In 2019, the company completed the change of control and became a state-owned cultural media company in Jiangxi Province. In March 2019, the shareholder and actual controller of Ciwen Media Holdings completed the change. After the transaction was completed, Huazhang Investment, a wholly-owned subsidiary of Jiangxi Publishing Group Corporation, became the controlling shareholder of the company, and the Jiangxi Provincial People's Government became the actual controller of Ciwen Media. Huazhang Investment has passed a total of 2 share transfers (share transfer price of 13 yuan/share) and a secondary market increase (average increase of 9.207 yuan/share). As of the 2023 annual report, Huazhang Investment held 20.05% of the company's shares and held 29.79% of the company's voting shares through a fiduciary vote.
The main film and television industry strengthens high-quality development and establishes close cooperation with leading platforms. In 2023, the company's total revenue was 460 million yuan (-1.1% YoY), net profit not attributable to mother was 39.66 million yuan; net profit due to mother was 27.63 million yuan (-43.9% YoY), mainly due to depreciation of accounts receivable, project replacement income, project debt restructuring, etc.; net cash flow from operating activities of 12.28 million yuan (-95% YoY). Movies and TV dramas are the company's main business, with revenue of 459 million yuan in 2023 (-1.46% year over year), mainly from projects such as “Firefly”, “Three Masters of the Purple River”, and “Zichuan **** King” and multiple rounds of distribution of existing series; gross profit margin of 7.8% (-15.2 pct year on year). In 2023, a total of 4 movies and TV series and 1 radio drama were broadcast in the first round. 6 movies and TV series obtained distribution licenses, 3 were produced, and 8 were in the post-production stage or in the middle of filming. The overall project reserves are rich, the creation of high-quality IP content continues, and close cooperation has been established with major platforms such as iQiyi, Youku, Tencent, and Mango TV.
It actively transforms and positions itself as a pan-cultural company with diversified, asset-light, and platform-based operations. 1) Strive to build your own short drama platform to create a film and television production cluster combining long, medium, and short dramas; 2) Build a game, animation and derivatives business, explore in-depth cooperation with platforms such as Tencent, Youku, iQiyi, Bilibili, Byte, etc., explore game version resources within the system of the controlling shareholder Jiangxi Publishing and Media Group, and continue to develop diverse content. In 2023, the company's game business revenue was 1.29 million yuan (+361% YoY), and the gross profit margin was 65.7%. 3) Reach strategic cooperation with Zhixiang Future, participate in Rokid with participating funds, develop strategic cooperation with Xiaopai Technology (domestic VR hardware developer), and develop interactive video games with Intercom Technology to actively build digital cultural asset industry clusters such as digital copyright, metaverse, and AIGC spawned by new technology.
Promote management improvement and empower major shareholders. The company relies on state-owned holding shareholders to establish a new corporate structure, establish strategic cooperation with Jiangxi Bank, China Merchants Bank Nanjing Branch, and Bank of Beijing Nanchang Branch, make full use of the capital market, and actively expand the company's investment and financing channels. Overall, the company has consolidated its advantages in multiple dimensions such as policy, industrial empowerment, resource introduction, financing and credit enhancement, and strategic planning, and continues to develop steadily and healthily.
Profit forecasting and valuation. We estimate the company's main business as follows: 1) Film and TV drama business: Judging from the project reserves, we expect the company's confirmed revenue for 2024-2026 to be 158 episodes, 170 episodes, and 180 episodes, respectively. Considering the series type, the price of a single episode is 4 million yuan, 4.5 million yuan, and 4.5 million yuan, respectively; in 2024-2026, the company's film and TV drama business revenue is 63 million yuan, 770 million yuan, and 81 million yuan respectively, with year-on-year growth rates of 37.7%, 21.0% and 5.9%, respectively; 2) Gaming and Internet services Business: We expect the company's revenue for 2024-2026 to be 5 million yuan, 10 million yuan, and 15 million yuan, respectively.
Overall, we expect the company's total revenue for 2024-2026 to be 640 million yuan, 780 million yuan and 830 million yuan, respectively, with year-on-year growth rates of 38.3%, 21.8% and 6.6%, respectively; net profit to mother is 72 million yuan, 93 million yuan and 107 million yuan respectively, with year-on-year growth rates of 160.1%, 30.1% and 14.2%, respectively. We expect the company's fully diluted EPS in 2024-2026 to be 0.15, 0.20, and 0.22 yuan/share, respectively.
Using PE valuation, referring to the comparable company's 2024 PE valuation, we gave the company a 2024 45 times PE valuation, with a target price of 6.75 yuan/share; using PB valuation, we expect the company to fully dilute BPS in 2024-2026 to be 2.19, 2.38, and 2.61 yuan/share respectively, referring to the comparable company's 2024 average 4.9 times PB, giving the company a 5.0 times PB valuation in 2024, with a target price of 10.95 yuan/share. Based on the principle of prudence, we combined the PE and PB valuation methods on average, and the target price was 8.85 yuan/share, which for the first time covered a “superior to the market” rating.
Risk warning. The progress of the film and television project fell short of expectations, and the progress of business transformation fell short of expectations.