Main points of investment
Event: the company announced its performance, KuaiBao, with a total operating income of 1.25 billion yuan in 2017, an increase of 58.8% over the same period last year; the net profit belonging to shareholders of listed companies was 213 million yuan, up 19.1% over the same period last year.
Comments:
The company's 2017 performance KuaiBao met expectations and still achieved 19.09% year-on-year growth after deducting the impairment.
The company's performance contribution in 2017 mainly comes from many TV dramas, such as "Biography of Ba Qing", "full moon", "plan", "Dear long time no see", "Emergency Department Doctor" and so on. We believe that from the broadcast of the Legend of Wu Mei Niang in 2015 to the broadcast of the full Moon in 2017 and the Legend of Ba Qing in 2018, the creative strength of Tangde Film and Television in the field of phenomenal high-quality content has been continuously verified. In the future, Tangde film and television brand and word-of-mouth are expected to further improve, and it is expected to steadily produce high-quality content works every year.
The adverse effects of the "The Voice of China" project have been fully taken into account, and if the influence of impairment factors is excluded, Tangde's performance is expected to double in 2017. According to the relevant announcement of Tangde, the company needs to take into account the risk of compensation for losses, including the 18.75 million US dollars in license fees and related taxes paid for the "The Voice of China" project. The impairment impact of the "The Voice of China" project on the company is 141 million yuan.
Therefore, excluding the impairment factor, Tangde Film and Television's main business generated a net profit of 354 million yuan in 2017, an increase of 97.77 percent over the same period of 179 million yuan in 2016. We believe that the impairment impact of "The Voice of China" has been fully taken into account and is an one-off event and will not have a continuous adverse impact on the company's operations in 2018.
In 2018, Tangde Film and Television is expected to enjoy both volume and price dividends of film and television projects! Film and television companies that can continuously produce high-quality content have more investment value. We believe that due to the increased demand for content from video websites and satellite TV channels, the price of film and television has risen to a high level, and the company has the strength of phenomenal content creation and distribution, and has the advantage of premium. At present, the annual output of Tangde's film and television content is on the rise, and nine films and television works are expected to achieve revenue in 2018. The company's existing projects are "East Palace", "Mangqinglou", "We are Young in wartime", "Feng Zicai", "A Love of Ayana", "March 30 of the decade", "people in the Beibu Gulf", "the Legend of Ba Qing" and "the full moon in bloom that year" two rounds and later stages, etc. The company is expected to launch 1-3 new film and television projects in 2018, so we think that Tangde Film and Television is expected to enjoy an increase in the volume and price of high-quality content in 2018.
Chairman Wu continues to increase his holdings to demonstrate his confidence in the future development of Tangde Film and Television. We believe that the company is in a value depression at present. Mr. Wu Hongliang, Chairman of Tangde Film and Television, has increased his shares in the secondary market for many times from November 29, 2017 to February 13, 2018. We believe that the competitiveness of the company's sustainable development in the future is still being consolidated and strengthened, with layout value.
The company's film and television talents gather, reserve film and television drama projects are rich, the future development of the time, land and people.
As a comprehensive film and television group, Tangde Film and Television has a win-win cooperation with talents in the industry with an open mind. its producers, directors, writers, artists and other talents gather, and there is no lack of domestic first-tier creators and stars. Such as Gao Yijun, Ding Hei, Xu Hongyu, Wei Zi, Juanzi, Fan Bingbing, Zhao Wei and so on, form the soft power of Tangde Film and Television in the market competition in the future. In addition, the company has a rich reserve of film and television projects, laying the foundation for the long-term growth of the company in the future. According to the Tangde film and television announcement, public information and our analysis, we estimate that the company has no less than 20 film and television projects in reserve in 2017 and 2018.
Profit forecast and investment advice: we expect Tangde Film and Television to achieve a net profit of 4.02 yuan and 552 million yuan respectively belonging to the parent company from 2018 to 2019. According to the estimate of the company's current total share capital of 400 million shares, we expect the company's EPS to be 1 yuan and 1.37 yuan respectively from 2017 to 2018, maintaining the buy rating.
Risk hints: the broadcast effect of works such as "win the World" is not as good as expected; A stock market sentiment and financial impact; regulatory policy risk; the risk of profitability decline caused by rising production costs of film and television content.
