The first stock of Chinese film and television entertainment, after the wind and rain, focus on the main business and then set out.
Huayi Brothers was originally founded in 1994 and landed on the gem in 2009. It is the first listed company in China's film and television industry. It is a leading entertainment company with high-value brands and rich entertainment resources.
Affected by the adjustment of industrial layout, changes in the market environment of the film and television industry and project promotion, the company's performance in recent years is in a trough stage, but after a cold winter, the company adjusts in time and refocuses on the advantage of "film + reality". Divest the weakly related assets of the main business, and at the same time began to release high-risk goodwill, long-term equity investment, inventory and other impairment from 18 years, although it brought losses to the profits of the year. But it made the balance sheet healthier, with the company's book goodwill balance falling to 600 million yuan as of the 19th annual report.
The film industry has been hit hard by the epidemic, but the enthusiasm for watching movies has not been extinguished, and the pace of recovery of blockbuster films has accelerated.
After the National Cinema resumed work in an orderly manner from July 20, the speed of resumption and the willingness of the audience to watch the movie showed a positive performance. Since mid-August, studio restrictions have been gradually relaxed, and the attendance rate in some cities has been opened to 50% since August 14. More importantly, with the increase in the supply of new films, "800" is expected to strongly boost the market, and Nolan's new film "Creed" is expected to be released on September 4. National Day has been scheduled for "me and my hometown", "Jiang Ziya", "winning" and so on. With the recovery of the film market, we cannot rule out the possibility that more mass films will be released.
In addition, in the face of the closure of the studio, small and medium-sized enterprises will accelerate clearance in the cold winter of the industry, and once the head company gets through the difficulties through financing or other strategies, its competitive advantage and market share are expected to increase.
In the past 20 years, the company has ushered in a significant improvement in both the business side and the capital side, and the leader can gradually recover.
In terms of business, the company has produced high-quality film and television projects over the past 20 years, and the heavyweight film "eight hundred" has been officially set on August 21. Dianying has gained excellent public praise, and under the influence of attendance restrictions, we think it is still expected to harvest a high box office; follow-up also reserve "God order", "749 Bureau" and so on; the online drama "Human fireworks Chef"
The Central Bureau of the Antiquities Bureau has achieved eye-catching results after its launch. Huayi Brothers'in-depth cooperation with film and television directors, rich industries and human resources in the industry, and many years of project production experience are expected to continue to play after the company refocuses on its main business. In terms of finance, the company plans to raise no more than 2.29 billion yuan in a non-public offering. Eight heavyweight companies, including BABA Pictures and Tencent computer, entered, alleviating market concerns about capital problems, and at the same time verifying the company's high-quality texture from the industrial level.
Investment suggestion: we expect Huayi Brothers' net profit from 2020 to 2022 to be 107 million / 464 million / 600 million yuan respectively, to turn losses into profits in 2020, and to grow at a year-on-year growth rate of 335% Universe 29% from 2021 to 2022, corresponding to 36.6x/28.3x for 21-22 years. The financial expenses of Huayi Brothers from 2021 to 2022 are estimated to be 2480.212 million yuan respectively. If the company's refinancing goes smoothly, it will continue to decrease. If financial costs are not taken into account, Huayi Brothers expects net profit (excluding financial expenses) to be about 658 million / 767 million in 2021-2022. This caliber profit is comparable to the company's 22nd PE level, giving Huayi Brothers a target market capitalization of 26.5 billion yuan. For the first time, coverage gives a "buy" rating.
Risk tips: the impact of the epidemic; film and television project production schedule is delayed, the film box office is not up to expectations; reality entertainment project operation effect is not as expected, new project expansion schedule uncertainty; brain drain and management risk; policy regulatory risk. The risk of operating cash flow and the risk that the financing progress is not up to expectation.