1H20's profit is expected to decline 105% compared with the same period last year.
Ciwen Media issued a half-year performance forecast for 2020, with an estimated net profit loss of 400-8 million yuan, down 104.7% and 109.4% compared with the same period last year, while the net profit of 2Q20 is expected to be 738-11.38 million yuan, down 90.6% from the same period last year. The performance was slightly lower than we expected, mainly due to the lower recognized revenue of film and television projects during the reporting period, and the game business performance also declined compared with the same period last year.
Pay attention to the main points
The production and release of the film and television business was delayed in the first half of the year, and the project recognized revenue was less. Affected by COVID-19 's epidemic in the first half of 2020, the production and distribution of the company's film and television business basically came to a standstill before May 2020. Although the domestic epidemic situation is gradually improving, considering the relatively long production and distribution cycle of film and TV series, the recognition of the company's film and TV drama project revenue in the second quarter of 2020 is still affected to a certain extent. During the reporting period, only Trident was broadcast on Jiangsu and Zhejiang Satellite TV on May 31, 2020, and simultaneously broadcast on iQIYI, Inc., Youku and Tencent. We expect the show to recognize revenue in the second quarter of 2020. While there is still a certain proportion of the company's expenses for fixed expenses, we expect that the company's 1H20 return net profit and loss is mainly caused by the decline in income and the rigidity of some expense items.
Pay attention to the progress of the shooting and release of the new project, and keep the medium-and long-term competitive advantage unchanged. Since May 2020, the company's new projects, such as "epidemic War", "saying that the heart is as pure as an ice jade pot", "Tianya guest", "killing the Wolf", "two conjectures of Marriage" and so on, have been filmed. "A river of water" has been killed. The company drama "Tomb robbing Notes restart" is scheduled to be broadcast on Youku on July 15, 2020, and "chances of winning" is scheduled to be broadcast on Beijing Satellite TV and Guangdong Satellite TV on July 16, 2020. IQIYI, Inc., Youku and Tencent videos are broadcast simultaneously. We believe that the successive broadcast of the company's dramas will also lay the foundation of financial reserves for the orderly promotion of new projects in the next phase. We judge that, based on the production strength of the company's boutique dramas, or long-term benefit from the improvement of the industry supply and demand brought about by the enhancement of demand for boutique dramas by the video platform downstream of the industrial chain.
Valuation and suggestion
We expect that the influencing factors of the epidemic may be gradually digested in the second half of the year, and the pace of the company's key new projects may be promoted or accelerated in an orderly manner.
We keep our profit forecast unchanged. The current share price corresponds to a price-to-earnings ratio of 24.1 pound in 2021 to 16.6 times earnings. Maintain the outperform industry rating, taking into account the valuation center up, we raised the target price by 32% to 12.80 yuan, corresponding to 20 times 2021 price-to-earnings ratio, there is 24.1% upside compared to the current stock price.
Risk
Key projects are not advancing as expected; downstream demand is weak; and regulation is tighter.