Events:
The company released the semi-annual report for 2020: the operating income of the company in the first half of 2020 was 60 million yuan, down 92.79% from the same period last year; the net profit returned to the mother was-6 million yuan, down 107.3% from the same period last year.
Comments:
Short-term performance pressure:
Affected by the epidemic, the production, distribution and broadcasting plans of the company's series were disrupted, and the film and television business basically came to a standstill before May. 2020H1 achieved revenue of 60 million yuan, down 92.79% from the same period last year, and realized net profit of-6 million yuan, down 107.30% from the same period last year. Of this total, 2020Q2 achieved a revenue of 58 million yuan, down 92.80% from the same period last year, and a net profit of 9 million yuan, down 88.35% from the same period last year.
The gross profit margin of 2020H1's film and television business is 82.90% (+ 64.49pct). The sharp increase in gross profit margin is mainly due to the fact that most of the revenue recognized in the first half of the year is from multiple rounds of distribution of stock dramas; 2020H1's sales expense rate, management expense rate and financial expense rate are 16.01% (+ 11.00pct), 35.74% (+ 32.35pct) and 9.33% (+ 7.54pct), respectively.
A number of TV series have won high popularity and high reputation, and the reserve of multi-theme projects is rich. According to the company's report, since May, the company has launched three 114-episode episodes one after another, and the performance of the series is excellent in the word-of-mouth and hot market: Trident started with a Douban score of 8.1 and was always in the top ratings of prime-time TV dramas, with a rating of 2.04% on the night of the finale. Since the launch of the first season, the popularity and reputation of "restart extreme Sea listening Thunder (season 1)" has continued to rise. IQIYI, Inc. 's popularity has broken through 850800, topic reading volume has exceeded 5.6 billion, and Douban rating has reached 8.5. "chance of winning" has won ultra-high audience cohesion, ranking first in the single channel of prime-time TV series, ranking firmly in the top three of satellite TV, and steadily breaking 1 in ratings. The company has a rich reserve of projects, 2 films and TV dramas have obtained distribution licenses, 2 have completed production, 4 are in post-production and 4 are in filming, which is expected to provide some support for revenue in the second half of the year and next year.
Adhere to the content of the whole industry chain development strategy, effective integration of internal and external resources. Following the popular variety show "the Voice of Chinese Dream", the company once again partnered with Oriental Satellite TV to launch a large-scale variety show "Dancer". The program won the top three in CSM59 City on Saturday, with a final rating of 1.55 and Weibo Corp's competitive variety TOP1 in a row, which was highly appraised by many mainstream media. In addition, the company's pro technology, on the basis of the resources of China Mobile Limited, China Unicom and other operators, continues to promote the operation and agency of multi-product lines such as games, video, reading, music, animation and so on, so as to accelerate the landing of video ring back tone business.
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. However, the epidemic in 2020 caused a serious impact on the company's operation, so we lowered our profit forecast. It is expected that the company will achieve a return net profit of 103 million, 193 million and 217 million in 2020-2022, corresponding to 0.22,0.41,0.46 yuan in EPS. 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.