Profit: The loss in the first half of the year expanded, mainly due to the decline of Yishang Hotel's performance. In the first half of 2016, the company realized an operating income of 43.2022 million yuan, a year-on-year decrease of 4.51%; In the first half of the year, the net profit loss attributable to the parent company was 32.8752 million yuan, and the net profit attributable to the parent company in the same period last year was 39.9276 million yuan, from profit to loss; Non net profit deducted in the first half of the year was -32.4869 million yuan, a larger loss than -25.6797 million yuan in the same period last year. In terms of profitability, the gross profit rate of the company in the first half of the year was 85.32%, down 3.1 percentage points year on year. The period expense rate was 150.4%, with a year-on-year growth of 11.2%, of which the management expense rate, sales expense rate and financial expense rate increased by 10.5 percentage points, increased by 3.6 percentage points and decreased by 2.8 percentage points respectively. The main factors affecting income and profitability in the first half of the year are: (1) in 2015, Tangshan Hot Spring, a subsidiary of the company, transferred its 19% equity of Nanjing Yishang Tianyuan Business Management Company and obtained an investment income of 59.47 million yuan; (2) In 2015, the company completed the disposal of Jinying real estate and recognized the income of 6.06 million yuan; (3) Operating revenue declined slightly.
Sub business: The hot spring passenger flow decreased by 17.3% year on year, and the emerging service industry began to generate revenue. In terms of sub business, the company's tourism and service industry revenue in the first half of the year were 38.7071 million yuan and 1.6771 million yuan, respectively, accounting for 89.60% and 3.88% of the total. Among them, the tourism revenue fell by 12.88% year on year, mainly due to the poor operation of Yishang Hot Spring in Tangshan, Nanjing. In the first half of the year, the subsidiary Nanjing CITS United Tangshan Hot Spring Company earned 35.6605 million yuan. The guest room income, catering income and hot spring income were 10.5278 million yuan, 6.0776 million yuan and 18.5379 million yuan, down 3.2%, 12.6% and 12.1% respectively, with a loss of 15.2804 million yuan. Tangshan Hot Spring lost 15.49 million yuan (excluding investment income of 59.47 million yuan) in the same period of 15 years, and the scale of loss in the first half of the year was basically the same as that in the same period of last year. In terms of passenger flow, the hot spring passenger flow in the first half of the year was 140000 person times, down 17.3% year on year, and the room rental rate fell 7 percentage points year on year. In addition, the company's emerging business generated a small amount of revenue. In the first half of the year, the fund management fee and basketball training revenue achieved 760800 yuan and 193600 yuan respectively.
Highlights: entering the Internet marketing and e-sports industry, frequent transformation of investment and acceleration of new line CTV: On July 12, the company announced that it planned to purchase 100% of the equity of new line CTV with 400 million yuan, including 180 million yuan in cash consideration, 220 million yuan in share consideration, and no more than 193 million yuan in matching fundraising for payment of this cash consideration, The price of issuing shares to purchase assets and supporting financing is 10.97 yuan/share. From 2016 to 2018, the committed net profit is not less than 36 million yuan, 47 million yuan and 61 million yuan respectively. After the completion of the merger and acquisition, it is expected to significantly improve the company's profitability, and will achieve another key measure to cut into the entertainment market from traditional tourism, helping the company to become a perfect industrial extension layout.
E-sports Carnival: The company signed a letter of intent with the Sports Information Center of the General Administration of Sport of China and Shanghai Xiaocong Culture Communication Co., Ltd. The three parties will cooperate to build the brand of China E-sports Carnival, and the company has won the joint undertaking right for 16 to 18 years. In the context of the rapid development of the e-sports industry, the amount and scale of third-party competitions' bonuses are growing, and the future copyright value space is broad, and the value of high-quality competitions is rising. The company shares 60% of the profit in the E-sports carnival project, and has invested 6 million yuan at present.
VR camera and show layout: after investing 9 million yuan in 5% of Rongzhi Xunda's equity in February, the company increased its capital by 5% again with 9 million yuan in May. The VR camera it developed is currently in a releasable state.
Online education industry fund: On April 18, the company contributed 20 million yuan to participate in the subscription of online education industry fund Nantong Muhua Equity Investment Center with Muhua Jinxin and others, and made equity investment around online education and its derivative industries. With the help of the resource advantages of professional institutions to enhance their own investment profitability.
Acquisition of Wind and Water Navigation: On May 17, the company planned to invest 12 million yuan to acquire 60% equity of Xiamen Wind and Water Navigation. Wind and Water Navigation is committed to promoting the layout of the sports and cultural industry of folk navigation.
The transformation of sports, entertainment and entertainment is accelerating, and medium and long-term profits are expected to improve. The company's performance loss in the first half of the year is basically the same as that of last year, maintaining the rating of "prudent overweight". The performance improvement brought by the merger and acquisition of new line CTV is expected to be stronger. The cooperation in holding the E-sports carnival cuts into the fast-growing E-sports industry, expanding the company's industrial chain layout while bringing new growth expectations. The company accelerated its strategy of accelerating the layout of sports and entertainment industries through M&A fund companies, and has a solid foundation for medium and long-term growth. With the gradual stripping of redundant projects and the increasing investment in sports and entertainment industries, the company's EPS is expected to be -0.09 yuan, -0.01 yuan and 0.04 yuan respectively in 16-18, maintaining the rating of "cautious overweight".
Risk tip: The progress of the acquisition of the new line Zhongshi is lower than expected, the profit of the original Yishang Hot Spring Hotel and the transformed sports and entertainment business is lower than expected, and the company's transformation progress is lower than expected, which may lead to continuous losses of the company.
