Report guide
The company's program reserves are rich and diverse, and relies on the advantages of variety production to enter the serial drama market. In 2020, the revenue contribution of variety shows and series was 1:1, and the improved product structure led to a doubling of revenue; the company is working hard to expand its new media marketing and Chinese video business, and the development prospects are worth looking forward to.
Key points of investment
Factors that exceeded expectations: The launch of the series in the 3rd quarter of 2020, the rich and optimized product structure led to a doubling of revenue, and prospects for entering new media content marketing are promising. The market believes that the development of TV variety shows will face multiple supervision, with high fluctuations and strong uncertainty. The company's programs focus on TV variety shows and lack new growth points, but we believe that: 1) in an environment where content media regulation is tightening, the risk advantages of the company's control policy are prominent, and the decline in actor costs is expected to improve profit margins; 2) TV series such as the TV drama “One Thought Without Thinking” developed by the company in 2020 will be launched one after another in the 3rd quarter. The business structure will be adjusted to variety shows: dramas 1:1, which is expected to double revenue and profit; 3) New media content marketing is expected to grow rapidly. Trust and JD It is worth looking forward to when Internet companies cooperate to quickly set up e-commerce live broadcasts and develop video marketing. The release of commercial value is worth looking forward to.
A path that exceeded expectations: The lifestyle-based content service group entered a fast track of growth, the variety business grew steadily, the serial explosion contributed to the doubling of revenue in 2020, and new media content cooperation was implemented at an accelerated pace. With an excellent operating model and a closed loop of business, the company: 1) the variety business achieved rapid growth through an efficient industrialization process, and the business model empowers media platforms and sponsors, and the model is stable and replicable; 2) Serials: Higher earnings than variety shows. With the gradual launch of serials such as “One Thoughtless Thought” in Q3 2020, business restructuring is expected to bring growth that exceeds expectations; 3) Strategic cooperation with supply chain company Jingxida to enter the rapidly growing field of new media e-commerce and live streaming; laying out the high-value commercial video sector is the general trend of future content video, “culture+consumption” The content matrix can be expected to continue to grow over the long term.
Catalysts: the broadcast of TV dramas such as “One Thought Without Thoughts”, continued promotion of JD cooperation, and the landing of mergers and acquisitions in the industrial chain
Profit forecast and valuation: The company's revenue for the fiscal year 2020-2022 is expected to increase 95.00%/40.00%/30.00% to $9.27/12.98/1,688 million yuan, and the net profit attributable to the mother is $276/3.90/505 million, an increase of 86.42%/41.55%/29.39% over the previous year, corresponding to PE valuation 11.66/8.24/6.37 times. We expect the company to have a rich program reserve and actively enrich its product structure, double its revenue in 2020, value 18 times PE in 20 years, and give a target price of HK$3.42, covering the “buy” rating for the first time.
Risk warning: the broadcast of the program falls short of expectations, the implementation of strategic cooperation does not meet expectations, and regulatory risks.
