\u3000\u3 Bohai Water Industry Co.Ltd(000605) 168 Three'S Company Media Group Co.Ltd(605168) )
Key investment points
Recommendation logic: 1) the company is a leading comprehensive advertising media enterprise engaged in integrated marketing services in China, holding the leading customers in telecom operators, automobile, consumer goods, finance and other industries. In 2021, the company achieved a revenue of 3.57 billion yuan and a CAGR of 57.5% in 20172021; 2) With the ability of professional integrated marketing services and the media resource network covering Wuxi Online Offline Communication Information Technology Co.Ltd(300959) the gross profit margin and net profit margin in the first three quarters of 2021 were 19.8% and 12.2% respectively, higher than the industry average (15.8% and 5.5%); 3) The strategic layout of meta universe business, the launch of its own IP virtual human plan, and the joint construction of a digital cultural and creative product trading platform with beiwen center are expected to become the second growth curve.
"Integrated marketing + head media + high-quality customer pool" Trinity to build the company's moat. 1) The company has professional integrated marketing service ability to provide customers with integrated marketing services in the whole process of brand strategy, content production, advertising, effect evaluation and optimization; 2) The venue resources covering the whole country are superimposed with multi-field Internet mainstream media to meet the marketing needs of customers in cross media and multi-channel; 3) The company holds the leading customers in telecom operators, automobiles, consumer goods and other industries, superimposes the leading customers in new fields, and maintains steady growth in revenue. In 2021, the company achieved a revenue of 3.57 billion yuan (+ 27.2%) and a net profit attributable to the parent company of 510 million yuan (+ 39.4%).
Equity incentive binds the interests of core employees, and innovation vitality continues to burst out. The company granted 611000 restricted shares to 2 senior executives for the first time in 2020; A new round of equity incentive will be implemented in 2022, and 469000 restricted shares will be granted to 52 incentive objects at the price of 96.3 yuan / share. The assessment target net profit from 2022 to 2024 is no less than RMB 730 / 10 / 1.3 billion, corresponding to the net profit growth rate of 37% and 30% in 2023 and 2024. Equity incentive is conducive to mobilizing the enthusiasm of incentive objects and forming a corporate interest community.
Layout of meta universe related businesses, and the second growth curve can be expected. 1) The company cooperates with the industry-leading artificial intelligence company magic enamel technology to create its own virtual human assets, and launches a customized virtual human plan to meet the new marketing needs of customers; 2) Build a digital cultural and creative products trading platform with beiwen center. The state-owned background authorization superimposes its own head effect, which is expected to become a new driving force for potential revenue growth.
Profit forecast and investment suggestions. According to the performance express of the company in 2021, the net profit attributable to the parent company from 2021 to 2023 is expected to be 510 million yuan, 740 million yuan and 1.03 billion yuan respectively, and the compound annual growth rate of net profit is 42%, corresponding to 23 times, 15 times and 11 times of PE respectively. The company is a leading integrated marketing advertising media company in China. Its main customers have strong stickiness and high marketing budget. It is expected to continue to contribute to high revenue growth; In 2022, the company may expand new customers on the basis of existing users, and the continuous growth of performance is worth looking forward to; Superimpose the business layout of meta universe, or build a potential second growth pole. In conclusion, we give Three'S Company Media Group Co.Ltd(605168) 202220 times PE, corresponding to the target price of 211 yuan, the first coverage, and a "buy" rating.
Risk tip: the risk of stricter industrial regulatory policies, increased market competition, downward risk in the advertising industry, and the risk that the progress of metauniverse strategy is less than expected.
