Gehua Cable (600037): Lower than expected profit and loss caused by changes in fair value

Gehua Cable (600037): Lower than expected profit and loss caused by changes in fair value

The third quarter of 19 performance was lower than we expected the company’s first three quarters of 2019 results: 1?
3Q19 revenue 18.

14 ppm, an increase of 0 in ten years.

70%; net profit attributable to mother 4.

73 ppm, a decrease of 13 per year.

58%, deducting non-net profit 3.

29 ppm, a decrease of 26 per year.

71%; 19Q3 income 5.

94 ppm, a decrease of 2 per year.

53%, net profit attributable to mother 3,656.

600,000 yuan, down 79 each year.

80%, the company’s performance is lower than our expectations.

The development trend income slightly decreased, and the profit and loss caused by changes in fair value caused net profit margin.

The company achieved operating income in 3Q19.

9.4 billion, down slightly 2

53%, we expect that this will be mainly due to the speed reduction of the three major operators in 2019, the free broadband fee strategy for 4G packages, and the 杭州夜生活网 downturn in the overlapping advertising industry, which will result in a decline in advertising fee income.

In terms of profit, the company stated that due to the change in the fair value of the shares of Guiguang Network held by the company, the fair value gain or loss in 3Q19 decreased by 5,954.

530,000 yuan, resulting in 3Q19 net profit attributable to mothers fell 79.

80% to 3,656.

600,000 yuan.

In addition, the gross profit margin can also be reduced by 9.

8ppt, cyclic oxide 3.

2ppt to 22.

07%, we think this reflects the increasingly fierce competition faced by the cable TV business.

The user scale is basically stable, and the long-term benefits brought by ultra-high-definition video and smart city construction.

As of 3Q19, the company’s cable TV subscribers reached 598.

0 million households, an increase of 0 from the previous month.

12%; the number of HD interactive TV users is 544.

50,000 households, an increase of 1.

34%, the growth rate increased slightly by 0.


We expect the maximum number of cable TV users to remain stable, while there is room for further improvement in the number of HD interactive TV users.

Looking forward, the company is actively planning the development of ultra-high-definition video, and has integrated the content of the seven major Internet TV licensees.

At the same time, the company also further promoted the construction of smart cities, focusing on expanding the scope and product types of smart cities.

We believe that the transformation into 5G commercial technology is mature, and ultra-high-definition video and smart city services are expected to bring new business growth points for the company.

Earnings forecasts and estimates Taking into account the impact of changes in fair value on profit and loss, we lower our 2019/2020 attributable net profit forecast8.

5% / 2.

1% to 7.
8.1 billion / 6.
8.4 billion.

The current contradiction corresponds to June 2019/20.


4x price-earnings ratio.

Maintain Neutral rating and 11.

The target price of 20 yuan corresponds to 20 in 2019.

00 times price-earnings ratio, 17 more recently included.

78% upside.

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