Report summary:

Incident: The company released its 2023 performance forecast on the evening of January 23. It is expected to achieve net profit of -2.09 to -148 million yuan in 2023; it is expected to deduct non-net profit of -0.20 to 41 million yuan, putting short-term pressure on performance.

Comment: The company's performance is under pressure in the short term, mainly due to fluctuations in the equity value of the investment companies it holds and the impact of natural disasters in Beijing. The company's net profit loss in 2023 was mainly due to a significant year-on-year decline in the fair value of Guiguang Network shares held by the company, and the July to August 2023 torrential rain disaster in Beijing had a certain impact on the company's main business operations.

The company actively promotes the large-scale development of 5G services and exploits the advantages of radio and television resources to develop government and enterprise business. In 2023, the company fully understood the strategic significance of developing the 5G radio and television business. It effectively promoted 5G business development by deepening fixed mobile integration and innovative products and sales strategies; the company continued to optimize and improve mobile phone terminal marketing plans to promote 5G terminal sales; and developed thousands of offline stores through the “Thousand Stores Plan” to continuously ensure the high-quality development of the radio and television business. In terms of government and enterprise affairs, the company actively expands services including 5G, government cloud, health insurance network, cultural big data, cultural private network and the establishment of a private network in Chaoyang District, winning bids for various key projects such as the Beijing Municipal Traffic Management Bureau and Bank of Beijing, and reaching special project cooperation with leading Internet companies; the company actively sorts out the government and enterprise business development system, promotes platform construction, enriches the product system, and organizes nearly 30 types of products according to government and enterprise business, radio and television 5G government enterprise services; actively promotes the Group's 5G business development and launches “Beijing Card Package” and other exclusive government and enterprise package products; China Activities such as broadcasting and television 5G services entering ministries and departments, central enterprises, and large enterprises in Beijing.

The company continues to carry out infrastructure construction and network operation and maintenance guarantees, and improve 5G and government infrastructure support systems. In 2023, the company successfully completed the construction of the CBNET Beijing node; completed the initial construction of the fixed-line network to support the first call of China's radio and television fixed-line; the company established and improved the network delivery operation mechanism, and the efficiency of government and enterprise business delivery was significantly improved. In addition, the company continues to strengthen its business support capabilities with Cloud BOSS as the core, and improve 5G and government business support systems.

Profit forecast: We are optimistic that the company will give full play to the advantages of radio and television resources, deepen the integration of fixed mobile and actively carry out 5G business and government business, and open up new room for the company's growth. The company is expected to achieve operating income of 2,409/29.90/3.461 billion yuan in 2023-2025, and net profit to mother of 168/0.22/0.34 billion yuan, corresponding to EPS -0.12/0.02/0.02 yuan/share. This is the first coverage, giving it a “buy” rating.

Risk warning: The development of the cable TV industry falls short of expectations, and the development of the 5G business falls short of expectations.