Focus Media Information Technology Co.Ltd(002027) (002027)
Investment logic
Equity incentive reflects the long-term orientation, and the H-share listing plan helps the development of overseas markets. 1) The company has launched two employee stock ownership plans to lock in core talents and improve long-term development ability; 2) The company’s overseas business has developed to more than 30 cities. Now the H-share listing will promote each other’s business development.
The essence of the company’s business model: accelerate the brand to break through the audience circle.
1) Brand advertising vs effect advertising: under the background of rising traffic cost, the continuous impact of brand advertising is more valuable; Brand advertising naturally coincides with passive communication media.
2) Basic logic of the company: breakthrough in “circle” under the effect of scale and volume. The company achieved breakthroughs through high-density point penetration. As of the first half of the year, the number of self operated elevator TV, self operated poster media and cooperative cinemas of the company were 756000, 1708000 and 13500 respectively.
3) Business model of the company: make alternative plans according to the differences of different products. LCD broadcast screen, frame poster and pre movie advertising are for large advertisers, and smart screen is suitable for long tail customers.
4) Competition pattern: the company leads the industry and has a stable leading position. The company has a large advantage in the number of point resources in ladder media and film media business.
Outlook 2022: pay attention to the changing trend of consumption, and new energy vehicles have potential.
1) From the perspective of industry launch, there have been several tuyeres in the past. The company has always stood at the growth outlet of downstream industries. At present, consumption and Internet contribute mainly to revenue, 1h21 accounting for 39.27% / 32.71% respectively.
2) Consumer brands are still important advertisers this year, focusing on consumption changes in 2022. In 2021, the new consumer brand is still an important advertiser in the list of advertising examples of ladder media. In the trend of social zero in 2021, the epidemic interpretation is still an important variable. Pay attention to the change trend in 2022.
3) Intensive listing of new energy vehicles and new models is expected to catalyze advertising, and the structure of advertisers may change. According to the policy, the sales volume of new energy vehicles will account for 20% in 2025, and the demand at the C-end is expected to be large; The intensive listing of new models in 2022 is expected to catalyze automobile enterprises to strengthen advertising.
Investment advice
It is estimated that the company’s revenue in 2021, 2022 and 2023 will be 15.8 billion yuan, 18.9 billion yuan and 22.5 billion yuan respectively, and the net profit attributable to the parent company will be 6.1 billion yuan, 7.1 billion yuan and 8.7 billion yuan respectively, corresponding to the net interest rate attributable to the parent company of 38.6% / 37.5% / 38.6% and EPS of 0.42/0.49/0.60 yuan respectively. Give the company 24 times PE valuation in 21 years, corresponding to the target price of RMB 10.1, and give a “buy” rating for the first coverage.
Risk statement
China’s economy is less than expected; Industry competition intensifies; Overseas progress is less than expected; The issuance of H shares was unsuccessful.
