Oriental Pearl (600637): Revenue slightly expects to return to growth

Oriental Pearl (600637): Revenue slightly expects to return to growth

Oriental Pearl 武汉夜生活网 (600637): Revenue slightly expects to return to growth

2018 and 1Q19 results are in line with expectations. Oriental Pearl announced its 2018 results: operating income of 136.

3.4 billion, down 16.

2%; net profit attributable to mother 20.

1.5 billion, down 9.

9%; deduct non-net profit 9.

70 trillion, down 0.


At the same time, 1Q19 results and 25 operating income were announced.

1.7 billion, down 8.

15%; net profit attributable to mother 5.

62 trillion, with an increase of 28.

63%; deduct non-net profit 2.

6.2 billion, down 23.


Development Trends The business optimization structure was adjusted, and the positioning of the four major industry segments was clear.

In 2018, the company continued to promote the creation of a converged media platform, and completed the reorganization of the four major segments of media network, film and television entertainment, video shopping, and cultural travel consumption, respectively, to achieve revenue of 30.

90,000 yuan (YoY-39.

11%, mainly due to Aide Siqi consolidation factor) / 12.

800 million (+ 9% year-on-year.

94%) / 69.

400 million (YoY-5.

24%) / 21.

800 million (YoY-10.


We believe that the direct connection between the transformation business segment and the business group, and the company’s segments are committed to achieving stable and good development and return to the growth trend.

Expenses are steadily decreasing, and operations are expected to continue to be optimized.

In 2018, the company’s sales expenses decreased by 6 every year.

18% to 7.

68 ppm, excluding Iddsker’s consolidation factor, decreases by 1 per year.

6%, mainly due to the annual reduction in delivery and distribution costs; management costs (excluding research and development costs) decreased by 2 each year.

96%, excluding Aidesiqi’s consolidation factor, the rate is declining1.

4%, mainly due to reductions in leasing costs and staff budget expenditures; R & D costs each decreased by 12.

83%, mainly due to the reduction of labor expenditures for R & D personnel; financial costs were converted from -55.47 million yuan -1.

360,000 yuan, mainly due to increased interest income and exchange gains.

While adjusting its business, the company has optimized the organization’s performance, effectively controlled expenses, and improved profitability.

The construction of “entertainment +” ecological industry chain is of great significance, but the short-term performance growth is relatively weak.

The company’s existing existing inventory, content and product advantages and industrial chain innovation resource advantages, leveraging OPG cloud as the core systematic intelligent means to create a unified converged media platform.

This will contribute to the company’s long-term development and enhance the industry-level substance, but its short-term contribution to the company’s profits is still relatively limited. Based on the above analysis, we lower our 2019 / 20e return to our net profit forecast13.

5% / 18.

5% to 21.

21 ppm / 22.

30,000 yuan.

Estimates and recommendations currently sustainably correspond to 19/20 years18.


7x P / E, maintain neutral rating and target price of 10.

2 yuan, corresponding to the 16th of 19 years.

5x P / E, potentially 10% downside.

Risks Macroeconomic fluctuations affect demand for art and literature, and competition for video and broadband services is intensifying.