Hong Kong | TMT | Company Research

The TV network will spend 21.8 yuan to buy a stake in Coolpad, accounting for 18%, making it the second largest stock. As early as the end of 2014, Coolpad also announced the establishment of a joint venture company with Qihoo 360. Switching to an Internet provider has become the company's primary strategy. In the structure of tripartite cooperation, TV has become rich, the mobile phone industry has been successful, and Qihoo has been able to move the entrance to each other's traffic. With the rich's product structure, 40 million output models and 6,000 patents, Coolpad has provided a foundation for mobile interaction. With the addition of Qihoo's security application, manufacturing system, and TV content and so on, the company is no longer just a hardware business. the three parties are expected to implement a mobile Internet generation circle of "end + application + content".

The e-commerce channel for the company's cooperation with Qihu will be created by the brands of "Qiku" and "Big God", which will be put on the market in recent months. The new mobile phone will be equipped with the 360 OS system, and the user can clean up any default device without the need for ROOT, handing over the autonomy of mobile phone selection to the user. In addition, the 360 OS system will increase system speed by three times, increase waiting time by 40%, and save traffic by 50%. This has largely overcome or eliminated many shortcomings of the traditional Android system, and we expect to be recognized by the market. Overall, the company should be able to achieve a turnover of at least 4500 units this year.

After working with Qihu and TV to build an interactive ecological circle, with the help of the application of the former and the content and balance of the latter, the company's offline application service will have more room for improvement and may achieve a high growth rate of doubling annualized in the medium term. Combined with the high profit level of this business, I expect that this will become the main profit point of the company in the future, accounting for about 30%.

Actively build the ecology of mobile interaction, and the prospect will be promising.

The company's original mobile phone owners enjoy proprietary research and development, supply, after-sales service, etc., but under the background of the cutting of the customers and the increase of the mobile phone, the company may be in trouble. For this reason, the company first cooperated with Qihu and TV to build a mobile interaction ecological circle and transform it into an Internet provider. At the same time, the main body of corporate profit comes from offline application services, and it will no longer be just hardware business in the future.

As a result, the company or face value is revalued. Traditional mobile phone operators face growing bottle growth and profit difficulties, but the growth in the health circle will be realized, giving it a 10-fold valuation in 2016. For the new wireless application service, not only is it growing fast, but its profitability is even higher, and we are valuing it at 20 times. It is estimated that the target is HK $3.59, which is at the "low" level. (as of July 2)

Cool people pay attention to each other, or create a new state of movement and interaction.

On June 28, the Coolpad Group announced that the directors would sell 18% of the shares to Leview Mobile HK Limited (a company owned by Coolpad). After the completion of the transaction, TV spent 21.8 yuan to buy a stake in Coolpad, accounting for 18%, making it the second largest shareholder, while Guo Deying's remaining stake was 20.3%, which was no longer a holding stock. As early as the end of 2014, the company established a joint venture with Qihoo 360, with shares accounting for 50.5% and 49.5% respectively, but with a common control structure.

We think that wireless cooperation is a solution to the difficulties faced by the company in the face of difficulties in the consumer market and the mobile phone market, and the transformation into an Internet provider has become the company's primary strategy. On the whole, in the structure of tripartite cooperation, TV has become rich, has won the mobile phone industry, and has won the entrance to the mutual exchange of traffic. With the rich's product structure, 40 million output models and 6,000 patents, Coolpad has provided a foundation for mobile interaction. With the addition of Qihoo's security application, manufacturing system, and TV content and so on, the company is no longer just a hardware business. the three parties are expected to implement a mobile Internet generation circle of "end + application + content".

"end out" or "bottom" rebounds

In response to the wave of smart phones in the wake of the financial crisis, the number and performance of mobile phones sold by Kupai has risen rapidly according to the three major merchant channels, and reached a peak in 2014. However, the plight of the decline in the face of the company's customer service has been caused by the decline in the number of customers.

For this reason, the company has made adjustments in terms of brand and pipeline. At present, the brands are mainly divided into Coolpad, IVVI and Dashen, which are respectively located in middle-and low-end, middle-end and middle-end customers, and the pipeline is divided according to consumer merchants, social public retail and e-commerce. From a physical point of view, the proportion of merchant pipeline output has dropped from 80% + to about 50%, and then the trend has been stable. IVVI brand acquires the cooperative shareholding mode of the company (60%), executives and first-level agents (40%), and the stock rights incentive has an effect on the future market performance.

As for the e-commerce pipeline to cooperate with Qihu, it will be launched by the brands of "Qiku" and "Big God" in the near future, and it will be put on the market in the next few months. It is worth pointing out that the new mobile phone will be equipped with the 360 OS system, and the user can clean up any default without the need for ROOT, handing over the autonomy of mobile phone selection to the user. in addition, the 360 OS will triple the system speed, increase the waiting time by 40%, and save traffic by 50%, which greatly overcomes or eliminates many shortcomings of the traditional Android system. We expect to be recognized by the market. Overall, the company should be able to achieve a turnover of at least 4500 units this year, and the latest data for the second quarter have improved considerably.

Offline application services may become profit-making host

According to the 2014 budget, the fastest growing service of the company in the period was application services, which increased 2.3 times to HK $349 million, mainly including financial planning, application sharing and advertising, accounting for 40%, 40%, 10% and 10%, respectively. It is worth pointing out that the gross rate of employment is as high as 90%, while the income margin is 1.4%, but the gross rate reached 24% in the second half of 2014, making it one of the main sources of profits.

We believe that after working with Qihu and TVTV to build a mobile ecosystem, with the help of the application of the former and the content and balance of the latter, the company's offline application services will have a greater improvement in space and may achieve an annualized high growth rate in the medium term. Combined with the high profit level of this business, I expect that this will become the main profit point of the company in the future, accounting for about 30%.

Catalytic perylene

The monthly output has exceeded the expected growth.

The transformation strategy has been promoted profitably, and the profit of offline application services has exceeded the expected period.

Cymbals

Add to the mobile phone account.

A little cooperation has dragged on.