Main points of investment

The recent announcement of the event company: 1) the company's board of directors agreed to appoint Wang Sheng as the company's president and Tong Yingying as the company's board secretary; 2) the announcement of signing a strategic cooperation framework agreement with Tongcheng Network Technology Co., Ltd.

Comments:

Newly appointed senior executives from the cultural industry background will serve as the president, sign a strategic cooperation framework with the same trip, and are firmly determined to develop and strengthen the literature and tourism industry. The company recently announced the appointment of Wang Sheng as the president of the company. Wang Sheng once served as a reporter, editor and host of the TV station, and later served as the director of the Foreign Affairs Department of Shanghai Culture, Radio, Film and Television Group and the vice president of Oriental Pearl New Media Co., Ltd. has a rich cultural industry background, in line with the company's strategy to speed up the development of the cultural industry, but also the company's first appointment of cultural industry background president since the backdoor listing. Highlight the company's firm determination to do a good job in the cultural industry After completing the creation of domestic boutique cultural performances and the impression of copyright operators in 2016, the company has been making great efforts to develop the literature and tourism industry, speed up the creation of new projects, and try to innovate the model. this time, the introduction of talents from relevant industries and the signing of a strategic cooperation framework with the same trip will break the existing difficulties, and the company and the two sides on the same journey will carry out comprehensive strategic cooperation in culture, tourism and related fields.

Tongcheng Yilong is one of the leading companies in the online tourism industry, with significant traffic advantages, which helps the layout and development of the company's literature and tourism industry.

Tongcheng Yilong is the second largest online travel platform in China after Trip.com, offering comprehensive and innovative products and services covering almost all aspects of travel, including transportation, accommodation booking and various supporting value-added travel products and services. In 2019, MAU (average monthly active users) reached 205 million, MPU (average monthly paying users) reached 26.9 million, and the number of paying users reached an all-time high of 152 million in 2019. At the same time, Cheng Yilong is the only operator of Tencent Wechat on mobile devices and the only operator at the entrance of "train ticket" and "hotel" on the mobile QQ payment interface, with significant traffic advantages; the two sides will cooperate in many aspects in the future (tourism, performing arts, literature and tourism project investment and operation, literature and tourism big data, etc.), helping the company's literature and tourism layout and development.

The real estate business focuses on green technology, the core layout of key city circles, and continue to contribute to steady cash flow and performance. At present, the company's real estate is mainly in Shanghai, Hangzhou and the area around Beijing. There has been no new land reserve in the past 19 years. Real estate will actively participate in the development and construction of the Yangtze River Delta, Beijing-Tianjin-Hebei and Guangdong-Hong Kong-Macau Greater Bay Area urban agglomerations. By the end of the first quarter of 2020, 3.3 billion of the contract debt on hand and 850,000 square meters of developable area in Yanjiao laid a good foundation for the real estate business. With its good product reputation and the layout of the core city circle, the real estate project company continues to contribute to sound cash flow and performance; recently, the company sold out on the first day of the Shanghai Qiantan project.

The impression brand and content creation have significant advantages. The impression has four major performance brand series: "impression", "most recall" and "return". At present, there have been a total of 18 public performance, production and signing projects, including 12 projects in production, 4 in production and 2 contracts. The current profit model of Guan Impressions is "performance creation" + "intellectual property license" + "Operation and Management of Art Troupe" + "shareholders' Rights and interests dividend". Previously, it was mainly based on performance creation, but now it is actively extending to operation and management. certain results have been achieved in the return of the three Gorges project, among which the income from performance production and ticketing are still the core sources of income. Compared with its competitors, Guanwei has a strong brand advantage, but due to the previous light asset operation mode, low control over project operation, and lack of experience in project operation, each project side is difficult to form a unified operation platform, brand image and marketing because of different investments and operators. At the same time, the company's core income depends heavily on one-time creation, and sustainable income depends on each project performance. At present, the growth of traditional projects is weak, and the company is actively seeking changes to increase the proportion of shares in the project and to infiltrate the performance and operation. In addition, in the cultural and tourism industry, the company actively participated in the industrial fund and invested in Viacom China's important strategic partner Viacom Golden staff of the United States, and signed a strategic cooperation agreement with Cheng Yilong this time. Enhance the layout of culture and travel and accumulate relevant experience and project reserves.

Profit forecast and investment advice: the real estate business is small but strong in brand power, with long triangle, Beijing-Tianjin wing, Guangdong, Hong Kong and Macao, high-quality land reserve and low land acquisition cost, high NAV provides the company with safety margin and good cash flow; at the same time, the hiring of senior executives from the cultural industry background and in-depth cooperation with Yilong will accelerate the development and breakthrough of the cultural industry, and the follow-up development is worth looking forward to. It is estimated that the EPS for 20-22 years will be 0.17 RMB 0.19 RMB per share respectively, and the closing price on June 24 will be estimated to be PE times that of 25-22-16, maintaining the "prudent overweight" rating.

Risk tips: cultural travel business development is not as expected, real estate and cultural industry systemic risk, goodwill impairment risk, corporate governance risk.