Main points of investment
A-share scarce CG target, continue to expand the field of CG application. The company is the first CG digital vision integrated service provider listed in China, and the actual controller Li Mengdi holds a stake of 30.06%. The business has expanded from CG static vision service based on architectural design effect map to CG dynamic vision service based on real estate / advertising promotional films and film and television animation, and CG visual scene integrated service based on digital multimedia exhibition, and other CG visual services such as CG cloud rendering, CG game art, CG training, etc., are carried out through acquisition. In 2014, the company's revenue in 2015 was 336 million yuan, an increase of 22.09 percent over the same period last year, and the net profit of returning to the parent was 2999,3132 million yuan, respectively. The year-on-year growth of 2.37%, 4.42%, and 4.42% compared with the same period last year, the forecast income of 2016 increased by 5-15%, and the net profit decreased by 0-15%, mainly due to the increase in financial expenses mentioned in the provision for bad debts.
The downstream of the CG industry is extensive, and the development potential of the domestic market is still great. CG generally refers to the application of computer image technology, and downstream industries include architectural design / real estate / marketing / exhibition / film / television / animation / games, etc., at present, the industrial development of developed countries led by the United States and Japan is relatively mature, while the domestic market segment in architectural planning and design and other static CG has been stable, CG scene services are still in a period of rapid development, while film and television animation game CG field still has a large gap compared with foreign countries.
New business development, going out to sea, and model upgrading contribute to sustained growth. Ruiyun Technology, a subsidiary of the company, provides self-service cloud rendering services, which is 20% owned by BABA and supported by Aliyun Computing, which is expected to benefit from the continued growth of demand for film and television special effects rendering. The company is actively exploring VR/AR and other technical practices, and has been applied in real estate, exhibition and other business applications. The company's business covers the whole country and extends overseas, especially in areas with mature domestic technology and fierce market competition, such as static CG, to explore overseas markets with the advantage of performance-to-price ratio, and the field of game CG also cooperates with large companies such as Ubisoft in France, and the overseas scale is expected to continue to expand. With the improvement of the scale of individual orders and the improvement of management efficiency and technology, it is expected to change from manpower-intensive to technology-intensive in the future, which will lead to the improvement of income scale and profit margin. In addition, the company from the dynamic CG extension of animation and other content areas also have room for imagination.
Forward-looking implementation of employee stock ownership is good for long-term development. In 2012 and 2016, the company set up employee stock ownership platforms at the company and Ruiyun technology level respectively, which formed good incentives for employees and beneficial to the long-term development of the company.
Investment suggestion: we expect the company's 2018 net return to be 0.30, 0.45 / 61 million yuan, and EPS 0.27, 0.40, 0.55 yuan respectively. Taking into account the company as the CG field scarce target and secondary IPO valuation relative to the industry average premium, give the target price 56.8 yuan, increase the rating.
Risk tips: risks caused by large projects and new areas, risks brought about by the real estate recession, and the risk of weak product innovation.