The earnings of the Interim Report declined, and production, distribution and broadcast plans for series affected by the pandemic were disrupted. The company's 2020 mid-year report revenue was 596.62 million yuan, down 92.79% from the previous year; Guimu's net profit and loss was 6,212 million yuan, down 107.31% from the previous year; net cash flow from operating activities was 202438 million yuan, down 74.85% from the previous year.
A number of film and television projects have been launched for filming, and variety content has been actively expanded. During the reporting period, the company's largest film and television business achieved revenue of 54,0609 million yuan, a year-on-year decline of 93.07%, mainly due to the impact of the epidemic. The company's film and television business basically came to a standstill until May. Since the epidemic basically stabilized in May, the company's series such as “Trident”, “Rebooting the Extreme Sea to Hear Thunder (Season 1)”, and “Chance of Success” have been broadcast online, with excellent word of mouth and market popularity. At the same time, film and television projects such as “The Battle of the Epidemic”, “A Frozen Heart in the Jade Pot”, “The End of the World”, “Breaking the Wolf”, “Two Conjectures of Marriage”, and “Dad Has Arrived” have been filmed one after another. As of the interim report, the company has obtained a license to distribute 1 TV series (“One River of Water”), 2 have completed production, 4 are in post-production, and 4 are being filmed. We think that all of these projects will probably meet the revenue confirmation requirements this year; there are also TV dramas “Life Rink” and “North of the Sky” in active preparation.
During the reporting period, following the joint creation with Oriental TV of the year's hit variety show “The Voice of the Chinese Dream: Our Song”, the company and Oriental TV once again joined hands to launch the large-scale variety show “The Dancer”. It began broadcasting every Saturday at 20:30 p.m. on Oriental TV and Tencent Video, iQiyi, and Youku every Saturday night until the 12th episode aired on August 8. The program came to an end. The 12th episode of the program came to an end. The 12th episode reached the top three of the CSM59 city ratings on Saturday. The finals had a ratings of 1.55. TOP1.
During the reporting period, game and channel promotion business revenue was 3,9084 million yuan, a year-on-year decrease of 91.47%. The company supports technology to continue operating and distributing game, video, reading, music, animation and other product lines based on the resources of operators such as China Mobile and China Unicom, while speeding up the implementation of the video ringtone business.
The revenue from the artist agency service business was 1,6926 million yuan, an increase of 218.56% over the previous year.
Profit forecasting and valuation: The company relies on state-owned controlling shareholders to actively carry out organizational structure reforms and initially establish a new group structure. We believe this will effectively strengthen risk control and financial management while receiving financial and other resource support. At the same time, the company fully unlocks the value space of IP through diversified products such as short and long videos, games, animation, live streaming, peripheral derivatives, creative advertising, content e-commerce, etc., to achieve a virtuous cycle of “content creation - content operation - content value realization”, accelerating the upgrade from video and television content providers to high-quality operators in the pan-entertainment industry with IP as the core. We expect the company to fully dilute EPS by 2020-2022 at $0.37, $0.50, and $0.61, respectively. Referring to the average PE valuation of comparable companies in 2020, Ciwen Media was given 25-30 times its PE valuation in 2020, corresponding to a reasonable value range of 9.25 yuan/share - 11.1 yuan/share, maintaining a superior market rating.
Risk warning: The development progress of film and television projects fell short of expectations.
