The company's business development is affected by the epidemic to a certain extent, and the overall operation is sound. 2022H1, the company's total revenue is 1.72 billion yuan (year-on-year-7.5%), comprehensive gross profit is 39.7% (year-on-year + 11.9pct), net profit is 400 million yuan (year-on-year + 32.1%), non-return net profit is 380 million yuan (year-on-year + 54.9%), net profit rate is 23.5% (year-on-year + 7pct), net cash flow from operating activities is 1.41 billion yuan (year-on-year + 36.6%). 2022H1, the company's sales expense rate remains unchanged; the management expense rate is 9.5% (year-on-year + 4.7pct), the main share of restricted stock expenses increases; the R & D expense rate is-0.3pct compared with the same period last year; the financial expense rate is year-on-year-0.6pct, and the loan size of major companies is reduced; income tax expenses are-14.976 million yuan (year-on-year), mainly due to the increase in deferred income tax expenses. For 2022Q1 and Q2, the company's revenue was 990 million yuan and 730 million yuan respectively, + 33.4% and-34.5% compared with the same period last year, and the net profit returned to the mother was 290 million yuan and 110 million yuan, + 197.6% and-45.3% respectively.

The main business of film and television copyright business is outstanding, and the development trend is good. 2022H1, the company's film and television copyright operation and service business income is 1.7 billion yuan (year-on-year + 1.7%), gross profit is 39.8% (year-on-year + 47.1pct), net profit is 490 million yuan (year-on-year + 55.1%), net profit is 28.7% (year-on-year + 9.9pct); revenue from film and television content production business and audio and video technology business is 14.91 million yuan and 7.48 million yuan respectively, down 81.4% and 93.1% respectively. The company's new media copyright operation business has video terminals such as Tencent, Youku, iQIYI, Inc., Mango, China Mobile Limited, China Telecom Corporation, China Unicom and other operators, as well as high-quality customers such as Huawei, XIAOMI and other hardware providers. at the same time, Douyin, Kuaishou Technology, Bilibili Inc., HUYA Inc. and other short video platforms and live broadcast platforms have been added to increase the distribution of the film library and enhance the liquidity of the film library. In February 2022, he signed a 6-year film and television program authorization contract with Tencent with a total amount of 1.8 billion yuan and received 900 million yuan in advance. At the same time, we will further strengthen the exploration of new business models, carry out in-depth joint operation and cooperation with partners to share multiple benefits; in addition, the company has actively tested the digital distribution model to achieve digital distribution of content for all-media terminals, including Internet, wireless, digital TV / IPTV/OTT, and create family living room cinemas. In terms of film and television content production and distribution, focus on high-quality products, as of 2022, the top four film and TV drama works in the company's inventory are all in the process of distribution. they are "the most brilliant us" (120 million yuan), "camouflage: the deep sea" (75 million yuan), "living more and more exciting 2" (45.73 million yuan) and "the most beautiful but first meeting" (33.37 million yuan). In addition, the Legend of Qilou Xianxia is under preparation.

Continue to do a good job in the company's 4K/8K, VR, AR, virtual human and other technology upgrading and layout. The company holds 24.38% of Shiyou Technology, which is the second largest shareholder. Shiyou Technology has a full-class digital human product system, and has matching patented technologies and solutions in virtual scenes, film and television animation virtual content production, VR/AR and metasmos content production and other scenes. 2022H1, the investment income recognized by the company under the Shiyou Technology long-term Equity Investment Law is 1.936 million yuan, which has exceeded the income level for the whole of last year.

Profit forecast and valuation. The company's itemized revenue assumptions are as follows: 1) Film and television copyright operation and services: we believe that the company continues to dig deep into the needs and cooperation of existing B-end customers, actively expand new distribution channels, and explore a diversified model of C-end joint operation. It is estimated that the company's film and television copyright operation and service business revenue will grow by 20%, 15% and 12% respectively from 2022 to 2024. 2) Film and television content production business: based on the progress of film and television projects and inventory, we estimate that the company's film and television content production business revenue from 2022 to 2024 is-55%, + 5% and + 3% respectively compared with the same period last year. 3) Audio and video overall solution business: we believe that with the normal development of epidemic control, it is conducive to the gradual recovery of the company's business. It is estimated that the company's overall audio and video solution business revenue from 2022 to 2024 is-70%, + 40% and + 30% respectively compared with the same period last year. We estimate that the company's fully diluted EPS for 2022-2024 is 0.27,0.31 and 0.35 yuan per share, respectively. With reference to the comparable company's 21 times PE valuation in 2022, we give the company 25-30 times PE valuation in 2022, corresponding to the reasonable value range of 6.75-8.10 yuan per share, "better than the market" rating.

Risk hint. The company's copyright purchase price has risen, and the risk of impairment of goodwill in the Star era has been calculated.