Ciwen Media is a high-quality film and television company with a stable production team. The company has set up front-line film and television teams in the industries such as TV, Mi Amoy and Micro Pictures, and has strong IP development strength. It has produced popular dramas such as "Thousand bones of Flower", "Old Nine Men" and "Legend of Chu Qiao", establishing a leading position in the industry. Currently, there are "Tomb robber Notes restart", "Storm Dance" and other dramas waiting to be launched, and "Tianya Ke", "Zichuan" and "de-Bone incense" are waiting to be filmed IP resource reserves. Consolidate the leading edge of the content market by continuously mass production of top-quality content. In 2019, the operating income was 1.171 billion, the net profit was 157 million, and the net profit was turned into profit.
The actual controller is changed into state-owned assets to strengthen the organizational structure and financial strength. In 2019, the actual controller of the company was changed to Jiangxi Publishing Group, and the new shareholders planned and adjusted the organizational structure, management system, team building, brand building, incentive mechanism, resource coordination and financial support, etc. retain the core production team and improve the landing rhythm of the project.
In this survey, we believe that the company is expected to exceed expectations in its account-sharing model and online business exploration in 2020:
1. After many rounds of adjustment, some members of the film and television content production industry have been cleared, and the concentration of the industry has been further enhanced. According to the data from the State Administration of Radio, Film and Television and Tianyan check, the number of Grade A production organizations of TV dramas across the country fell by 30% in 2019. Since 2020, more than 5000 film and television companies have written off, and the head companies have received project transfer orders from small and medium-sized companies one after another. At the same time, in the face of strong stock downstream side, Ciwen Media ensures the stability of the basic business market to a certain extent through the following three points: 1) establish the original and IP matrix system, and insist on creating head boutique content. Based on the new rules of SARFT on the length of the series, the company needs to expand the project and enrich the IP matrix to provide content guarantee for film and television production and mining subsequent derivative value. Take the development and operation of film and television content as the core, and take the road of high-quality and brand development. 2) undertake customized dramas to alleviate the cash flow pressure and ensure stable project output. In 2020, IP Tianya Ke turned to a customized model in cooperation with the platform. 3) pay attention to the pre-marketing sales model to ensure the distribution of TV dramas. In the process of script selection, creation and adaptation, communicate with the target platform in time, and formulate a shooting plan according to the SARFT's requirements for the proportion of TV series.
2. New opportunities for business development, which are expected to break through the profit ceiling: 1) increase investment in C-end paid products. C-end paid products are developing rapidly. In 2020, the box office of a single series has exceeded 100 million, the recovery of production unit cost has accelerated, and the sharing model of To C has high growth potential. 2) join hands with short video platform to promote short and long video fusion. Enable young teams to develop short video content, layout medium-and long-term dramas and micro-variety; 3) cut into the field of MCN. Based on the artist brokerage business, the business extends to the field of online celebrity economy and live broadcast.
Investment suggestion: after the actual controller is changed to Jiangxi Publishing Group, the business recovers one after another, in addition to retaining the original core production team, the new shareholders provide financial support and strengthen the predictability of project confirmation rhythm. At present, the customized drama projects from the video platform ensure the stability of the business basic disk to a certain extent. The company is still exploring business cooperation models with new traffic platforms such as Douyin and Kuaishou Technology; after entering the ledger drama market, profitability is expected to be further improved. We expect that from 2020 to 2022, the company will achieve a net profit of 198 million, 224 million and 278 million, corresponding to EPS of 0.42,0.47,0.59 yuan. As a head film and television production company with a valuation premium, we give it a "buy-A" rating.
Risk tips: uncertainty of project startup time, smooth transition of content production capability to uncertainty of MCN content, etc.