Main points of investment:
Shang Shang Interactive, Xinhua Pioneer and thickened performance, vigorously transform the entertainment industry. In 16 years, the company's revenue was 1.34 billion yuan (+ 20%), the return net profit was 229 million yuan (+ 64%), and the non-return net profit was 220 million (+ 75%).
The main values of Shang Interactive and Xinhua avant-garde culture were combined in April and August, respectively. During the reporting period, the original machinery sector achieved revenue of 550 million (- 12%), accounting for 41% of the main revenue (down 15% from the same period last year), while sales and production declined (- 15% and-13%). The entertainment sector has revenue of 790 million (+ 60%) and gross profit margin of 51%. In terms of fees, sales expenses decreased by 8% compared with the same period last year, mainly due to a decrease in expenses related to manufacturing business; management expenses increased by 44% year-on-year, mainly due to acquisition expenses (14.12 million), increased office rent and equity payment fees; financial expenses increased by 51.16 million (+ 163%), mainly due to bank financing and 600 million bonds issued in June 16. The company's revenue in the first quarter of 17 years is 240 million (+ 73%), and the net profit is 32.57 million (+ 119%). The estimated net profit range from January to June in 17 years is 140 million-160 million.
All the acquired companies fulfilled their performance commitments during the reporting period. Specific operating situation: 16-year Da Tang brilliant (main film and television production) revenue of 498 million (+ 7.6%)
The net profit of returning to the mother is 162 million, deducting the net profit of non-returning to the mother is 157 million (+ 28%, the gambling performance is 122 million, the performance is 109%). The revenue of Qianyi Zhicheng (main entertainer broker) is 57.93 million (+ 13%), and the net profit is 35.84 million. Value still interactive (main game release) 16 years April combined table, annual revenue of 307 million, return net profit of 99.36 million (and table return net profit of 60.31 million), deduction of non-return net profit of 96.98 million (gambling performance of 91 million, performance completed 107%); Xinhua Pioneer (copyright operation) merged table in August of 16 years, with annual revenue of 79.8 million and net profit of 3840 million. In addition, the company's main entertainment subsidiary, Zhongnan Film, lost 46.53 million in the reporting period, and Zhongnan Music lost 730000 yuan.
Focus on multi-content derivative development. 17-year film and TV drama plan: carry out 5 TV series projects, 6 film projects and 2 online drama projects, and speed up the development of key IP "touch gold" and "unforgivable".
Music Variety: will withdraw from the folk music competition to sing "China by the ear" with Anhui Satellite TV, and plan to select and train idol groups. In terms of games: Shanghai Aurora Mobile Limited (key page game R & D) merged in March in 17 years, and focused on launching products such as "Journey to the West", "painting the Cup of rivers and lakes", "unique Fairy King" and other products in 17 years, and completed the acquisition of Shanghai Aurora Mobile Limited. Further improve the company's game plate from mobile games and page games research and development (mango mutual entertainment, Shanghai Aurora Mobile Limited), release to operation (value is still interactive) industry chain. In addition, we will further strengthen cooperation in the mango ecosystem and the mango fund ecosystem, promote capital cooperation with Mango Media, participate in a large number of high-quality projects, and launch investment returns.
Profit forecast. We are optimistic that the company will deepen the diversified layout of cultural media. It is estimated that the company's return net profit in 2017 and 2018 is 480 million yuan and 536 million yuan, corresponding to EPS of 0.58 yuan and 0.64 yuan respectively. With reference to the industry average, the company is given a 17-year valuation of 30 times, corresponding to the target price of 17.4 yuan, to maintain the buy rating.
Risk hint. The performance of the acquisition company falls short of expectations; the future transformation falls short of expectations.