\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 88 Citic Press Corporation(300788) )
Event: the company issued 2022q1 report. In 2022q1, the company achieved a revenue of 412 million yuan, a year-on-year decrease of 12.91%, a net profit attributable to the parent company of 409814 million yuan, a year-on-year decrease of 35.24%, and a net profit deducted from non attributable to the parent company of 333231 million yuan, a year-on-year decrease of 43.25%.
Consumption weakness superimposed on the outbreak of the epidemic, and online store channels showed negative growth for the first time. According to the open book report, the book retail market in 2022q1 decreased by 13.28% year-on-year. Physical store channels decreased by 29.7% year-on-year. Although physical store channels showed positive growth in 2021, they still failed to return to the pre epidemic level; Online store channels showed negative growth for the first time, with a year-on-year decrease of 8.34%, which is mainly due to the great impact of the epidemic on logistics. The industry as a whole is facing the weak consumption under flow saturation and the repeated impact of the epidemic.
The epidemic has a great impact on the company’s supply chain. Since 2020, the company has actively integrated the channel system and embraced online channels. The proportion of traditional e-commerce platforms (jd.com, Dangdang, etc.) and short video platforms (Tiktok, etc.) is large. As a leading company in the industry, the company has actively overcome the impact of the epidemic, but its impact on the company’s supply chain is still large, and its performance in the first quarter is under pressure.
The company adheres to the fundamental principle of “producing good books for the people and high-quality products for the times”, and continues to expand the content and scale of high-quality products. The company’s key book list in 2022 revealed that 1) Business Finance: principles: changing world order (by Rui Dalio), prospects of China’s economy, development of China’s economy (by Lin Yifu, etc.), striving to embark on the road of common prosperity (edited by Ma Jiantang), how to prevent the next pandemic (by Bill Gates), etc; 2) Literature, art and life: 5000 years of Chinese Art (written by Yang Qi), patterns hidden in the Forbidden City (written by Wen Zang), surprised exploration, the king of reasoning (written by Zijin Chen), etc; 3) Children’s books: dog money 2 (by [de] Bodo “Schaeffer), Penguin Classic bilingual graded reading (by Penguin Langdon), highlights popular science English graded reading (by highlights press, USA), etc.
Profit forecast and investment suggestions: externally, we are optimistic about the gradual improvement of the epidemic situation and 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 operating conditions. We expect the company to realize a 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: the recovery of the epidemic is not as expected, the risk of market fluctuation, and the risk of intensified competition in new media channels
