Company profile
Straw Bear is a Chinese drama producer and distributor whose business covers the investment, development, production and distribution of TV dramas and online dramas. According to Frost Sullivan, the company ranks fourth among all series producers and distributors in China in terms of the number of TV series shown in 2019, with a market share of 6.0%. By the first half of 2020, the company had invested in 16 completed dramas, 11 of which were homemade dramas.
The company's homemade dramas include "Shushan War 2 Fire Walking Song" and "people in the game", while buyout dramas include "drunken Linglong", "Phoenix Prisoner" and so on. Behind the shareholders include Liu Shishi (Liu Shishi), Zhao Liying and other well-known film stars, the second largest shareholder is iQIYI, Inc. (IQ US), holding about 14.68 per cent after the IPO.
Sino-Thai viewpoint
The company has a complete set of series industry chain business model, with a dominant position in the same industry: the company's platform business model can effectively integrate IP, creators, shooting and production studios, external quality control experts and distribution channels into a sound ecosystem to achieve synergy and industrialization. The company can quickly select the theme and participants of the series, and shorten the cycle from incubation to production and then to distribution. it usually takes about 17.8 months for the company to submit a public application for filing to the first round of the series, which is much lower than the industry average of 22.5 months. In addition, the company attaches great importance to the development of IP and generally holds 20-30 IP reserves to meet the needs of production and distribution of dramas.
In terms of operating performance: in the fiscal year 2017-2019 and the first half of 2020, the company's income was 540 million yuan, 680 million yuan, 770 million yuan and 580 million yuan respectively, of which the income from homemade dramas accounted for 17.6%, 65.6%, 74.7% and 83%, respectively. IQIYI, Inc. is the company's largest customer, accounting for 21.4%, 36.0%, 27.2% and 69.2% of the total revenue for the same period, respectively. Gross profit margins are 28%, 30.9%, 14.1% and 23.4% respectively; inventory includes plays and IP rights, dramas in production, shows that have not yet been released and shows purchased, accounting for 36.5%, 50.7%, 49.5% and 37.9% of the total current assets in the same period, respectively; and the net profit margins of home ownership are 11.2%, 1.8%, 6.5% and 9.3%, respectively. Trade receivables and notes receivables are about $290 million, $190 million, $490 million and $790 million respectively, with turnover days of about 139,129,162,201days respectively. Net cash from operating activities is-$56.7 million,-$63.99 million, $39.13 million and $11.83 million respectively.
Valuation: based on 660 million shares after the global public offering, the company's market capitalization is HK $33.8-4.09 billion. In terms of valuation, the company's rolling price-to-earnings ratio in 2020 is about 43.2-52.2 times, higher than the industry average. This time the price stabilizer is CITIC Construction Investment International, which participated in two sponsor projects in 2020, with a rise and a drop on the first day. In terms of cornerstone, the introduction of three well-known investors, such as Snow Lake, subscribed a total of about $50 million, assuming that they were priced at the upper limit of the offering price range and did not exercise the over-allotment option, accounting for about 38 per cent of the offering shares. We believe that the company has a sufficient reserve of dramas, maintains a good cooperative relationship with China's five major television stations and three major online video platforms, and has a strong distribution capability. in addition, considering that the company has a certain star effect, we give it 75 points. rated as "purchase".
Risk hints: (1) market competition risk, (2) the popularity of the series is not as popular as expected.