\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 88 Citic Press Corporation(300788) )
Event: Citic Press Corporation(300788) published the annual report of 2021 on March 29. Last year, the company achieved an operating revenue of 1.922 billion yuan, a year-on-year increase of 1.60%; The net profit attributable to the shareholders of the listed company was 242 million yuan, a year-on-year decrease of 14.35%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 212 million yuan, a year-on-year decrease of 16.98%; The net cash flow from operating activities was 285 million yuan, a year-on-year decrease of 13.33%; The weighted average return on net assets was 12.35%.
Industry environment: Book retail has not recovered before the epidemic, the growth of network channels has stagnated, and the extremely low discount of short video e-commerce has squeezed the profit space. During the "14th five year plan" period, book price legislation will be promoted.
Main business fundamentals: mass book publishing has maintained a leading position in the market, book sales, output and inventory have resumed growth, and the gross profit margin has been reduced due to the increase of printing and editing costs.
Children's book business: against the trend of high growth, CITIC children will establish "CITIC children's culture group" to form a child growth service system.
Digital transformation: diversified content products have covered paper books, e-books, audio books, podcasts, short videos and VR content, and will start relevant businesses of metauniverse.
Bookstore format: CITIC bookstore will turn losses into profits and build a membership knowledge service system.
We expect the company to achieve revenue of 2.1 billion yuan / 2.33 billion yuan / 2.61 billion yuan in 2022 / 2023 / 2024, corresponding to net profit attributable to parent company of 310 million yuan / 350 million yuan / 410 million yuan, corresponding to EPS of 1.6 yuan / 1.8 yuan / 2.2 yuan. Based on the closing price on March 30, PE is 14.8 times / 13.0 times / 11.1 times. We believe that the reasonable valuation of the company in 2022 is 22 times, corresponding to the target price of 35.2 yuan, giving a "buy" rating.
Citic Press Corporation(300788) published the annual report of 2021 on March 29. Last year, the company achieved an operating revenue of 1.922 billion yuan, a year-on-year increase of 1.60%; The net profit attributable to the shareholders of the listed company was 242 million yuan, a year-on-year decrease of 14.35%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 212 million yuan, a year-on-year decrease of 16.98%; The net cash flow from operating activities was 285 million yuan, a year-on-year decrease of 13.33%; The weighted average return on net assets was 12.35%.
Industry environment: Book retail has not recovered before the epidemic, the growth of network channels has stagnated, and the extremely low discount of short video e-commerce has squeezed the profit space. During the "14th five year plan" period, book price legislation will be promoted. According to the open book data, the overall scale of the book retail market was 98.68 billion in 2021, up 1.65% year-on-year and down 3.51% compared with 2019, which has not yet returned to the pre epidemic level. The growth rate of online store channels slowed down significantly, with a year-on-year increase of 1%; Driven by theme books, the physical store channel increased by 4.09% year-on-year, but decreased by 31.09% compared with 2019. In 2021, online channels accounted for nearly 80%, and short video e-commerce rose rapidly. The proportion of children's code is much higher than that of other types of e-commerce, and it is concentrated in a few varieties. The discount of short video e-commerce is as low as 3.9%, which has an impact on other types of e-commerce and physical store channels. The "disorderly price war" has greatly squeezed the profit space of publishing institutions. The requirements of "standardizing the online and offline publishing order" are clearly put forward in the "development plan of the publishing industry during the 14th five year plan" published by the State Press and publication administration. Strengthen the supervision and management of publication prices, promote the legislation of book prices, effectively stop the vicious "price war" of online and offline publication sales, and create a healthy and orderly market environment. If relevant laws and regulations are issued, it can effectively improve the current profit dilemma of the publishing industry.
Main business fundamentals: popular book publishing has maintained a leading position in the market, and book sales, output and inventory have resumed growth, but the gross profit margin has declined, and the cost of printing, binding and editing has increased rapidly. The sales volume of the company's book production business increased by 6.79% year-on-year, the production and inventory volume achieved double-digit growth under the low base in 2020, and the sales volume of the bookstore business increased by 3.39%. The company's gross profit margin fell from 40.4% to 35.5%. From the cost side of the main business of book publishing and distribution, the royalties and remuneration items with a cost of about 31% increased slightly by 1.34%, the printing and binding fee with a cost of 22% increased by 6.93%, the paper material fee with a cost of 13% increased by 0.11%, and the editing expenses with a cost of 10% increased by 7.21%. The expense side improved year-on-year. The company's sales expense rate decreased by 1.7pct year-on-year, the management expense rate increased by 0.3pct year-on-year, and the R & D expense rate decreased by 0.3oct year-on-year. In 2021, the company had the courage to break through the difficulties of the industry, outperformed the market and ranked first in the overall market. In the subdivided fields, the market share of economic and management books continues to lead the market; Popular science keeps the first place in the market; Biography rose to second place; Compared with last year, the art category increased by six places and ranked sixth. During the year, it produced Bill Gates's "double carbon" book "climate economy and the future of mankind", here is China 2, which tells about China's geographical changes in the past century, and dog money, which focuses on the cultivation of children's financial quotient.
Children's book business: against the trend of high growth, CITIC children will establish "CITIC children's culture group" to form a child growth service system. In the face of drastic changes in the market environment, the market share of children's books continued to increase to 3.75%, ranking first to third year-on-year. CITIC children's book won 146 awards throughout the year, and has formed a competitive advantage in the fields of popular science, early childhood enlightenment and high-quality picture books, all of which rank in the forefront of the market. In 2022, the company plans to establish "CITIC children's culture group", based on CITIC children's books, combined with IP based creative production and standardized content production, and strive to build a children's growth service system through the creation of "end" and "Scene". Around picture books, popular science, literature, art, parent-child tutoring and other lines, build a children's knowledge production system, and develop a member subscription age-specific reading product system integrating books / Derivatives / digital products. Based on the original topic selection, explore and carry out IP full copyright and full product operation business. Through online we media and member subscriptions, and the operation of offline children's theme space, create content and channel capabilities directly facing users.
Digital transformation: diversified content products have covered paper books, e-books, audio books, podcasts, short videos and VR content, and will start relevant businesses of metauniverse. The company actively responded to the external challenges of channel migration and intensified online competition, and quickly established a self broadcasting matrix of books. The self operated income of books accounted for 45% and the cumulative number of service users reached 20.5 million. The company continues to make efforts to operate knowledge MCN. During the reporting period, the MCN matrix covered 39.33 million fans and 2.7 billion content videos. In 2022, the company plans to launch "2022 Citic Press Corporation(300788) meta universe design competition", including "virtual image IP Design Challenge" and "meta universe story design invitational"; CITIC classic series NFT products will also be launched to gradually promote the deep binding of NFT with the publishing copyright system and offline experience.
Bookstore format: CITIC bookstore will turn losses into profits and build a membership knowledge service system. Under the influence of the epidemic, CITIC bookstore has continuously innovated business formats, optimized and adjusted the stock business structure, expanded cross-border cooperation asset light projects, and turned losses into profits in 2021. The scale of airport stores ranks first, with an annual passenger flow of 446 million; Business stores have established mature models and competitive advantages. Chengdu xinglonghu store is known as the "most beautiful underwater bookstore". McDonald's Integrated Children's theme space has attracted social attention and won 15 provincial and ministerial and 1 urban Bookstore awards. Yuyu culture and life company provides comprehensive supply chain services for all Taiya bookstores in China, meeting the flexible supply chain standards recognized by Japan's Taiya bookstores and Japan hawker group. In 2022, the company plans to take CITIC academy and CITIC bookstore as the basis, and take CITIC academy mass edition and government enterprise edition as the digital content dissemination interface online; Offline, the business line of CITIC bookstore is used as the traffic entrance and service network to radiate the surrounding government and enterprise customers, and the supply chain system of CITIC bookstore is used as the support of diversified products. On the basis of connecting users of CITIC academy and CITIC bookstore, we will further build a "membership" knowledge service system.
Investment suggestion: we expect the company to achieve revenue of 2.1 billion yuan / 2.33 billion yuan / 2.61 billion yuan in 2022 / 2023 / 2024, corresponding to net profit attributable to parent company of 310 million yuan / 350 million yuan / 410 million yuan, corresponding to EPS of 1.6 yuan / 1.8 yuan / 2.2 yuan. Based on the closing price on March 30, PE is 14.8 times / 13.0 times / 11.1 times. We believe that the reasonable valuation of the company in 2022 is 22 times, corresponding to the target price of 35.2 yuan, giving a "buy" rating.
