\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 88 Citic Press Corporation(300788) )
Event: the company released the annual report of 2021. The company achieved a revenue of 1.922 billion yuan in 2021, with a year-on-year increase of 1.60%; The net profit attributable to the parent company was 242 million yuan, a year-on-year decrease of 14.35%; The net profit attributable to the parent company after deduction was 212 million yuan, a year-on-year decrease of 16.98%; Net operating cash flow was 285 million yuan, down 11.70% year-on-year. Among them, Q4 achieved a revenue of 518 million yuan in 2021, a year-on-year increase of 14.35%; The net profit attributable to the parent company was 40.249 million yuan, a year-on-year decrease of 28.96%. The slowdown in the growth of the company's operating revenue is mainly due to
Affected by the increase of discount rate under the change of channel, and the overall profitability also declined under the influence of price war. Repeated outbreaks + secondary changes in new media channels have led to higher discounts, and it is expected that the price order of the industry will be standardized. According to the open book data, the overall code ocean scale of the book retail market in 2021 was 98.68 billion yuan (YoY + 1.65%), of which online sales code ocean was 77.49 billion yuan (YoY + 1.0%), offline sales code ocean was 21.19 billion yuan (YoY + 4.1%), and online channels accounted for 78.5% (down 0.5pct compared with 2020, but still increased by 8.6pct compared with 2019). From the channel discount, 20192020/2021 online discount is 5.9/6.0/5.8 fold, and the further increase in discount rate in 2021 is mainly due to the two change of online channels: from Jingdong, Dangdang and other traditional e-commerce platforms to the new media business platform such as tiktok and jitter, and new media providers have a large demand for new business and a higher discount rate. Specifically, the new channel short video e-commerce discount is as low as 3.9%, while the platform e-commerce discount is 5.20%, the self operated and other e-commerce discount is 7.8%, and the traditional offline physical store discount is 8.9%. In view of the disorderly price war in the industry, the "development plan for the publishing industry during the 14th five year plan" released by the State Press and publication administration clearly puts forward the requirements of "standardizing the online and offline publishing order" and promoting book price legislation. During the two sessions, CPPCC members further submitted proposals on accelerating the promotion of book price legislation, which we believe will be conducive to the long-term and healthy development of the industry.
Interpretation 2021: the company's leading position in book publishing has been further consolidated. The bookstore business light asset operation mode has run through, turning losses into profits, and successfully built an all media ecological communication system. In 2021, the company maintained the first market share in the book retail market, with obvious leading advantages. In terms of business, 1) book publishing and distribution: in 2021, the sales volume of the company's book publishing and distribution business was 454918 million (YoY + 6.79%), and the production volume was 535375 million (YoY + 25.23%). The book sales volume and production volume continued to rise. From the perspective of category, economic management / Science / biography / children / Art ranked No. 1/1/2/3/6, with the proportion of children's category market rising to 3.75%, ranking 1 higher than last year, and increasing the trend of children's category. The company takes IP as the core to actively promote children's publishing and extension business, and comprehensively enhance the scale effect and brand effect of children's business, and tiktok's account of 320 thousand children. Ranking first in the self broadcast account list of the publishing house; 2) Bookstore business: in 2021, the company actively adjusted the stock bookstore business and expanded cross-border cooperation asset light projects. The bookstore business turned losses into profits. By 2021, the company had 88 bookstores in operation, of which the scale of airport stores ranked the top, business stores implemented asset light operation, and office stores focused on serving surrounding government and enterprise customers. It is expected to expand the scale of office stores in 2022. In addition, the company actively responded to the changes of media channels. During the year, the company introduced a large number of Internet operators and quickly established a self broadcasting matrix of books. The cumulative number of users served was 20.5 million, the proportion of self-supporting income of books reached 45%, and its knowledge MCN matrix covered 39.33 million fans in the whole network. The company has built a multi content product structure covering paper books, e-books, audio books, podcasts, short videos and VR content, It has preliminarily realized the all media communication ecosystem of Online + offline and tob + TOC.
Looking forward to 2022: focusing on users' fine book publishing and expanding the advantages of children's publishing, an internal distribution group is established to strengthen the ability of book price control, build a media ecosystem in the medium and long term, and transform to a learning service and knowledge group. The 14th five year publishing plan clearly requires that the publishing power should be achieved in 2035. As a leading publishing company, the company will continue to play the role of publishing in strengthening the national soft power and the influence of Chinese culture, and promote three short, medium and long-term strategic objectives. 1) short term: a. refine user demand labels and content labels, carry out accurate content dissemination, and continuously improve the supply capacity of high-quality books; b. Set up distribution groups, integrate and optimize channels and resources, reshape the book price control system, and improve the ability of book price control; c. Establish "CITIC children's culture group" and implement the children's growth service system based on the advantages of children's books and CITIC children's books. 2) Medium term: initially establish a user centered financial publishing ecosystem, build a Financial Publishing System Based on audio books, NFT, virtual human content, cultural and creative space and content e-commerce, and actively explore and practice meta universe business; 3) Long term: focus on CITIC bookstore, CITIC academy and government enterprise services, integrate b-end and C-end customers, give full play to the content advantages, further build a new "membership" service system, expand the asset light output mode, and accelerate the transformation of the company to learning services and knowledge groups.
Profit forecast and investment suggestions. Externally, we are optimistic about the restoration of order in the publishing industry, internally, we are optimistic about the improvement of the company's price control ability, the increase of leading market share and the improvement of business conditions. However, affected by the overall prosperity of the publishing industry, we lowered the profit forecast for 22-23 years. It is expected that the company will realize the net profit attributable to the parent company of 274 / 306 / 340 million yuan from 2022 to 2024, with a year-on-year increase of 13.6% / 11.4% / 11.3%, maintaining the "buy" rating.
Risk tips: market fluctuation risk, increased competition in new media channels risk, tax preferential policy risk.
