The current situation of the company
On September 3, 2020, we were invited to participate in the SMG& Oriental Pearl 2020 streaming strategy conference and BesTV+ product launch launch. The press conference proposed BesTV+ streaming media strategy, that is, to build a video streaming media platform with good experience for users, adopt the "get through" strategy, expand the "content + e-commerce" business model, improve efficiency, constantly increase revenue performance, form future competitiveness, and create a new communication platform; the meeting also released a short film of BesTV+ product introduction and held a product launch ceremony.
Comment
Through the construction of BesTV+ streaming media platform, build streaming media model in China. The company has resources and operating capabilities covering media, film and television, shopping, literature and travel, real estate and other online and offline industries: it owns resources such as IPTV Blockbuster, Oriental Pearl Radio and Television Tower, Oriental Shopping, Mercedes-Benz Cultural Center, etc., but it is also faced with challenges such as a wide range of businesses, difficulties in resource integration, and weak growth in traditional business. The company expects to start with four opening strategies: channel and content production, big screen and small screen, private network and mobile Internet, online and offline omni-channel entertainment and life services, and build an internal linkage mechanism and a closed loop for new consumption. We believe that the company's four opening strategies are expected to give play to the advantages of SMG content, production experience and diversified industrial layout capabilities at a deeper level, and make use of home large screen entrances such as Oriental Cable and IPTV/OTT, as well as offline channel advantages such as Oriental Pearl Tower and Mercedes-Benz Cultural Center, to achieve the connection between large and small screens, so as to attract audiences, improve stickiness and expand audiences.
Create a service platform and ecosystem based on the user value of content. The company will open up a "one account, multi-platform distribution" model to open up the rights and interests of members, build a B+ mall, and develop 5G home smart gateways. At present, BesTV+ streaming strategy is making great efforts to create "B+ members", members can achieve "from online entertainment content to offline entertainment consumption". We expect that the BesTV+ streaming strategy may further promote the construction of the application platform for the overall transformation of SMG in the 5G era, under which the relationship between Oriental Pearl Co., Ltd. and SMG may be closer.
Actively participate in the "national network integration" and strengthen the construction of smart cities. On August 26, 2020, the "national network integration" entered the substantive promotion stage, and the company planned to contribute 500 million yuan with its own funds and hold 0.49% of the shares of the company after its establishment. And the company and China Dianke set up a joint venture, relying on radio and television spectrum resources and market operation capacity accumulated in recent years, will step up efforts in the construction of smart cities. We believe that the company is expected to seize the development opportunity of "national network integration" and radio and television 5G to speed up the transformation from traditional business to new business, and realize the mutual empowerment of BesTV+ streaming media group and other diversified industries.
Valuation proposal
We keep our profit forecast unchanged. The current share price corresponds to 22.9 times 2020 earnings and 19.5 times 2021 earnings. Maintain the neutral rating and target price of 10.88 yuan, corresponding to 20 times 2021 price-to-earnings ratio, 2.4% upside from the current stock price.
Risk
The launch effect of the new product is not as good as expected; the impact of the epidemic exceeds expectations; competition intensifies; macroeconomic fluctuations affect recreational consumption demand.
