Citic Press Corporation(300788) (300788)
Key investment points
Event: the State Press and Publication Administration released the development plan for the publishing industry during the 14th Five Year Plan period, which mentioned the plan to promote the formulation of relevant laws and regulations, including "book price legislation".
The plan aims to promote the high-quality development of the publishing industry during the 14th Five Year Plan period and maintain the fair trade of books. In terms of offline publishing, the plan puts forward requirements to focus on high-quality development, strengthen publication price management, promote book price legislation, and effectively stop the vicious "price war" in online and offline publication sales; In terms of online publishing, the supervision of publishing order will be more strict, all kinds of publishing chaos will be strictly punished, and the healthy ecological environment of the industry will be maintained.
Book price legislation is expected to guide the industry to return to rationality. In the first three quarters, the decline in the scale of the book market and the decline in sales discounts put pressure on the overall operation of the publishing industry. According to the third quarterly report of the company, the online channel discount will be 60% in 2020, and the online store channel discount has decreased to 5.7% from January to September 2021. The short video e-commerce platform has developed rapidly through the lowest price of the whole network. The channel discount is 40%, which is lower than the overall online level. Among them, the children's category with the largest proportion is the lowest 3.30%. Unreasonable low price dumping has a great impact on the normal development of the main business of publishing companies; On the one hand, low prices will directly affect most of the sales revenue of physical bookstores; On the other hand, in order to cope with the low book price of e-commerce, and then passively reduce the price, it may further affect the overall gross profit level and the normal transaction and ecology of the industry. We believe that with the announcement of the planning issued by the press and publication administration, the phenomenon of unreasonable pricing is expected to be greatly improved, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) vicious price war will be effectively curbed, the pricing of the publishing industry will return to the rational range, and the company's revenue and gross profit level may be improved.
The publishing business is strong. In 2021h1, the company maintained a leading position in the overall book market. The revenue of book publishing and distribution business increased by 10.6% to 710 million yuan year-on-year. The company has a wide range of published books, including children's, finance, commerce, social sciences and other sub categories. The market share of management is 15.3%, ranking first in the market; The revenue of children's business was about 220 million yuan (+ 35%), and the market share ranked fourth. Under the market downturn in the third quarter of 2021, the market position of children's books of the company was further improved, and the market share ranked first in August and September for two consecutive months. The company will continue to increase investment in copyright and content R & D, expand the scale and quality of high-quality content reserves, and the trend of constant strength of the strong in the future may continue.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 305 million yuan, 397 million yuan and 476 million yuan respectively, and the corresponding PE will be 18 times, 14 times and 12 times; Considering the gradual profitability of the company's bookstore business and the rapid development of children's books, the book price legislation will guide the book price to return to rationality and help the company's business maintain steady growth. In conclusion, we maintain the "buy" investment rating of the company.
Risk tips: there are risks in national policies, unexpected risks in epidemic development, and the effect of the company's book market is less than expected.
