Gehua Cable's Third Quarterly Report: A 3.3 billion yuan additional issuance plan was approved, and later investment is expected

The company disclosed its 2015 third quarterly report that it achieved operating income of 1.681 billion yuan in the first three quarters, which was basically the same as the same period. In the third quarter, operating income in the first half of the year was 551 million yuan, which was basically the same as the same period last year. The company is breaking through its role as a cable TV transmission channel and moving towards becoming a comprehensive media group. With the implementation of fixed-value projects, the company is expected to continue to deploy and invest and maintain its buy rating.

The company disclosed in the third quarterly report of 2015 that it achieved operating income of 1.681 billion yuan in the first three quarters, basically the same as the same period; net profit was 431 million yuan, and net profit after deducting non-profit was 135 million yuan, a year-on-year increase of 45.5% and 682.77%. In the third quarter, operating income in the first half of the year was 551 million yuan, basically the same as the same period last year; net profit was 131 million yuan, a year-on-year increase of 30%.

The reasons why profit growth significantly exceeded revenue growth were:

1) narrowing of amortization and depreciation expenses;

2) decrease in financial expenses;

3) increase in investment income; and

4) differences in income tax policies.

The continued growth space of the main business comes from the cloud platform strategy and the improvement of broadband service penetration.

According to the data disclosed in the company's semi-annual report, the growth of the company's user number will slow down, the proportion of high-definition interactive digital users will reach about 80%, and the cloud platform penetration rate will reach about 75%. After vigorous promotion in 2014, the penetration rate of broadband services has increased to about 8%, and this year's growth is slow. Subsequent growth space comes from the improvement of ARPU and the improvement of broadband service penetration under the cloud platform strategy. Cloud platform strategy and broadband services complement each other and are mutually beneficial. At present, the company has launched the cloud flying video service to open up multiple screens, and has jointly deployed education services with Chuanglian Education (2371.HK) and Xinhuanet. The cloud platform has huge operating potential, and further observation is needed in the future. At present, the funding plan of TV theater operating companies has been further streamlined, and the big data alliance is under preparation. The alliance strategy provides impetus for the transformation of the company and the industry.

The additional issuance plan was approved, and the

company's additional issuance plan was approved by the China Securities Regulatory Commission. It will introduce strategic investors such as Beijing Broadcasting Corporation, China Film Corporation, and Oriental Pearl, and raise more than 3 billion yuan, of which 1.9 billion yuan will be used for high-quality copyright content investment, and co-produced and distributed many films such as "Tang Xuanzang","China Salesman", and "My War" with China Film; in addition, about 1 billion yuan will be invested in cloud platform construction.

Expand mobile TV channels and card WiFi portal The company

1) became the second shareholder of Beiguang Media to obtain outdoor mobile TV channels;2) won the bid for the My Beijing WiFi construction project and obtained commercial operation rights. Through the layout of ground and wireless WiFi channels, the company has become a comprehensive video channel in Beijing City and provides a foothold for subsequent new media strategies.

Investment suggestions: Since TV payment habits are still being cultivated, the strategic effect of the cloud platform is not yet significant, and it is necessary to observe when the potential of the cloud platform is released in the future. It is estimated that net profit from 2015 to 2017 will be 719 million yuan, 789 million yuan and 891 million yuan, EPS will be 0.62 yuan, 0.67 yuan and 0.76 yuan, and corresponding PEs will be 38.66X, 35.82X and 31.58X. The company is breaking through its role as a cable TV transmission channel and moving towards becoming a comprehensive media group. With the implementation of fixed-value projects, the company is expected to continue to deploy and invest and maintain its buy rating.

Risk point: OTT and other businesses eroded the market share of cable TV networks, and the transformation efforts were lower than expected

[Original Announcement]

Gehua Cable's third-quarter quarterly report

Editor: vian