Golden Base Research, Xingyue / Author Yang Qichao, Shifeng / Editor and reviewer

In recent years, driven by the policy of triple play convergence, IPTV has developed rapidly and has become a mainstream TV transmission channel. With the improvement of living standards, residents' demand for spiritual culture has been increasing, and there is still considerable room for growth in the number of IPTV users and value-added services. Hebei Radio and Television Wireless Media Co., Ltd. (hereinafter referred to as "Wireless Media") specializes in IPTV integrated broadcast control services, and its IPTV integrated broadcast control sub-platform qualification is exclusively granted by Hebei Radio and Television Station, giving it a unique competitive position in Hebei Province.

As the main operator of the new media market under Hebei Radio and Television Station, Wireless Media has joined hands with the three major telecom operators in recent years to vigorously develop IPTV business. The user base has exceeded 15 million, creating the industry's "Hebei Speed" and "Hebei Phenomenon." Wireless Media is at the forefront in terms of user scale, business revenue, technology research and development, and industry influence domestically. In recent years, Wireless Media has actively expanded innovative business formats, extending its business to smart education, smart homes and communities, and smart healthcare and wellness, to create a regional eco-friendly integrated media service platform and cultivate new business growth points.

I. IPTV users are steadily growing, becoming the mainstream TV transmission channel, with rising demand and enhanced consumption capabilities leading to broad industry prospects

As a new media business operator, Wireless Media specializes in IPTV (Interactive Network Television) integrated broadcast control services, operating in the industry of "Information Transmission, Software, and Information Technology Services (I)."

IPTV, as a crucial application area under triple play convergence and a typical business format in the cultural digital industry, relies on broadband internet to provide high-quality audio-visual services to the general public through the integrated application of media technology, communication technology, and new-generation information technology.

Stable signals, multiple functions, and high cost-effectiveness are the primary reasons why users choose IPTV. Additionally, IPTV's competitive advantages over OTT (Over-The-Top Internet TV), cable TV, and internet video include live TV support, diverse functions, and superior large-screen image quality.

Driven by the triple play convergence policy, IPTV has developed rapidly. According to data from the Ministry of Industry and Information Technology, the number of domestic IPTV users at the end of each year from 2019 to 2023 was 294 million, 315 million, 349 million, 380 million, and 401 million, respectively. Currently, IPTV user growth has entered a stable phase, and IPTV has become the mainstream TV transmission channel nationwide.

Looking at the downstream market, the domestic economy is still in a growth period, with the continuous improvement of residents' material living standards, their demand for spiritual culture is increasing, and their consumption capacity for cultural products is continually enhancing. There is still considerable room for growth in the number of IPTV users and value-added services.

According to data from the National Bureau of Statistics, from 2019 to 2023, the value added of the domestic tertiary industry was 53.54 trillion yuan, 55.20 trillion yuan, 61.45 trillion yuan, 64.27 trillion yuan, and 68.82 trillion yuan, respectively, with an average annual CAGR of 6.48%. Among them, the value added of the information transmission, software, and information technology services industry was 3.27 trillion yuan, 3.80 trillion yuan, 4.40 trillion yuan, 4.79 trillion yuan, and 5.52 trillion yuan, respectively, with an average annual CAGR of 13.99%.

In the first half of 2024, the value added of the domestic tertiary industry increased by 4.6% year-on-year, with the value added of the information transmission, software, and information technology services industry increasing by 11.9% year-on-year.

In terms of residents' consumption capacity, domestic residents' per capita disposable income has shown an upward trend year after year in recent years.

According to data from the National Bureau of Statistics, from 2019 to 2023, the national per capita disposable income of residents was 30,700 yuan, 32,200 yuan, 35,100 yuan, 36,900 yuan, and 39,200 yuan, respectively, with an average annual compound growth rate of 6.28%. In the first half of 2024, the national per capita disposable income of residents was 20,700 yuan, a nominal increase of 5.4% over the same period last year. Excluding price factors, the actual growth was 5.3%.

In the first half of 2024, the national per capita consumption expenditure of residents was 13,600 yuan, a nominal increase of 6.8% over the same period last year. Excluding price factors, the actual growth was 6.7%. Among them, the proportion of domestic residents' per capita service consumption expenditure in per capita consumption expenditure reached 45.6%, an increase of 1.1 percentage points year-on-year.

Furthermore, with the advancement of broadband transmission and information technology, as well as the trend towards more personalized and even customized consumption patterns, audio-visual services are shifting from media-led to user (consumer)-participated. Enterprises in the industry are paying more attention to the interactivity of audio-visual program services. End-users can more autonomously choose viewing times based on personal habits and needs, listen to, watch, and enjoy their favorite content and services, bringing new opportunities for further development in the IPTV industry.

II. Exclusive regional resources with a broad potential audience, intelligent and refined operation to enhance customer loyalty

According to policies issued by industry authorities such as the State Administration of Radio and Television, the IPTV integrated broadcast control business operated by Wireless Media nationwide implements a management model of a central master broadcast control platform and provincial broadcast control sub-platforms. Each provincial region is directly operated by the respective provincial radio and television stations or authorized subsidiaries to carry out related business operations based on local IPTV sub-platforms, without cross-regional competition.

Simultaneously, the qualification for the IPTV integrated broadcast control sub-platform is exclusively granted to Wireless Media by Hebei Radio and Television Station. As the only legitimate IPTV integrated broadcast control operator in Hebei, Wireless Media enjoys a unique competitive position in the province. Its unique operational advantages have established stable cooperative relationships with the three major telecom operators in Hebei Province.

As of now, Hebei Province has a total population of over 70 million, providing a vast audience base for Wireless Media. According to Wireless Media's inquiry response, as of the end of June 2023, the number of users for Wireless Media's IPTV business was 15,295,600 households, accounting for 58.04% of households in the province, lower than the national IPTV penetration rate of 74.98%, indicating considerable room for growth.

Furthermore, the IPTV business is deeply integrated with the internet broadband business. The development space for the IPTV market is closely related to the scale of fixed internet broadband access users.

As of the end of 2023, the number of basic and value-added IPTV users of Wireless Media was 15,363,200 and 704,100, respectively, remaining relatively stable compared to the end of 2022. According to data from the Ministry of Industry and Information Technology, as of the end of 2023, the number of fixed internet broadband access users in Hebei Province reached 31,797,000.

It is evident that the number of IPTV users of Wireless Media is significantly lower than the number of fixed internet broadband access users in Hebei Province, indicating considerable room for development.

Amidst the increasing demand for personalized audio-visual experiences among target audiences, Wireless Media is exploring intelligent and refined operations akin to those in the internet industry. On the one hand, it continuously enriches its high-quality content offerings. On the other hand, through various technological means such as natural language interaction, personalized playlists, and intelligent recommendations, it gradually enables users to transition from watching TV to using TV, thereby enhancing the user experience and improving customer loyalty.

Wireless Media has independently built an IPTV business operation support system, enabling IPTV audio-visual services to offer various personalized functions such as live broadcast, on-demand playback, time-shifting, and replay. Wireless Media has also innovatively developed special features such as "Nine-Screen Navigation" and "Four-Screen Simultaneous Viewing," enhancing the audio-visual experience for families and meeting their evolving cultural consumption needs, shifting from watching TV to using and playing with TV.

Furthermore, through big data analytics, Wireless Media gains a deeper understanding of users' consumption habits, interests, and hobbies, enabling it to innovate service models and optimize the user experience. In particular, intelligent content recommendations can significantly increase user turn-on and activity rates, enhance the conversion rate of value-added content consumption, achieve rapid growth in value-added services, and improve user loyalty.

Currently, the IPTV business primarily operated by Wireless Media has fully covered the three major telecom operators in the province—Hebei Unicom, Hebei Telecom, and Hebei Mobile—and has established the self-owned brand "China IPTV-Hebei," as well as three operator business promotion brands: "Unicom TV" for Hebei Unicom, "Tianyi HD" for Hebei Telecom, and "Mobile TV" for Hebei Mobile.

As a pioneer among cultural enterprises in Hebei Province, Wireless Media has received numerous honors, including being nominated as one of the "Top 30 National Cultural Enterprises" for the 12th time, named one of the "Top 30 Well-known Cultural Enterprises in Hebei Province," and awarded the "Annual Best Large-Screen Intelligent Operation Award," "Most Commercially Valuable Award," and "Annual Growth Potential Award" in China's Intelligent Audiovisual and Technological Innovation Industry.

In summary, Wireless Media is the only legitimate IPTV integrated broadcast control operator in Hebei Province, possessing exclusive regional resources with considerable room for growth in the number of business users. Simultaneously, relying on its industry-leading content operation capabilities, Wireless Media continuously optimizes the user experience and enhances user loyalty.

III. Building upon basic services to promote value-added services and create an integrated media service platform

As the operator of the provincial IPTV broadcast control platform, Wireless Media provides new media audio-visual services such as movies, music, games, and online education to TV end-users after content review, encoding, packaging, and transmission through dedicated networks of the three major telecom operators.

Wireless Media's IPTV integrated broadcast control services encompass basic IPTV services, value-added IPTV services, shopping channel transmission services, and intelligent hypermedia services.

Among them, basic IPTV services primarily provide end-users with basic audio-visual programs through telecom operators, including live broadcasts, on-demand playback, and replays of CCTV, provincial satellite channels, and local terrestrial channels. Wireless Media's value-added IPTV services offer personalized audio-visual and interactive programs, including high-quality movies, variety shows, music, games, anime, and more.

As of September 5, 2024, Wireless Media has aggregated nearly 300 high-definition and standard-definition live broadcast channels, over 300,000 hours of categorized on-demand programs, and diversified value-added services such as online education, TV games, smart communities, and smart education. It also offers unique IPTV features such as 2-hour time-shifting and 7-day replay, providing users with differentiated, personalized, and high-quality interactive HD TV services.

In the past three years, the number of users for Wireless Media's basic IPTV services has exceeded 15 million, and the settlement price and revenue from basic IPTV services have remained stable overall.

Currently, Wireless Media's IPTV business is transitioning from a primary reliance on basic IPTV service revenue to a balance of both basic and value-added service revenue. The revenue scale of paid value-added services, including paid movies, children's programs, games, education, and music, is growing steadily.

Wireless Media will continue to vigorously develop value-added IPTV services by continuously improving and expanding its basic content library, enhancing the convenience of the broadcast control platform, meeting users' personalized needs, and promoting the development of value-added services.

Simultaneously, Wireless Media positions the IPTV platform as the entry point for family smart living on large screens in the region. By integrating multi-screen resources and technological capabilities, it aims to create an intelligent hypermedia platform for education, healthcare, and communities, gradually realizing the strategic layout of an integrated development strategy of "one cloud, multiple screens" and fostering a regional eco-friendly integrated media service platform.

In recent years, Wireless Media strives to break through the boundaries of its single IPTV business, expanding its offerings to include smart education, smart homes and communities, and smart healthcare and wellness.

Among them, the "Smart Education Cloud Platform" provides services such as online teaching, intelligent tutoring, intelligent learning, intelligent examination and evaluation, and intelligent management and services. Currently, the "Smart Education Cloud Platform" has become the only external broadcast platform for provincial-level famous teacher and excellent course content by the Hebei Provincial Department of Education.

As of September 5, 2024, Wireless Media has completed the first phase of the "Smart Education Cloud Platform" construction, with the first phase project having completed the educational informatization transformation of six campuses and over 200 classrooms, which have been connected to its IPTV private network. The second phase project, which covers 5,000 classrooms, has completed inspections for nearly 1,500 classrooms.

In terms of smart homes and communities, Wireless Media primarily serves community residents through collaborations with property management companies, sub-district offices, and other institutions, bundling its services with intelligent property services, basic IPTV services, and value-added services.

As of September 5, 2024, the first phase of the "Beautiful Community·Huaidi" smart community project has been launched, providing party building propaganda, convenient life services, volunteer services, and more to over 16,000 households in Huaidi. In June 2023, Wireless Media signed a strategic cooperation agreement with the Shijiazhuang Civil Affairs Bureau on smart community construction, continuously exploring innovative models for radio and television smart media in smart community construction.

In smart healthcare and wellness, Wireless Media has independently established the "Hebei IPTV Healthy Homes Platform" based on the IPTV integrated broadcast control platform, fulfilling its service goals through health-related program content and services.

As of September 5, 2024, the "National Health Commission's People's Health Channel (CHTV)" Health China section has been launched on Hebei IPTV, with sections dedicated to senior citizens such as Silver Hair University, Healthy Aging, and Famous Doctor Lectures. Simultaneously, the platform is gradually connecting with high-quality medical institutions and wellness resources partners across the province and beyond, providing users with online consultations, hospital registration, medication benefits, comprehensive health screenings and assessments, and wellness services.

IV. Strengthening independent research and development capabilities and collaborating with leading technology companies to advance technological innovation

The new media industry is undergoing rapid development and transformation, placing high demands on industry enterprises in terms of information technology research and development and application. Competition in technological research and development and application capabilities is crucial for industry enterprises.

As a high-tech enterprise, Wireless Media values research and development capabilities and has established an overall research and development system consisting of five major modules: product planning, technological research and development, data analysis, platform support, and creative design. It has formed an organizational structure led by the Technology and Product Department for research and development efforts.

As of the end of 2023, Wireless Media had 67 registered research and development personnel, accounting for 25.87% of the total number of employees. The research and development team at Wireless Media is dominated by senior staff with over five years of work experience, accounting for more than 70% of the total research and development personnel. Their rich experience facilitates research and development activities and promotes technological innovation.

Wireless Media continuously invests funds in research and development, having developed seven core technologies, including the EPG management system, anti-tampering system, Big Video 3.0+ system, big data analytics system, and big data intelligent content recommendation system. In addition to fulfilling basic integrated broadcast control services, these technologies offer unique features such as security, efficiency, intelligent operation, and high scalability for innovative applications.

In terms of technological reserves, Wireless Media currently holds 19 patents and 48 computer software copyrights, possessing the research and development capabilities and patent foundation required for systematic transformation and upgrading of the IPTV integrated broadcast control platform.

While strengthening independent innovation capabilities, Wireless Media collaborates with leading technology companies such as Huawei, Iflytek, AsiaInfo Technologies, and Baidu to jointly advance technological innovation.

Among them, Wireless Media and Huawei have jointly established the "Big Video Application Joint Innovation Laboratory" to continuously promote the research and development of new technologies and products in the large-screen video field. Together with Iflytek and AsiaInfo Technologies, they have set up the "Intelligent Hypermedia Joint Innovation Laboratory" for application development, product design, and project incubation in areas such as "AI + New Media" fusion innovation, user insight and operation, and data value mining. In collaboration with Baidu, they have established the AI Joint Innovation Center to jointly build an AI industrial base and smart media, collaborating on the research and development of intelligent projects such as Lingxi smart speakers and smart mid-screen displays. They also work with ByteDance to conduct research and application of IPTV intelligent recommendation algorithms.

In terms of accolades, Wireless Media's "Interactive Cloud Classroom Application with Picture Technology" and "Multi-View Live Broadcast Technology Application" won the second and third prizes, respectively, in the "Second High-Tech Video Innovation Application Contest" hosted by the State Administration of Radio and Television. The IPTV Big Data Intelligent Operation Platform was selected for the third batch of national radio and television and online audio-visual industry development projects. In 2023, Wireless Media's "XR-based Interactive Education Technology Application" won the third prize in the third High-Tech Video Innovation Application Contest hosted by the State Administration of Radio and Television, while its "IPTV Intelligent EPG Group Recommendation" received an excellence award in the third Radio and Television and Online Audio-Visual AI Application Innovation Contest hosted by the same authority.

In short, Wireless Media values independent research and development capabilities, and its technological innovation capabilities are outstanding. At the same time, it has formed a strong alliance with leading domestic technology companies to jointly promote technological innovation. Over the years, Wireless Media's research and development achievements have repeatedly received awards and recognition.

V. The issuance price-earnings ratio is lower than the industry average, and fundraising consolidates the foundation to cultivate new growth points

For this IPO, Wireless Media's issue price is 9.40 yuan per share, corresponding to a diluted post-tax net profit attributable to shareholders of 13.95 times the lower of the 2023 non-GAAP net profit before and after deductions, which is lower than the average static price-earnings ratio of 18.61 times the after-tax net profit attributable to shareholders of comparable listed companies in the same industry in 2023, and lower than the recent one-month static average price-earnings ratio of 20.01 times in the same industry released by China Securities Index Co., Ltd..

Wireless Media intends to use the funds raised for the Hebei IPTV Integrated Broadcasting and Control Platform Systematic Renovation and Upgrade Project, Content Copyright Procurement Project, and Intelligent Hypermedia Business Cloud Platform Project.

Among them, the "Hebei IPTV Integrated Broadcasting and Control Platform Systematic Renovation and Upgrade Project" mainly includes the cloud-based upgrade of hardware and software of the broadcasting and control platform and network support upgrade; expansion and renovation of the monitoring hall, as well as expansion and upgrade of the monitoring system; and the implementation of high-definition, intelligent, and converged media upgrades to the content production cloud platform.

This project is a systematic expansion and upgrade of Wireless Media's main business, the IPTV basic support platform, in terms of capabilities, functions, efficiency, stability, reliability, broadcast safety, information security, and network security. In addition to meeting the current IPTV broadcasting and control needs of Wireless Media, it also focuses on the future, meeting the requirements for system elastic expansion, rapid deployment, and moderate advancement to meet the needs of comprehensive and integrated business development.

The "Content Copyright Procurement Project" involves procuring copyrighted content, mainly including popular TV dramas, basic film libraries (classic TV dramas), educational content, sports content, children's/animation, lifestyle services, health and wellness, 4K programming, and innovative incubation content, to support the development of Wireless Media's IPTV business.

In the audio-visual field, copyrighted content resources are core resources that attract users, maintain user stickiness and loyalty, and are an essential foundation for expanding user scale, enhancing user experience, and achieving sustainable development of a company's main business.

The implementation of this project will help enhance the richness and quality of Wireless Media's content resources, strengthen its market competitiveness in the audio-visual field, and bring about a virtuous cycle for the long-term development of Wireless Media's business.

The main goal of the "Intelligent Hypermedia Business Cloud Platform Project" is to leverage innovative technologies to build a new intelligent converged media business platform to expand the boundaries of Wireless Media's business and help it seek new growth opportunities in niche markets such as smart education, smart homes and communities, smart healthcare services, and content-based e-commerce, while grasping the development opportunities of new information applications under the trend of smart society development.

The implementation of this project will help cultivate a platform-based economy and create regional new mainstream media institutions, improve corporate innovation and market competitiveness, and cultivate new business growth points.

In the future, Wireless Media will seize the excellent opportunities presented by the development of the domestic cultural industry, base itself on its IPTV basic business, vigorously develop value-added services, fully expand industry applications, actively explore cross-border integration with various industries, create new service scenarios and formats, achieve multi-profit point support, and extend its main business from the IPTV audio-visual service field to the smart home field.