occurrences

On October 25, 2024, the company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 1.427 billion yuan, a year-on-year increase of 3.45%; net profit to mother -0.31 billion yuan, a year-on-year decrease of 60.46%; net profit after deduction of -0.374 billion yuan, a year-on-year decrease of 71.86%. Q3 achieved revenue of 0.509 billion yuan in a single quarter, up 24.99% year on year; net profit to mother - -0.114 billion yuan, up 51.77% year on year; net profit after deducting - -0.166 billion yuan, up 32.11% year on year.

reviews

Focus on the main business, inject high-quality IPTV assets, and create a new pattern of “IPTV+cable TV” integrated operation. During the reporting period, the company replaced 100% of its shares in Sanya Yucheng Investment with assets related to IPTV under the controlling shareholder Jilin Radio and Television Station.

Originally positioned as a base for developing Sanya's visual culture experience, Sanya Yuecheng was later affected by Hainan's policies and macroeconomics, and is currently in a state of shutdown. In order to further focus on the main business and revitalize the assets of listed companies, the company placed Sanya Yuecheng in a subsidiary of the controlling shareholder to improve the company's overall operating efficiency. At the same time, the company established a new subsidiary, Jilin Northeast New Media Co., Ltd., which undertook all the rights and obligations to install IPTV assets, realized the integration of IPTV and cable TV content and traffic resources within Jilin Province, further enriched the business development pattern, diversified risks, and provided users with more comprehensive Internet new media audiovisual services. As of May 2024, there are about 4.51 million IPTV users in Jilin Province. Compared with most provinces in the country, there is still room for user size and value-added business expansion, and the issuer Radio and Television News Media promised that the total profit of IPTV assets in 2024-2026 will not be less than 0.193 billion yuan. Considering that the rest of the company's financial indicators are basically stable, infrastructure depreciation costs are expected to slow down in the coming year. This asset injection is expected to bring new growth momentum to the company's performance and gradually improve profitability.

The company's repurchase, controlling shareholders' holdings increased, and a number of strategic collaborations were reached, boosting confidence in the company's long-term development. On September 3, 2024, the company bought back 50.9135 million shares of the company's shares through centralized bidding transactions (accounting for 1.46% of the company's current total share capital); at the shareholder level, as of September 30, 2024, the controlling shareholder, Jilin Radio and Television Station, increased its holdings of 9.9 million shares through centralized bidding (accounting for 0.28% of the company's total shares). Since 2023, the company has successively reached strategic cooperation with Jilin Publishing and Media Group and Changying Group to integrate the resource advantages of various parties in the fields of digital platform construction for the cultural industry and AI audio and video intelligent business development, and promote the company's transformation into a digital technology innovation enterprise. The company is the only cultural technology listed company in Jilin Province. A series of measures such as increasing holdings and repurchases, asset injection, and business expansion reflect the management's strategic direction of revitalizing the company's existing business and integrating cultural resources in the province, and inject firm confidence into the company's long-term development.

Investment advice:

We expect the company to achieve operating income of 1.984/2.106/2.216 billion yuan in 24-26, net profit of 0.41/0.036/0.155 billion yuan, and corresponding EPS of -0.12/0.01/0.04 yuan. According to the closing price of October 25, 2024, 25-26 will correspond to 174/40 times PE, respectively, and maintain an “gain” rating.

Risk warning:

The risk of emerging media diverting users; the risk of iterative technology updates; the risk of increased market competition; and policy risks.