5G technological innovation content industry. There are two major differences between 5G and 4G, one is that 5G points to multi-terminals and multi-screens, and the other is that 5G is difficult to show the situation of spending money in 4G era. We believe that the biggest variable in the market in the next 1-2 years is the order of magnitude of VR/AR terminal shipments. With reference to the experience of 4G, only when shipments reach a certain order of magnitude (about 100 million) will there be a substantial increase in the price and quantity of content. With the large-scale shipment of new hardware as a symbol, the development of the content industry in the 5G era is roughly divided into two stages, one is based on the distribution of existing hardware, and the other is based on the large-scale shipment of new hardware. The two stages of 5G correspond to different value chain reconstruction, which are the reconstruction of distribution pattern and content pattern, and the resource endowment of each party is different, so the path choice is different, the benefit logic and rhythm are different.
100 ahead of time layout 5G content ecology, focusing on ultra-high definition, cloud games, cloud VR three major directions. In the late 4G era, the company laid out the entertainment section, realizing the transformation from traditional pipeline flow operation to content management based on Internet applications; in the 5G era, when the Internet entered the second half, the competition in the field of entertainment content was significantly intensified, and the company focused on the three application areas of ultra high definition video, cloud games and cloud VR, which was expected to seize development opportunities in a new round of industrial restructuring.
Tianyi Ultra HD: is the original Tianyi video upgrade products, efforts to create 4K, VR zone to attract users, to achieve the content product upgrade at the 5G level.
Tianyi cloud games: cloud games put forward higher requirements for high bandwidth and low latency, the company relies on telecom "one cloud, two networks" resources, the layout of cloud game platform has natural advantages.
Tianyi Cloud VR: work with South Korean operator LG U+ to introduce content and software and hardware technologies, and learn from the successful experience of LG U+ to focus on the layout of VR live streaming (events, concerts, etc.) to create differentiated content advantages.
Relying on China Telecom Corporation, he is endowed with unique resources. As a content operation platform under China Telecom Corporation, Bai Holdings has significant advantages in terms of users, traffic and channels, and is expected to promote the rapid popularization of the three 5G applications. 1) low traffic cost: the company has an operator background, and the biggest difference compared with the Internet platform is the cost advantage, which is particularly prominent in the initial stage of post-5G application. 2) huge user base: China Telecom Corporation has more than 330 million mobile users and 150 million broadband users, and is expected to become a potential customer base for the company's 5G applications; the company's existing entertainment business has accumulated a high user base. 3) strong offline channel promotion ability: compared with other Internet platforms, the channel advantage of telecom operators lies in their huge offline experience store network. The 5G experience Hall built by China Telecom Corporation is conducive to the promotion of the company's 5G applications such as Tianyi Cloud Games and VR.
Investment suggestion: the company is the only A-share listing platform under China Telecom Corporation, with the dual attributes of both operators and Internet content operators. 5G time Company focuses on the three major directions of ultra-high definition, cloud games and cloud VR, relying on the advantages of users, traffic and channels of the group's telecom operators, is expected to promote the rapid popularity of the three major 5G applications. It is estimated that the net profit of the company from 2019 to 2021 is 1.30 billion yuan, the corresponding EPS is 0.16 yuan, and the corresponding PE is 0.27 yuan, which is twice as much as that of 163-98-68. Considering that compared with the traditional Internet platform, the biggest advantage of the company lies in the cost advantage, which makes it have a unique first-mover advantage in the early stage of 5G application, giving it a "overweight-A" rating.
Risk hint: 5G construction speed is lower than expected, VR/AR hardware shipments are lower than expected, and 5G application user expansion is lower than expected.