Overview of events
On the evening of October 27, 2022, Jiecheng shares released three quarterly reports that the company achieved operating income of 2.291 billion yuan in the first three quarters of 2022, down 11.84 percent from the same period last year, and realized a net profit of 488 million yuan, an increase of 5.86 percent over the same period last year. 458 million yuan was deducted from non-net profit, an increase of 14.49 percent over the same period last year.
The gross profit margin has increased by a large margin, and build a "screening hall" in strategic cooperation with Kuaishou Technology.
In 2022, in order to deal with the impact of COVID-19 's epidemic on the company's cinema line's new film distribution business, the company continued to dig deep into the needs and cooperation of existing customers, increase the distribution efforts of the film library, and enhance the cash realization ability of the film library. Due to the low marginal cost of film library distribution, the overall gross profit margin of the copyright distribution business has been raised, and the overall gross profit margin of the company in the first three quarters has increased from 29.38% in the same period last year to 35.77%. According to the interactive easy reply of the company on September 18, the company reached a strategic cooperation with Kuaishou Technology to jointly create a "projection hall" channel with Kuaishou Technology to provide users with the ultimate viewing experience, and to empower the industry from various aspects, such as content supply and content operation, and share the return on investment. The company is also constantly trying to explore a new realization mode of copyright content, seize the development opportunity of the large screen end in the 5G era, expand the family multi-screen digital distribution model, and create a complete distribution system from content supply, content dissemination, content scheduling and settlement of content consumption. innovate digital distribution and create family living room cinemas.
The production of the content has a deep foundation, and the market performance of "ace Force" and "penalty" is remarkable. On October 27, 2022, the 33rd TV series "Flying Apsaras Award" press conference introduced the shortlist of works for this year's "Flying Apsaras Award". These include the military TV series "Ace Army" jointly produced by the company and iQIYI, Inc.. Another TV series "punishment", co-produced by the company and iQIYI, Inc., was released on the iQIYI, Inc. platform in the third quarter. According to Lighthouse data, in early September 2022, "punishment" ranked first in the market share of the whole network. Among them, September 6 and September 8 even approached the broadcast market share of 19.79% and 19.69%, and its content also aroused heated discussion and public opinion in the same period. The success of the "ace force" and "penalty" reflects the company's deep skills in content production and subject matter grasp as an old player in the film and television industry, especially under the background that the film and television industry has experienced regulatory reshuffle and industry clearance in the past few years. The market share of high-quality film and television content producers is expected to be further enhanced.
Advanced layout meta-universe format, short video second creation to enhance high-quality copyright value to look forward to the future of the company, in meta-universe, the company has long had a layout-in 2016 to invest in Shiyou technology, advanced layout of virtual human virtual technology.
2022 is the first year of meta-universe, the industrial policy of meta-universe has been launched in many places, the underlying technology of meta-universe has made continuous breakthroughs, and continue to explore the forms of meta-universe, such as virtual copyright operation and virtual idol. According to the company announcement, Shiyou Technology achieved 34.3799 million yuan in revenue and 8.0435 million yuan in net profit in 2021, including 11.6735 million yuan in revenue and 3.339 million yuan in net profit in the first three quarters. At present, the application scene and industry of digital virtual human continue to expand, and it is expected that Shiyou's scientific and technological performance will continue to achieve high growth in 2022.
In terms of film and television copyright business, as many long and short video platforms join hands to carry out short video cooperation, the company has significantly benefited from the scarcity of high-quality film and television rights, and we believe that the company's copyright assets are expected to be revalued. the realization space of copyright assets is expected to be further improved.
Investment suggestion
According to the results of the three-quarter report, taking into account the impact of the epidemic, we adjust the company's profit forecast for 2022-2024, adjusting the forecast of revenue of 48.83 billion yuan for 2022-2024 to 4,370 yuan for 40.30 yuan. Adjust the forecast of 2022-2024 net profit for homing from 8.06 to 1.184 billion yuan to 605, and adjust the forecast of EPS 0.31 to 0.38 and 0.46 to 0.23, 0.31 and 0.37, corresponding to the closing price of 4.64 yuan per share on October 27, 2022, PE is 20, 15 and 13 times, respectively. At present, the company has high barriers to film and television copyright business and high prosperity in the industry. at the same time, it continues to explore meta-universe-related new business type. We believe that its overall valuation level is low and maintains a "buy" rating.
Risk hint
COVID-19 's epidemic situation has added uncertainty to the release of new films in the film and television industry; the progress of the implementation of the film and television copyright contract is not as expected; and the small volume of Shiyou technology will not have a significant impact on the company's revenue and profits at present, and there is still uncertainty about the impact on the company's performance and operating results in subsequent years.
