Summary of the report:
Events:
Huayi Brothers announced on the evening of January 23 that the company signed a "Strategic Cooperation Framework Agreement" with BABA Pictures to cooperate in the company's main control of film and television projects, artist development, derivatives development, marketing services and other fields. At the same time, BABA Pictures plans to provide a loan of 700 million yuan to the company (with a term of five years, the annual interest rate is the benchmark five-year loan rate, and the annual interest rate is paid annually). The company is guaranteed by the 70% equity of its subsidiary Dongyang Meila and the income right of Yunfeng's new partnership share enjoyed by its subsidiary Huayi Mutual Entertainment.
Events:
Huayi Brothers announced on January 23rd that the company signed a "Strategic Cooperation Framework Agreement" with BABA Pictures to cooperate in the company's main control of film and television projects, artist development, derivatives development, marketing services and other fields. At the same time, BABA Pictures plans to provide the company with a five-year loan of 700 million yuan at the annual interest rate of the benchmark five-year loan and pay interest on an annual basis.
Huayi Brothers and BABA Pictures reached a strategic cooperation agreement with BABA on five-year strategic cooperation and 700 million yuan loan agreement on controlling film and television works, artist development, derivatives development and marketing services, including: 1. Master film and television project: during the cooperation, Huayi Brothers guaranteed to control and release 10 cinema films (except online movies and Russell projects) within 5 years. BABA has priority investment rights in the main control projects. priority joint distribution rights, network dissemination rights and online ticketing cooperation rights under the same core business conditions; 2. Artist broker: the two sides intend to carry out in-depth cooperation, the specific content to be determined; 3. Film and television derivatives: BABA enjoys priority development rights under the same core commercial conditions, and agrees to use e-commerce advantages to promote and sell film derivatives; 4. Marketing services: Huayi master project gives priority to the use of Taobao tickets and lighthouse publicity services. At the same time, the two sides reached a loan agreement, and BABA Film subsidiary borrowed 700 million yuan from Huayi Brothers (with a term of five years, with an annual interest rate of five years, paying interest on an annual basis). The loan is used by Huayi Brothers to carry out its business within its business scope.
Huayi content production advantages combined with BABA platform advantages, give full play to the synergy between companies this strategic cooperation is based on both sides' optimism for the future development of the film and television entertainment industry and full recognition of each other's core values. Huayi Brothers is a domestic comprehensive entertainment group, with the original ability of film and television IP as its core competitiveness, with a leading content advantage and a complete industrial chain derived from the content → channel →; BABA Pictures has made remarkable achievements in the field of new infrastructure construction in the film industry, relying on the advantage of a large platform, and this cooperation is another important layout for BABA Pictures to deepen the "Golden Orange Co-production Plan (released in November 2018)". BABA Film is the strategic investor of the company, and has had film and television project cooperation with Huayi Brothers (BABA is the co-producer of "Fanghua"). On the one hand, we believe that this strategic cooperation can give full play to their respective advantages. it is of positive significance to the future strategy and business development of both sides. On the other hand, the 700 million loan will help to ease the pressure on Huayi Brothers' capital layer, and the relatively abundant funds will help the company to produce more influential works continuously and steadily in the future.
Profit forecast
We predict that the return net profit of the company from 2018 to 2020 is 4.41 billion yuan, 5.35 billion yuan and 6.37 billion yuan respectively, the EPS is 0.27 yuan / 0.32 yuan / 0.38 yuan respectively, and the corresponding stock price PE is 17-14-12 times. Maintain the recommended rating.
Risk hint
The follow-up progress of the strategic cooperation agreement is not as expected; the progress of the main film and television project is not as expected.