• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
 
 
Company Report Excerpt
January 21, 2008
Channel monopolization and weak periodicity. The company’s turnover and operational capital flow are
insusceptible towards economic cycle, and its main businesses are quite defensive; cable network userskeep an annual surge of 250,000 -30,000.Beneficiary of inflation. Price cut in set-top box leads substantial decrease in expenditure of cable digital TVtransformation, while improvement of basic TV service charge makes the sector an impetus to itsperformance growth.Acquisition is completed, and management mechanism has been rationalized. Newly formed managementteam is abundant in experience, and eager to progress. Team members have clear mind in construction of amodern enterprise management system and an advanced operation system, and they have tried to workthose experiences out with positive attitude. Meanwhile, the company is also making effort to get morefinancial support from the government. As analyzed above, the company is expected to perform well in thefuture.Potential profitability. While the company is of advantage in terms of its user amount, increase of TV service
charge and government’s support, its average service fee of Rmb950/family a
s well as 6% net margin arefar below those of sector average. With improvement of cable digital TV transformation technology &management, we predict that its net margin in 2010 will increase to 16%.Valuation and investment suggestion: Viewing from PE and PB, the company suffers the lowest valuationamong its peers. However, its future performance is most predictable. Companies of cable networkoperation have been enjoying the above-market valuation. Given PE at 30x or EV/EBITDA at 10x, itsreasonable valuation is Rmb10.8. According to our DCF model, suppose WACC=10.03%, G=1%, itsabsolute valuation is Rmb13.86.Potential risks: Control of satellite TV settling in the urban area relaxed; failing to enjoy tax exemption, andnot-so-optimistic performance in 20
 
By Xu Yaowen 
Shaanxi Broadcast & TV Network Intermed (600831):Beneficiary of Inflation and Channel Monopolization,Speedy Performance Growth Expected --- Recommended
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...