"the first share of China Variety" successfully listed in Hong Kong
Yusheng Culture is not only the leading TV variety show operator in China, but also the first variety show stock in Hong Kong. In 2016, the income / net profit was 475 trillion yuan, an increase of 68% and 71% respectively over the same period last year. The acceleration of growth was mainly due to the doubling of the number of programs; from 2019 to 2019, the income / net profit CAGR was 55% and 120% respectively, which was in a period of rapid growth; gross profit and net profit were 56% and 31% respectively.
The market scale of video content industry continues to expand.
China's video content industry is gradually coming out of the cold winter, the regulatory margin has been relaxed; the capital level allows film and television culture-related industries to be reorganized and listed on the gem. The domestic video content market is expected to reach 5.4 trillion in 2023.
Company advantages: adhere to the original independent property rights, strong expansibility; advertising end to provide complete solutions, both customers + platform resources advantage the company adopts the content of independent research and development as the core business model, according to market demand, set up five categories of programs, at the same time the company has a special content research and development team, so that the company can retain high-value program intellectual property rights in the industry value chain. On the one hand, the reserved copyright has high value, on the other hand, it is conducive to the company's future extension and expansion of the intellectual property rights.
In addition, the company adopts the business model of "actively attracting investment and fixing production by sales", which provides complete advertising solutions for sponsors, which effectively improves the sales success rate, program renewal rate and business sustainability of the company's programs. at the same time, it improves the company's bargaining and profitability. In order to ensure the quality of publicity, sponsors will provide stable funds for the initial stage of program research and development, so as to ensure the quality of programs. Excellent program quality can also ensure its bargaining power in negotiating pricing with major satellite TV and online video.
Growth-driven: the reserve project is rich, and the average program revenue increases. In terms of volume, 20 programs are expected to be released in 2020. In terms of price, the average income of each TV variety show increases from 81.4 million yuan in 2014 to 142 million yuan in 2018. It is expected to reach 215 million yuan in 2023. According to the prospectus, there are seven TV variety shows among the 20 programs in 2020. If each set is calculated at an average of 150 million yuan, the preparatory variety program in 2020 will generate 1.05 billion yuan for the company.
Investment suggestion
In the short term, the epidemic has led to an increase in consumer demand for indoor entertainment activities and good video content production providers, which may exceed expectations in 2020; in the medium to long term, on the one hand, policies have warmed up, the regulatory margin has been relaxed, and limited film and television works have been put online. At the same time, the capital level allows film and television culture-related industries to be reorganized and listed on the gem. On the other hand, the company has strong original ability, rich project reserves, and the average income of each variety show is expected to increase gradually under the support of high-quality content, and the volume and price resonance contributes to the long-term growth space.
We estimate that the 2020 PE 2021 / 2022 EPS is 0.17 / 0.23 / 0.31 and the 20 / 21 / PE is 11 / 9X, which is in the bottom area compared to the peers, with a target price of HK $2.80 for the first time and a buy rating of 11x for the 21-year PE. (HK $1 = RMB 0.889)
Risk hint
The uncertainty of the development of the epidemic affects the progress of program recording; the uncertainty of regulatory policies; the intensification of market competition; systemic risk.
