Three’S Company Media Group Co.Ltd(605168) (605168)
The expansion of new customers exceeded expectations, with high performance and high growth certainty in the next two years
The expansion of new customers exceeded expectations, with high performance growth and high certainty in the next two years. In 2021, the company added FMCG customers such as Yibao, Xuehua and Heineken under China Resources, giant biology of Yimei head enterprise, customers of the national sports lottery center, and high-quality customers such as Postal Savings Bank Of China Co.Ltd(601658) in the financial field. In addition, upstream media added CCTV launch services. Previously, the net profit attributable to the parent company q1-q3 was 260 million yuan, which only completed half of the annual performance in 2021. The market is worried about the certainty of its performance. We believe that the quarterly performance fluctuation is related to the rhythm of advertising. Considering the increment of the company’s high-quality customers, we believe that the certainty of the company’s annual performance gambling is high. The company’s increment next year mainly comes from the automotive industry. It is expected that high-quality customers such as FAW Volkswagen and Honda are expected to bring deterministic high-quality customer increment to the company. The company’s high performance growth in the next two years is highly deterministic.
High quality customers and media resources make the profitability higher than the industry average
The profitability of Three’S Company Media Group Co.Ltd(605168) is much higher than the industry average. In 2020, the company’s gross profit margin, net profit margin and roe were 19.5%, 12.9% and 21.5% respectively. Excellent profitability mainly comes from high-quality customer resources and head media resources. On the one hand, the company cooperates with well-known large customers such as Yili, operators and state-owned banks, and has a cooperation history of 5 or even more than 10 years. It is not only highly viscous, but also has a mature cooperation mode and rich experience, which has formed a high industry barrier. On the other hand, the upstream suppliers of the company are mainstream media such as byte beat, Sina and Netease, which have rich media resources and high efficiency. The continuous rebate of Internet media has led to the continuous decline of the company’s operating cost. In 2021, the company added the service of China Central Television.
The equity incentive scheme for core executives shows business confidence and is optimistic about the release of performance
Previously, the company issued an equity incentive plan for two core executives, binding the interests of shareholders and the company with the personal interests of the core team, and set performance gambling targets: the net profit from 2020 to 2022 will not be less than 350 / 5 / 700 million yuan respectively, and the net profit attributable to the parent will be 360 million yuan in 2020, exceeding the performance target. We expect the growth rate to be more than 40% from 2021 to 2022, The scale of business performance in the next three years is expected to be released quickly. We are optimistic about the performance certainty of the company and the excellent business ability of the management.
Profit forecast and valuation
New and old customers made efforts at the same time, and the expansion of new customers exceeded expectations. We expect that the company’s operating revenue from 2021 to 2023 will be RMB 4.608 billion, RMB 7.022 billion and RMB 10.090 billion, with a year-on-year growth rate of 64.1%, 52.4% and 43.7%, the net profit attributable to the parent company will be RMB 508 million, RMB 711 million and RMB 1.038 billion, with a year-on-year growth rate of 40%, 39.9% and 46%, and EPS will be RMB 7.29, 10.20 and 14.89/share, corresponding to 20.6/14.7/10.1 times the current share price, Maintain the “buy” rating.
Risk statement
Risk of severe economic situation; The risk that the expansion of new customers does not meet expectations; The risk that the performance scale of core customers does not meet the expectations.
