2015 Radio and Television listed companies achieved outstanding results and fully integrated into "Internet +"

Radio and television network operators are actively accelerating their transformation in the direction of digitalization, two-way and high-definition in their traditional main businesses, and are fully integrated into the 'Internet +' era through diversified new business formats such as Internet-integrated TV, cable broadband networks, big data analysis platforms, and value-added services.

Original title: The film and television sector shines brightly on cable companies.

With the successive release of the 2015 annual reports, the annual exam for listed companies in radio and television has come to an end. Overall, the film and television sector (including Huayi Brothers, Enlight Media, Huace Film and Television, Wanda Cinema, Hualu Baina, New Culture, Great Wall Film and Television, Tangde Film and Television, etc.) achieved impressive results in 2015, with operating income and net profit both achieved substantial growth. The cable TV network sector (including Radio and Television Media, Gehua Cable, Radio and Television Network, Jishi Media, Huasu Media, Oriental Pearl, Tianwei Video, Jiangsu Cable, Hubei Radio and Television, etc.) has also achieved steady development.

"At present, the stock prices of the cultural media sector, including listed companies in radio and television, are still undervalued, and the overall environment of the industry is developing towards a more standardized and rational trend. In the general environment of rising consumption of culture, education, sports and entertainment, how to make rational judgments at the outlet has become a fork that cultural media companies must face." Zhang Juhua, an analyst at Capital Securities, told a reporter from "China Press, Publication, Radio and Television" that from the divergence of performance in 2015, it can be seen that in the field of cultural media, diversification is a response to changes. The most important thing for listed companies now is to actively deploy.

The pan-entertainment layout closely follows VR hotspot

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In 2015, the performance of most listed companies in the film and television sector improved significantly. Among the eight major A-share targets, 3 companies have increased their operating income by more than 50%. Among them, Hualu Baina's revenue increased by as much as 148.15%. In terms of net profit growth, New Culture, Hualu Baina, Wanda Cinema, and Tangde Film and Television all grew by more than 30%, of which New Culture (104.52%) and Hualu Baina (78.65%) far outperformed similar companies.

The boom in the film and television sector is not unrelated to two major factors: "Endogenous, the industry is growing rapidly. In 2015, the box office of movies increased by 49% year-on-year to 44 billion yuan. The TV drama industry exploded on the Internet; in terms of extension, in 2014 and 2015, film and television companies have opened up the entire entertainment industry chain through extended mergers and acquisitions, and the consolidation effect in 2015 was obvious." Zhang Heng, an analyst at Industrial Securities, introduced that for example, Wanda Cinema Line acquired 14 cinema companies including HG Holdco (consolidated in October 2015), Muwei Fashion and Chongqing Shimao. The consolidation of Hualu Baina's Blue Flame was inconsistent with last year's caliber (consolidated in only 3 months in 2014 and consolidated in 2015), and New Culture acquired Tulip and Dakos (consolidated in March 2015).

The annual report shows that film and television companies are no longer simply satisfied with a single film and television business. While focusing on a certain field based on their own resources, platforms and other advantages, they continue to expand the entertainment industry chain and establish a pan-entertainment ecosystem. The most typical one is Huace Film and Television. The company's development strategy is to create a "SIP+X" pan-entertainment ecosystem with "all-network dramas + variety shows + movies" as the core. During the reporting period, full-network drama revenue accounted for 73.60% of total revenue. In terms of overseas layout, they have successively established joint ventures with South Korea's joint-stock company NEW, and signed strategic agreements with South Korea's largest entertainment media company CJ E&M. In addition, the company focuses on the industrial side "X", such as VR, education and other fields. Another example is Hualu Baina. The company has gradually established a collaborative layout of "content (film and television, variety show, sports)+ marketing" with variety shows as the core. The variety show sector has blue flames as the main body. During the reporting period, this sector accounted for as much as 85%, constituting the company's main source of profit.

A sensitive sense of smell is a major strength of film and television companies. They are often able to sensitively capture current industry hotspots and quickly invest. While IP continues to ferment and "high fever" does not retreat, VR has become the next target of film and television companies. According to the annual report, in 2015, film and television companies have been "divided into multiple channels", laying out VR from different routes: Huayi Brothers mainly focuses on VR+ theme park, hopes for live entertainment, M & A cases have 24 million yuan investment storm magic mirror, and the shareholding proportion of Shengwei suddenly increases; Light Media is optimistic about cinema social interaction under VR scene, and its subsidiaries participate in DreamVR Pre-A round financing with tens of millions of funds; Huace Film and Television aims at VR+ variety, and buys 7% equity of Lanting Digital for 14.7 million yuan..."VR is the hottest theme of the current film and television company layout format, but we must see that VR content is too narrow, VR helmet and other hardware equipment investment is huge, wearing technology has many weaknesses not yet broken through, VR technology popularization still needs time and other factors, enterprises into VR field strategy must be cautious." Zhang Juhua said.

It is worth mentioning that although the revenue of various film and television companies grew rapidly in 2015, according to annual report data, the return on net assets of some companies declined compared with the same period last year. For example, Huayi Brothers, whose revenue increased by 62.14%, had a return on net assets of 13.04% during the same period, a decrease of nearly 7 percentage points from 2014. In addition, the return on net assets of Wanda Cinema, Huace Film and Television, Enlight Media, Tangde Film and Television and other companies all dropped to varying degrees compared with the same period last year.

In this regard, Zhang Juhua reminded that under the traditional business model, the film and television industry has high investment risks and fierce competition. The effect of the same cost investment in creating revenue is volatile, the cost recovery cycle is long, and the operating efficiency of large companies also faces fluctuations. "In 2016, when the industry is developing and the competition is fierce, the overall performance of the A-share film and television industry will show a good development trend, but the performance of some companies will fluctuate to some extent."

Weak revenue growth fully integrated into "Internet +"

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In 2015, the overall revenue growth of the cable sector slowed down. The revenue growth rates of most of the nine listed companies failed to exceed the data for the same period last year. Only Oriental Pearl, Hubei Radio and Television, Radio and Television, Radio and Television Media maintained better performance than the same period last year. Among them, Oriental Pearl, Hubei Radio and Television and China Digital Media have increased their revenue by more than 10%. In terms of net profit, Hubei Radio and Television far surpassed the other eight companies with a high growth rate of 51.88%, which was more than 10 percentage points higher than the second-ranked China Digital Media (39.03%).

Among the cable sectors with stable performance, Hubei Radio and Television's performance in 2015 was not outstanding. By sorting out its annual report, we can find that the company's performance growth mainly comes from the province's cable TV network-related assets injected during the performance period, which has significantly increased the total number of interactive TV terminals, the total number of digital TV terminals and the number of broadband users. According to the provincial network integration progress, the company was integrated into Wuhan Radio and Television Investment, Shiyan Radio and Television and Jingzhou Video Information at the end of October 2014. At the same time, the company's new business has also grown rapidly. As of the end of 2015, the company's total number of interactive TV terminals was 1.4886 million, a year-on-year increase of 580,000, and broadband users were 536,200, a year-on-year increase of 167,500.

"The company is promoting a fixed increase (no more than 1.73 billion yuan) to support the construction of the province's TV Internet cloud platform and the transformation of two-way broadband networks. After the implementation of the project is completed, it will accelerate the two-way broadband transformation of the company's next-generation radio and television network and the construction of the TV Internet cloud platform to further enhance future profit margins." According to Liu Jiang, an analyst at Changjiang Securities, with the advancement of Hubei Radio and Television's "platform + investment" strategy, high-quality projects with better complementary coordination are expected to emerge in the future.

From the perspective of profitability and revenue quality, the industry's overall return on net assets was 8.59%, down nearly 2 percentage points from 10.41% in the same period last year. Only Tianwei Video and Radio and Television Network had net asset returns. The rate increased compared with the same period last year. Even Hubei Radio and Television, which performed well in terms of operating income and net profit growth, had a return on net assets of 7.18%, a slight decrease from 7.84% in 2014. Another company, Huasu Media, which delivered a good report card, experienced a serious decline in revenue quality. In 2015, its return on net assets was only 7.84%, which reached 19.14% in the same period in 2014. In this regard, Meng Wei, an analyst at China International Capital Corporation, said that overall, the performance of the print media and cable TV network industries is weak compared with the entire industry. Traditional media has increasing pressure under the impact of new media. Resource integration and new media within the industry. Transformation or extension breakthroughs are the turning point.

Zhang Juhua expressed the same view. He believed that the traditional cable radio and television industry and the new media industry have strong integration, and the expansion of the industry format will bring rapid results to the company's revenue growth. "Radio and television network operators are actively accelerating their transformation in the direction of digitalization, two-way and high-definition in their traditional main businesses, and are fully integrated into diversified new formats such as Internet integration TV, cable broadband networks, big data analysis platforms, and value-added services. In the era of Internet +, enhance competitiveness." Zhang Heng tried to give cable network companies a new development idea, which is the combination with VR: "As VR content keeps up, the optimistic market value of Radio and Television +VR will reach 100 billion yuan. By then, the value of industry channels is expected to be reshaped. Cable network companies will Welcome to a good opportunity." In fact, this new idea has already been grasped by some cable TV companies. On May 1, Hubei Radio and Television announced that it has signed cooperation agreements with Light Media, Danghong Technology, Yongxin Video, Jiachuang Video, School of Software of Huazhong University of Science and Technology, etc., seeking multi-party cooperation to vigorously deploy the radio and television VR industry. The company also invested 10 million yuan to establish a VR company as the specific implementation agency for the company to layout the VR industry chain.

"The cable sector is ushering in a period of opportunity in its game with the Internet video industry, and future industry performance will show two levels of differentiation." Zhang Juhua said that companies that are actively expanding and have frequent capital operations will show a steady performance growth trend with the help of business structure upgrades; while the overall performance growth of other companies will show a significant decline.

Editor: Nancy