The company's recent situation: 1) Beijing Yitian Xinxing Network Technology Co., Ltd., the main operator of the company's online text reading platform "Tashu Literature", has acquired a strategic stake of 18.9% in Beijing Quantum Jump Technology Co., Ltd., which is a byte jump wholly-owned subsidiary; 2) after the addition of 3C electronic products in Hainan outlying islands duty-free commodity category on July 1, China exemption Group purchased iphone series mobile phones and other goods from the company.
Byte jump recently bought a stake in the company's online article reading platform tower to read literature. Tianyin Communication, a wholly-owned subsidiary of the company, is the largest shareholder of Yi Tian Xin, the main body of the operation of Tadu literature, with a shareholding ratio of 34%. The company has also become the only listed company in the A-share market that has direct equity cooperation with byte jump. On July 16, Quantum Jump Technology Strategy, a subsidiary of Byte Jump, bought a stake in Yi Tian Xinxing and became the third largest shareholder, with a shareholding of 18.9%. In December 18, the company sold 51 per cent of its shares to Phoenix New Media Ltd with a strategy of 288 million yuan. With new shareholders such as byte jumping increasing capital one after another, the company's shareholding further dropped to 34 per cent. Yi Tian Xinshi 18 years revenue of 162 million yuan, net profit-19.39 million yuan; 19 years of operating conditions improved, revenue increased to 204 million yuan and reversed losses, net profit of 8.21 million yuan, net assets of 81.42 million yuan at the end of 19 years.
Byte beat continues to add code in the field of online literature, tower reading literature has great potential for development. On July 14, byte beat signed a "framework cooperation agreement" with Chinese online, one of the largest genuine digital content providers in China, and strategically bought a stake in Tarim Literature only 2 days later. The layout of the online text field twice in a week, on the one hand, byte jump extends the business layout outward, on the other hand, it is in-depth content cooperation. The follow-up tower reading literature is expected to integrate into the byte beating ecosystem, produce synergy with Chinese online and other companies, and contribute incremental investment income to Tianyin Holdings.
Supply Hainan outlying island duty-free shops to expand new mobile phone distribution channels. Since July 1, Sanya and Haikou duty-free shops of China exemption and Haikou have added iphone series of mobile phones and other goods, which are supplied by Tianyin Holdings, but the supply still falls short of demand, and the demand is very strong. In 2019, the company's mobile phone distribution business revenue reached 45.3 billion yuan / + 10.27%. In terms of Apple Inc's mobile phone sales, the company was authorized by JD.com 's CES channel to become the only agent authorized by Apple's online, offline and offline retail channels at the same time. It is expected to surpass China Mobile Limited to become the largest Apple Inc distributor in China in 2020. The new Hainan outlying island duty-free distribution channel will further improve the company's mobile phone distribution business network and increase the scale of mobile phone distribution business, thus thickening the company's profits.
Profit forecast: the company's tower reading literature introduction and investment byte jump, mobile phone distribution business to expand tax-free channels on outlying islands, are expected to thicken the company's performance in the future. Looking to the future, the strategic layout of the company is gradually clear, the trend of 5G replacement and the expansion of JD.com platform will promote the sustained and rapid growth of mobile phone distribution business, and the "going out" strategy opens the development space of lottery business. It is estimated that the EPS for 20-22 years will be 0.15 plus 0.22 yuan respectively, and the share price on July 22 will be times higher than that of 61-42-26 corresponding to PE, maintaining a "prudent overweight" rating.
Risk tips: overseas demand is lower than expected, exchange rate risk, business expansion is not as expected, etc.