\u3000\u3 Bohai Water Industry Co.Ltd(000605) 168 Three’S Company Media Group Co.Ltd(605168) )
Event: Three’S Company Media Group Co.Ltd(605168) ( Three’S Company Media Group Co.Ltd(605168) . SH) released the 2021 annual performance report on April 8, 2022. In 21 years, the company achieved a revenue of 3.571 billion yuan, a year-on-year increase of 27.18%, and a net profit attributable to the parent company of 505 million yuan, a year-on-year increase of 39.18%, which is basically consistent with the express. In a single quarter, 21q4 achieved a revenue of 1.429 billion yuan, a year-on-year increase of 47.23%, and a net profit attributable to the parent company of 244 million yuan, a year-on-year increase of 35.59%.
Comments:
Optimize the customer structure and vigorously develop high budget brand customers. The company continues to explore new customer resources, focusing on the development of high budget customers in important areas of the national economy and focusing on the goal of brand image construction. In the 21st year, China Resources Group added fast-moving consumer goods customers such as Yibao, Xuehua, Heineken, Foshan Haitian Flavouring And Food Company Ltd(603288) and other fast-moving consumer goods customers, new consumer customers such as giant biology, the leading enterprise in the medical and beauty industry, the sports lottery management center of the State Administration of sports, Postal Savings Bank Of China Co.Ltd(601658) and other leading high-quality customers in the financial industry, as well as customers of Dongfeng Honda and FAW Toyota, which promoted the continuous and stable growth of the company’s main business.
Ensure the stickiness of existing customers and dig deep into the marketing budget. For the original leading customers in consumer goods, telecom operators, finance, automobile and other industries, the company promotes the formation of large-scale effect of key customer advertising by building a more efficient marketing methodology, so as to obtain the incremental budget of more stock key customers.
Implement the development strategy of developing integrated marketing business in the automotive industry to ensure performance growth. The company has accumulated some experience in the marketing business of the automobile industry to help customers effectively solve the problem that online marketing is difficult to touch consumers’ willingness to buy cars. In 21 years, the company won the bid of Dongfeng Honda’s 2022 online advertising agency project, and was selected as a brand-new model of FAW Toyota to provide brand publicity and communication and other marketing services. Now it has accumulated a series of automotive industry customers, including FAW Volkswagen, FAW Pentium, FAW Toyota, SAIC GM Cadillac, Dongfeng Honda, Great Wall Motor Company Limited(601633) and so on. In the future, it will continue to develop automotive industry customers to ensure continuous growth of performance.
The profitability was stable, and the gross profit margin and net profit margin increased slightly. The gross profit margin and net profit margin of the company in 21 years were 21.15% / 14.14% respectively, with a year-on-year increase of 1.66pct/1.22pct. We believe that the overall improvement of the epidemic is mainly due to the recovery of offline scene activity services and campus media services with high gross profit margin; The gross profit margin and net profit margin of 21q4 were 23.25% / 17.09% respectively, with a year-on-year decrease of 2.11pct/1.47pct. We believe that it is mainly due to the impact of the epidemic on offline advertising with high gross profit margin.
NFT and virtual human business will further catalyze the company’s performance. The company signed a strategic cooperation agreement with beiwen center in January 22 and plans to jointly establish a digital cultural and creative product trading platform, which is expected to be launched this year and become the second growth curve of the company. Recently, China’s NFT market has developed rapidly. In March, the sales of China’s digital collection platforms whale exploration and meta vision increased significantly, with a month on month increase of 110.68% / 239.3% respectively. After the Three’S Company Media Group Co.Ltd(605168) platform is launched, it is expected to realize revenue quickly; In March 30th, Tencent responded to the recent rectification of official account and small program of the two hype and the sale of digital collections, mainly based on relevant national laws and regulations, in order to prevent the risk of speculation in virtual currency transactions, which also led to the expectation of regulation regulation in the market, and will be more conducive to the advantage of the company’s state-owned background digital collection trading platform in the future. The company actively complies with the development trend of the meta universe, arranges the field of virtual human, cooperates with magic enamel technology, a front-line manufacturer of Chinese virtual human, creates its own virtual human, and further expands the marketing scene.
In 2021, the company plans to distribute a cash dividend of 30.00 yuan (tax included) to all shareholders for every 10 shares, and it is expected to distribute a total profit of 209033400 yuan (tax included), with a cash dividend rate of 41.39% and a dividend rate of 1.78%; At the same time, it is proposed to increase 4.5 shares for every 10 shares to all shareholders at the share capital premium in the capital reserve. It is expected that a total of 31355010 shares will be increased. After the increase, the total share capital of the company is expected to increase to 101032810 shares.
Investment suggestions: Three’S Company Media Group Co.Ltd(605168) has stable head customers in many industries, including head state-owned enterprises such as Yili, three operators and four banks. It will update and develop new customers in many industries such as China Resources Group, FAW Volkswagen, Dongfeng Honda and FAW Toyota in 21 years, and there may be investment income elasticity in the next 2-3 years. The company will disclose the first quarterly report on April 16. Combined with the situation of new customers in 21 years, the company is expected to achieve high growth in 22q1 revenue. Considering the epidemic and other influencing factors, the net profit margin may decline. We estimate that the net profit attributable to the parent company in 22-24 years is RMB 744 / 10.29/1.322 billion, the corresponding EPS is RMB 10.67/14.76/18.97 (RMB 7.36/10.18/13.08 after increase and dilution), and the corresponding valuation is 17x / 12x / 9x. According to the 22-year 25X P / E target valuation given by the comparable company, the target price is 266.75 yuan / share. Considering that the company benefits from the continuous growth trend of marketing and promotion investment of core state-owned enterprises, and the layout of NFT and digital virtual human is expected to form a catalyst, the “buy” rating is maintained.
Risk factors: increased market competition, decline in operating interest rates, changes in industrial policies and other risks.
