In the first half of 2016, the company's competition operation revenue increased 81.9% to 195 million yuan compared with the same period last year, accounting for 90% of the total revenue, and the business gross profit reached 106 million yuan, an increase of 57.7% over the same period last year. Due to the company's business restructuring this year, after the divestiture of CCTV's traditional advertising business, the company's film and television program business revenue decreased by about 83.7% to 30.6 million yuan compared with the same period last year. Affected by this, the company's total revenue in the first half of the year decreased by about 23.6% to 225 million yuan compared with the same period last year, and its net profit decreased by 27.9% to 67.1 million yuan compared with the same period last year.
Main points of investment:
The road running project continues to make efforts to consolidate its leading position in the industry. In the first half of this year, the company has successfully won the Shenzhen Marathon, Nanchang International Marathon, Changde Liuye Lake International Marathon and Jiaxing Shaoshan International Marathon, and has run four high-level marathons. it is expected that the company will independently operate more than 15 national marathons in the second half of this year. Including the mature operation of Shenyang Marathon, Changsha Marathon, Hangzhou Marathon, Guangzhou Marathon and so on. Up to now, the company has operated 8 marathons in 31 provincial capital cities. In addition to the national marathon, the company has also signed up for 50 urban marathons, accounting for more than 50% of China's marathon market, indicating that the company has achieved an absolute leading position in the field of marathons. In addition, the company's independent IP event "four Seasons running" will also join hands with new long-term sponsors to debut in the second half of the year. In the future, with the gradual increase in the number of event operations, the company's brand awareness will also be improved, sponsorship costs will rise, and B-end profitability will also be further strengthened.
Basketball events are developing rapidly. The company has made a major breakthrough in basketball this year. This year, the company won the commercial operation right of NBL (National Men's Basketball League) in 2016-2019 and a 20% stake in the competition organization. NBL is one of the two major men's basketball events under the Chinese Basketball Association (CBA and NBL). At present, NBL is independently operated by nine clubs through Beijing Embiou Sports Management Co., Ltd., and supervised and managed by the Chinese Basketball Association. This year's NBL event is broadcast live by CCTV Sports Channel, and according to statistics, its ratings frequently ranked among the top three of CCTV's five channels this summer, and even won the top spot in prime time more than once. This year, the number of NBL teams has expanded to 14, mostly in areas such as CBA, where it is inaccessible. Now there are nearly 20 NBL sponsors. In the future, with the gradual marketization of the event, the commercial value will be different.
From B to C, it develops in an orderly way. Consumers' gradual attention to sports is the main driving force for the future sports industry to achieve rapid growth. This year, the company also began to strengthen the development of sports C-end business, and from "single event operation" to "single event operation".
The integrated industrial platform of event operation + sports service + venue operation is moving forward. This year, the company has carried out strategic cooperation with well-known brands in many fields to create sports service products suitable for Chinese consumers, so as to lay the foundation for C-segment income growth in the future.
In addition, the company launched the "Zhimei Rubik's Cube" project this year. At present, it has carried out the investment and construction of more than a dozen venues in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen. It is expected that all of them will be opened up in the second half of this year and receive income from the operation of stadiums and stadiums.
The company plans to combine the comprehensive cooperation with local governments in the next three years, and by 2020, nearly 100 stadiums will be arranged to provide sports venues for high-frequency activities for mass sports groups, and obtain stable cash flow from C-end.
Maintain the "highly recommended" rating with a target price of HK $3.25. As the company's sports events are mainly held in the second half of the year, and all the 10 new venues will be opened for operation by the end of this year, the profitability of side B and C will be further improved. We keep our earnings forecast unchanged, with projected annual 16E/17E revenue of 669 million and 960 million, EPS of 0.059 and HK $0.106, and earnings per share growth of 67 per cent and 79 per cent, respectively. As a leading company in the field of event operation, we believe that it will also make great breakthroughs in sports services and venue operation in the future. we maintain the company's "highly recommended" rating with a target price of HK $3.25, which is equivalent to about 31 times of 17-year PE.
Risk disclosure: the divestiture of the traditional media business is a drag on the company's overall revenue.