\u3000\u3 China Vanke Co.Ltd(000002) 027 Focus Media Information Technology Co.Ltd(002027) )
Event:
1. In the 2021 annual report, the revenue is RMB 14.836 billion, yoy + 22.64%, the net profit attributable to the parent company is RMB 6.063 billion, yoy + 51.43%, and the net profit not attributable to the parent company is RMB 5.414 billion, yoy + 48.48%. It is proposed to pay a cash dividend of 1.3 yuan (including tax) for every 10 shares.
2. In the quarterly report of 2022q1, the revenue was 2.939 billion yuan, yoy-18.19%, the net profit attributable to the parent was 929 million yuan, yoy-32.12%, and the net profit not attributable to the parent was 811 million yuan, yoy-33.33%.
Key investment points:
The epidemic repeatedly affects advertising demand and delivery:
The revenue of 2021q1-q4 and 2022q1 companies is 3.593/37.34/38.22/36.88/2.939 billion yuan, yoy + 85.4% / + 39.7% / + 17.1% / – 12.6% / – 18.2%; The net profit attributable to the parent company was 1.368/15.32/15.22/16.41/929 billion yuan, yoy + 3510.4% / + 95.0% / + 10.4% / – 8.2% / – 32.1%. Due to the base and macro fluctuations in the second half of the year, the recovery was high before and low after, and the growth of 2021q4 and 2022q1 industries was weak.
Building: the growth of building business has slowed down since the recurrence of the epidemic in 2021q3. The building income of 2021q1-q42022q1 is 32.4/34.1/36.1/33.5/26.55 and yoy + 77.5% / + 30.2% / + 11.5% / – 14.0% / – 18.15% respectively. The main reasons for the year-on-year decline in 2022q1 revenue are: (1) macro fluctuations affect the demand of advertisers, while the epidemic affects the advertising in some regions. According to the grassroots survey, the single cycle duration of selected points in Beijing, which was not greatly affected by the epidemic from 2022q1 to April 2022, was 21.7/19.8min, an increase of 30.5% / 8% year-on-year; The number of advertisers was 14.4/14.7, with a year-on-year increase of 18.4% / 17.3%, and the publication and hanging situation was good. However, from February 2022 to now, the epidemic situation in Shenzhen, Shanghai and other places has repeatedly affected the offline flow of people and had a certain impact on the building business. Since most of the company’s elevator TVs can be put into the cloud intelligently, the elevator posters still need to be put in manually. Therefore, it is expected that the impact of the epidemic situation closure on the elevator poster business is greater than that of the elevator TV business. (2) In 2021q1, there are many educational advertisers with a high income base (the education policy has been tightened since April 2021). Building media raised the price of regular publications in July 2020, January / July 2021 and January 2022 respectively, and the implementation was good. We look forward to the recovery of advertising demand and delivery after the improvement of the epidemic.
Cinemas: the revenue of 2021 / 2022q1 cinemas is RMB 1.171282 billion, yoy + 145.1% / – 16.85%. In 2021 / 2022q1, the national box office was 47 / 14 billion yuan, yoy + 131.7% / – 22.7%, and the cinema revenue was basically the same as the box office trend. According to CTR, in October / November 2021, the cost of cinema advertising increased by 92.6% / 35.4% year-on-year, maintaining a good recovery; February 2021 increased by 1% year-on-year, and the decline of monthly growth rate is related to the poor box office performance of the Spring Festival. Recently, due to the epidemic, many films were withdrawn during the May Day season, and it is expected that the summer season will bring the box office and cinema advertising market back.
The cost and expense are well controlled, and the bad debts receivable are controllable:
Operating cost and resource expansion: in 2021, the operating cost was 4.82 billion yuan, yoy + 8.3%. From 2021q1 to 2022q1, the operating cost is 1.23/12.7/11.8/11.3/1.08 billion yuan, yoy + 1.7% / + 20.1% / + 22.8% / – 6.8% / – 12.6%, and the cost shows a downward trend quarter by quarter.
Rental cost: (1) the overall rental cost in 2021 was yoy + 13.2%, which was mainly due to the significant increase of 221.5% in theater rental cost compared with 2020. During the epidemic period in 2020, local cinemas were closed, and there were no theater media resource procurement costs and theater media rental costs. The normal rhythm was restored in 2021. By the end of March 2022, the company had covered 1927 cinemas and 13600 screens. (2) In terms of buildings, at the end of 2021 / March 2022, there were 774 / 781000 self operated elevator TVs, yoy + 13% / + 11%; There are 158 / 1.55 million elevator posters, yoy-6% / – 8%. The total number of resources for buildings is 235.4/233 million, yoy-1% / – 3%. The number of resources has been adjusted and optimized to a certain extent, and the rental cost has decreased slightly compared with the same period. At the end of 2022q1, the use right assets (prepaid rent) in the account increased by 5.2% compared with the beginning of the year, and the prepayment (including prepaid equipment purchase money) decreased by 12.6% compared with the beginning of the year. It is speculated that the company will maintain a cautious point expansion strategy, and there is no obvious change in the competitive environment. (3) Since 2017, in response to the the Belt and Road policy, the company has deployed overseas. Up to now, the company’s overseas subsidiaries have operated 98000 sets of elevator TV media equipment, yoy+34.2%, and have successively entered South Korea, Thailand, Indonesia and other countries and regions; Fmkorea (holding 50.4%) plans to spin off its Korean subsidiary and be listed on the Korean stock exchange.
Employee compensation: employee compensation decreased by 6.1% year-on-year in 2021, mainly due to the further improvement of human efficiency through resource combing, system upgrading and digital transformation of Kuma intelligent advertising platform. The number of building development / operation personnel was controlled from 842 / 3248 at the end of 2020 to 800 / 2476 at the end of 2021, with a total of yoy-20%.
Taxes, fees, non recurring and receivables: (1) the proportion of business tax surcharges in revenue in 2021 is basically the same as that in 2020 (both 0.5%), which is mainly due to the continuity of the exemption policy for cultural undertakings construction fees. Since 2022, the relevant preferential policies expire, and the collection of cultural undertakings construction fees will be halved, so the proportion of tax in 2022q1 will be increased to 1.9%. (2) Good cost control: during 2021 / 2022q1, the cost rate was 20.8% / 23.8%, a year-on-year decrease of 2.5 / 1.0 percentage points. (3) In 2021 / 2022q1, the non recurring profit and loss is 650 / 120 million yuan, of which 590 / 220 million yuan is mainly from government subsidies. (4) In 2021, the credit impairment loss was 165 million yuan, yoy-55.4%. In 2021q1-q4, the credit impairment loss in a single quarter was less than 100 million yuan for four consecutive quarters, and the credit impairment loss in 2022q1 was 120 million yuan, which was mainly due to the negative impact of the epidemic in many places since March on the economy. The company judged that the expected credit loss rate of accounts receivable had increased, so it made more provision accordingly. The number of days of accounts receivable rose by 18.82% at the end of the year, but the number of days of accounts receivable fell slightly to yq1-2022y, and the turnover of accounts receivable fell by 18.82% at the end of the year (yq1-2022y), but the number of days of accounts receivable fell slightly to yq1-2022y).
The proportion of consumer goods increased again and continued to explore new domestic consumption segments:
Consumer goods: the competition of new consumer goods is fierce and there is a demand for continuous exposure, especially the demand for brand advertising of leading enterprises.
In 2021, the revenue of daily consumer goods was 6.3 billion yuan, yoy + 40.8%, accounting for 42.7%, an increase of 5.5 percentage points over the previous year. ① Daily chemical products: in addition to imported brands such as Clarins and Clinique, new domestic cosmetics daily chemical products such as huaxizi, runbaiyan and perfect diary will continue to be put into use. In 2021, new mystery of New Zealand, membrane method family and Lin Qingxuan will be added, and in 2022, pill beauty will be added. ② Food and drink: in addition to the large-scale launch of alcohol, Yuanqi forest, Xiaoxian stew and daily topping, new rice porridge, zihi pot, Tangda people and other convenience foods form a sub segment. In 2021, Jane Eyre, Youyi C, daily Heiqiao, etc. will be added; In 2022, Jianong fruit, Jianchun and Taishan raw pulp will be added. ③ New small household appliance market: in 2021, ulike hair remover, SKG massage instrument, Philips electric toothbrush, Dyson, etc. will be added; In 2022, Jiang Xiaozhu moxibustion, comper beauty instrument and yunmi intelligent floor suction machine will be added. ④ Revitalize the clothing track: Bosideng drives traditional clothing such as Joeone Co.Ltd(601566) , LiLang and Anta, and emerging clothing such as ubras, bosie and violent Lori; In 2022, new post show sweat clothes will be added. ⑤ Others: new consumer goods for mothers, infants and children such as black and white tone and kangaroo mother recently; Health care Langdi calcium drives By-Health Co.Ltd(300146) and other products to be continuously put into use.
Since the beginning of last year, the growth rate of online advertising financing has been 28.1% lower than that of the previous year, accounting for 2.61% of the total revenue of online advertising, which is still 2.6% higher than that of the previous year. After the launch of online advertising, the growth rate of online advertising financing has remained 1.5% higher than that of the previous year, According to the data of the Institute of information and communications technology, the amount of Internet investment and financing from 2021q1 to 2022q1 is US $151 / 153 / 85 / 61 / 3.5 billion respectively. It is difficult to enter 2022. Recently, UU errands, karaoke bar, karaoke treasure, decibel pass, etc. have been added. Ali increased cooperation and became the company’s largest advertiser customer in 2021, contributing 1.285 billion yuan to the company’s revenue (in 2020, Ali was also the largest advertiser, contributing 600 million yuan), accounting for 8.7% of the total revenue.
Others: expand the coverage of service customers such as tourism, life beauty, leisure services and medical services through smart screen and advertising agency mode. In 2021, the revenue of commercial services was 730 million yuan, yoy + 21.1%. The revenue of advertisers of transportation and automobile decreased by 25.7% year-on-year, which was caused by the reduction of new energy vehicle enterprises and traditional vehicle enterprises.
Profit forecast and rating: the epidemic in 2022q2 is still continuing, but the company’s operation is stable and the medium and long-term logic remains unchanged. It is optimistic about the company’s room to improve its penetration in consumer goods / commercial services / real estate, home furnishing, entertainment and leisure / Finance and the recovery space of Internet / automobile and other industries, and its value as brand advertising and the long-term development space of life circle media. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 5.73/67.2/7.45 billion, corresponding to EPS of RMB 0.39/0.46/0.51 and PE of 14.8/12.6/11.4x, maintaining the “buy” rating.
Risk tips: macroeconomic, advertising industry depression, overseas expansion less than expected, intensified industry competition, repeated epidemic, box office less than expected, bad debt receivable, smart screen advertiser development less than expected, downward shift of valuation center, operation of investment object, public opinion and other risks.
