\u3000\u3 Bohai Water Industry Co.Ltd(000605) 168 Three’S Company Media Group Co.Ltd(605168) )
Key investment points
Event: Three’S Company Media Group Co.Ltd(605168) released the annual report for 2021. According to the announcement, the company achieved a revenue of 3.57 billion yuan in 2021, a year-on-year increase of 27.2%; The net profit attributable to the parent company was 500 million yuan, a year-on-year increase of 39.2%; Net profit deducted from non parent company was 460 million yuan, with a year-on-year increase of 33.4%.
Increase the budget of new customers and lay a solid foundation for business growth. In 2021, the three main businesses of the company achieved rapid growth. In breakdown, the revenue of digital marketing services was 3.21 billion yuan, a year-on-year increase of 25.1%, the revenue of scene activity services was 190 million yuan, a year-on-year increase of 25.5%, and the revenue of campus media marketing services increased by 69.6% to 30 million yuan. During the reporting period, the company expanded its existing customer business and explored incremental customers simultaneously: 1) incremental: new FMCG customers such as Yibao, snowflake and Heineken under China Resources Group, new consumer customers such as giant biology, the leading enterprise in the medical and beauty industry, customers of the sports lottery management center of the State Administration of sports, Postal Savings Bank Of China Co.Ltd(601658) , China Minsheng Banking Corp.Ltd(600016) and other leading high-quality customers in the financial industry, and Dongfeng Honda and other leading automobile customers with large marketing budget; 2) Expand the stock: continue to tap the deep marketing budget of the leading customers in the original consumer goods, telecom operators, finance, automobile and other industries, consolidate the stickiness of the original customers, promote the formation of large-scale advertising effect of key customers, and the performance can grow steadily.
Media resources are abundant, and digital marketing services contribute most of the revenue. Tiktok has Wuxi Online Offline Communication Information Technology Co.Ltd(300959) ‘s extensive media resource network: online media resources, and has established good business cooperation with the APP, Tencent, Sina (including Sina micro-blog), Sohu, NetEase, Iqiyi, Youku, People.Cn Co.Ltd(603000) , China ifeng.com, etc. In terms of offline media resources, by the end of 2019, it has a campus media resource network covering more than 800 colleges and universities in 31 provinces (autonomous regions and municipalities directly under the central government), which can spread customer marketing information in multiple scenes, wide coverage and high efficiency. Digital marketing services have increased from 890 million yuan in 2018 to 3.21 billion yuan in 2021, with strong growth momentum.
Equity incentive binds the interests of core employees, and innovation vitality continues to burst out. The company granted 611000 restricted shares to 2 senior executives for the first time in 2020; A new round of equity incentive will be implemented in 2022, and 469000 restricted shares will be granted to 52 incentive objects at the price of 96.3 yuan / share. The assessment target net profit from 2022 to 2024 is no less than RMB 730 / 10 / 1.3 billion, corresponding to the net profit growth rate of 37% and 30% in 2023 and 2024. Equity incentive is conducive to mobilizing the enthusiasm of incentive objects and forming a corporate interest community.
Layout the meta universe track and build a potential second growth pole. 1) The company cooperates with the industry-leading artificial intelligence company magic enamel technology to create its own virtual human assets, and launches a customized virtual human plan to meet the new marketing needs of customers, which will further broaden the marketing scene; 2) In cooperation with Beijing Cultural Property Rights Trading Center Co., Ltd., the company will make full use of beiwen center’s leading position in the field of cultural property rights trading in the capital and Three’S Company Media Group Co.Ltd(605168) its resource advantages in the field of cultural media to jointly establish a trading platform for digital cultural and creative products, which is expected to build a potential second growth pole of performance.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 750 million yuan, 1.02 billion yuan and 1.32 billion yuan respectively, and the corresponding PE will be 16 times, 12 times and 9 times respectively. The company is a leading integrated marketing advertising media company in China, with strong stickiness of main customers and high marketing budget, which is expected to continue to contribute to high revenue growth; In 2022, the company may expand new customers on the basis of existing users, and the continuous growth of performance is worth looking forward to; Superimpose the business layout of yuanuniverse, or build a potential second growth pole and maintain the “buy” investment rating.
Risk tip: the risk of stricter industrial regulatory policies, increased market competition, downward risk in the advertising industry, and the risk that the progress of metauniverse strategy is less than expected.
