Main points of investment
Event: the company announced its annual report in 2018, with revenue of 3.55 billion yuan (+ 201%), net profit of 210 million yuan (+ 354%) and non-net profit of 130 million yuan (+ 683%) in 2018. The company also announced that 2019Q1 realized revenue of 1 billion yuan (+ 92%), net profit of 24.02 million yuan (+ 10%) and non-net profit of 20.99 million yuan (+ 11%).
Internet advertising business continues to expand, driving rapid revenue growth. In 2018, giant net's Internet advertising business accounted for 75% of the company's revenue. Giant net realized 150 million yuan in non-return net profit, with a performance commitment rate of 119%, which has become the growth engine of the company's performance. Assuming that the annual results of the giant network in 2017 are consolidated, then the annual revenue of three-dimensional communications in 2017 is 1.75 billion yuan, with a net profit of 120 million yuan. As a result, in fact, the company's revenue in 2018 increased by 105% compared with the same period last year, and its net profit increased by 72% compared with the same period last year. After deducting the 65 million yuan earned from the transfer of some properties in 2018, the company's net profit increased by about 20% year-on-year. 2019Q1's net profit growth came under pressure as the company set aside more impairment losses on its communications business and were affected by fund dividends in the same period in 2018.
Internet advertising business is actively expanding new platforms. In 2018, Giant's self-media business has formed a content media matrix covering more than 100 million users in literature / light entertainment / original animation / online education / finance / emotion / games / life common sense / beauty makeup and other sub-areas. In 2019, the company will actively expand its advertising business covering byte-beating products (such as Jinri Toutiao, Douyin), Weibo Corp, Qutoutiao, Oriental Toutiao and other media, so as to find new driving forces for profit growth.
Communication business layout overseas, involved in 5G smart tower operation. At the end of April 2019, the company invested US $5 million in 3D Hong Kong, authorizing it to build communications equipment marketing service outlets in Hong Kong / Southeast Asia / Europe / North America and set up international teams. take advantage of its regional advantages to accelerate the expansion of international sales network. At the same time, in terms of domestic 5G smart tower operation services, the company has carried out pilot operations in a number of cities and regions in 2019, which is expected to contribute to the company's performance in 2018 and 2020.
Profit forecast and investment advice. It is estimated that the net profit of homing from 2019 to 2021 is 244x406 million yuan and EPS is 0.750.87 yuan respectively. 1) the company's performance evaluation target for 2019 is 220 million yuan, and Juwang's performance commitment for 2019 is 170 million yuan, and the company's performance may be guaranteed; 2) the company's communications (participation in 5G construction) and advertising business (new advertising platform) have marginal improvement; maintain a "buy" rating.
Risk tips: the performance of the subject matter of M & A may fall short of expectations, the risk that Wechat may control the company's traffic, the progress of communications business may fall short of expectations, and the promotion of 5G infrastructure may fall short of expectations.