Focus Media Information Technology Co.Ltd(002027) (002027)
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. 1) 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. 2) In the future, the competition in the new energy vehicle industry will intensify. Both traditional vehicle enterprises and new forces of vehicle manufacturing will also increase advertising, and their customer groups are consistent with the medium and high-end customers faced by focus ladder media. In the future, both consumption and new energy customers will increase greatly, and the correlation between Focus Media Information Technology Co.Ltd(002027) and macroeconomic cycle fluctuations will gradually decrease.
Focus Media Information Technology Co.Ltd(002027) will benefit from the trend of advertisers switching advertising budget from online to offline. Online advertising is affected by the decline in the accuracy of technology delivery, the rise in traffic prices, the increase in the uncertainty of video programs and the massive adoption of brand awareness strategy by consumer enterprises. In the future, a large number of enterprises will switch advertising from online to offline. Focus Media Information Technology Co.Ltd(002027) as the leader of ladder media, it has absolute advantages in the coverage of the first and second lines. It is the mainstream media that advertisers give priority to when advertising, and will significantly benefit from the rising trend of offline advertising share.
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 macroeconomic expectations are 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 usher in the trend of low before high next year. After the economy is gradually verified and upward, the company’s valuation is expected to be revised again. Since January 5, 2022, the average value of pettm in the past three years has reached 33.6 and 29.5. 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.
In 2022, the competition pattern will be improved, and there is limited room for cost rise. We expect focus to maintain an increase of less than 5% at the point: Although Xinchao, the largest competitor of Focus Media Information Technology Co.Ltd(002027) , will be listed and financed in Hong Kong, Xinchao will not significantly expand its point in the future, but will only optimize its existing point. At present, the first thing that Xinchao needs to ensure is the profitability. The substantial expansion will cause losses. Therefore, the two companies will no longer have a bit of competition. Therefore, Focus Media Information Technology Co.Ltd(002027) will not expand a large number of points, and its cost increase is small. However, it will maintain a high growth in advertising prices and customer delivery, and the profit growth space can be expected.
Profit forecast and investment rating: Based on the continuous optimization of the company’s customer structure and the annual performance guidance, we maintain the previous profit forecast and expect to achieve eps0 from 2021 to 2023 42 / 0.51/0.61 yuan, corresponding to 19.63/16.19/13.52 times of current PE respectively, maintaining the “buy” rating.
Risk warning: macroeconomic fluctuation exceeds expectations, competition intensifies and payment collection is unfavorable
