\u3000\u3 China Vanke Co.Ltd(000002) 027 Focus Media Information Technology Co.Ltd(002027) )
Key investment points
The short-term decline of stock price reflects the concern about the impact of the epidemic on 2022, and pessimistic negative expectations have been included in the stock price: in the past, even in 2018 and 2019 with poor economic expectations and capital market sentiment, focus's pettm valuation center can still be maintained at about 15-20 times, Focus's valuation is mainly supported by its anti inflation business model and solid leading position, rather than the growth of its performance. We believe that under the background of pessimistic market expectations in the first quarter, there is limited room for downward valuation and performance expectations.
The impact of the epidemic on performance is short-term, and the current valuation level has great room to improve: the impact of the epidemic is only short-term, the intensity of the epidemic blockade is more restrained than in the past, and the impact on performance is limited. In addition, the epidemic also spread widely in China in 2021, and educational advertisers significantly reduced their advertising, but focus still achieved the profit target of RMB 6.02-6.2 billion in 2021. The company itself is still resilient, and we still have confidence in the growth of performance in 2022. In the long run, focus represents the future of China's brand economy, and there is no doubt about its long-term value. Therefore, there is much room for valuation improvement at present.
Focus Media Information Technology Co.Ltd(002027) by adjusting the customer structure and strengthening its alpha capability, the attribute of economic cycle fluctuation is gradually reduced: since 2019, the company has actively increased the proportion of consumer advertisers in revenue, and there is still much room for improvement in the future. Consumer advertisers are different from Internet advertisers. Their advertising strategy is very regular. Consumer enterprises have the demand for product release and publicity every year. Therefore, their advertising accounts for a fixed proportion of revenue and will not fluctuate greatly like Internet enterprises. In 2019, when Internet advertisers significantly reduced their advertising, their consumer customers still maintained a 21% growth. Therefore, as long as the revenue of consumer enterprises does not decline sharply, their advertising will also remain stable The correlation between Focus Media Information Technology Co.Ltd(002027) and macroeconomic cycle fluctuations will gradually decrease.
Beta in the advertising industry is expected to rebound at the bottom in 2022, and the valuation may usher in a significant repair: at present, the expectation for the macro economy is at the most pessimistic moment. In the future, with the improvement of liquidity and the stimulation of infrastructure and consumption policies, the macroeconomic fundamentals are expected to rebound in 2022. After the gradual upward verification of the economy, the valuation of the company is expected to be revised again. The sharp downward valuation in the past includes pessimistic expectations for the macro economy. According to focus's current revenue and future business forecast, we believe that the current PE valuation level is significantly underestimated and there is a large room for rise.
Profit forecast and investment rating: Based on the impact of the epidemic and the lack of educational advertisers, we adjusted the EPS forecast from 2021 to 2023 from 0.42/0.51/0.61 yuan to 0.42/0.48/0.55 yuan, corresponding to the current PE of 13.50/11.84/10.21 times respectively, maintaining the "buy" rating.
Risk warning: macroeconomic fluctuation exceeds expectations, competition intensifies and payment collection is unfavorable
