Oriental Cable also boosts cable TV revenue and maintains an increased rating.
The company's 20H1 realized revenue / homing net profit / deducted non-homing net profit of RMB 590,000 / 10.02 / 750 million respectively, compared with the same period last year, + 3.41% / 5.49% / 5.02% respectively. After the merger of Oriental Cable, the company's overall revenue has been boosted, but due to the impact of the epidemic, the company's main business is under pressure. We downgrade our profit forecast and estimate that the 2020-2022 net profit will be 1.584 billion yuan, 17,655.05 million yuan, and EPS0.46/0.52/0.59 yuan. Comparable company in 2020 industry average PE level of 27.88X, there is radio and television integration premium factor, the company's business diversification, which should be discounted than the industry average valuation, give the company a valuation of 25x PE in 2020, adjust the target price to 11.50 yuan, and maintain the overweight rating.
It also shows that Oriental Cable boosts revenue, and the company's overall revenue and non-return net profit increase slightly.
Despite the impact of the epidemic, the company also reported that Oriental Cable boosted cable TV revenue, driving the media network business income to increase by 73.64% to 2.484 billion yuan; culture and travel consumer business income increased by 105.25% to 1.87 billion yuan, which was the sales of the Yangpu Binjiang project; video shopping and film and television entertainment business were affected by the epidemic, and revenue fell by 58.61% and 21.19% to 1.205 billion yuan and 296 million yuan, respectively. From a quarterly point of view, the company's 20Q1 net profit decreased by 16.85% to 218 million yuan compared with the same period last year, while 20Q2's non-home net profit reached 533 million yuan, an increase of 15.10%, and the company's profitability recovered.
Rely on the advantages of full license operation to expand the user base and continue to develop the BesTV+ streaming strategy.
By the end of June 2020, the company's BesTV converged channel platform served 58.23 million IPTV business users, with 45.66 million OTT business users and 18 million interactive VOD users, and the number of Oriental Shopping members increased to 12.5 million. The company continues to take the BesTV converged channel platform as the core, providing users with multi-content, multi-service, multi-scene, cross-terminal converged media products and services, and the number of users on different platforms maintains the growth trend. The company has rare licenses such as IPTV and OTT, and complete user access channels such as IPTV, Internet TV and CATV, which continues to effectively promote the development of Best+TV streaming strategy, expand the scale of users, and the commercial realization ability is expected to be improved.
Comply with the trend of media integration and the national strategy of radio and television 5G, and actively explore the construction of smart cities.
Relying on the national strategy of Radio and Television 5G, the company plans to invest 500 million yuan in 2020 to participate in the establishment of China Radio and Television Network Co., Ltd., and promote 5G construction and 700m frequency clearing and other national network projects to help follow-up business transformation and upgrading. At the same time, the company continues to explore the extension of radio and television 5G industry and participate in smart city construction projects. On August 27, the company and China Electric Power Co., Ltd. jointly announced the establishment of China Electric Power Dongzhu to broaden the traditional Internet of things and smart city construction business, and form the construction layout of the new generation information infrastructure.
The company's business has been affected by the epidemic, and the impact has not yet been fully apparent, maintaining the overweight rating.
The company's business is obviously affected by the epidemic. In the first half of the year, due to the low year-on-year base of Oriental Cable consolidation, the drag on performance is not obvious, but it is expected to show further in the whole year (Oriental Cable 19Q4 begins to merge), so we downgrade the company's profit forecast for 2020-2022. It is estimated that the net profit for 2020-2022 will be 1584x17.65 billion yuan (the previous value is 1.774 billion yuan for 2020-2021). EPS is 0.46 and 0.52, 0.59 yuan. Comparable company in 2020 industry average PE level of 27.88X, there is a valuation premium of radio and television reform, the company's business diversification, which should be a discount to the industry average valuation, give the company a valuation of 25X PE in 2020, adjust the target price to 11.50 yuan, and maintain the overweight rating.
Risk tips: a decline in the number of pay-TV users and a decline in revenue from video shopping.
