\u3000\u3 China Vanke Co.Ltd(000002) 027 Focus Media Information Technology Co.Ltd(002027) )
Matters:
Financial report for 2021: revenue of 14.836 billion yuan, yoy: + 22.64%, of which Q4 revenue grew by – 12.63%; The profit attributable to the parent company is RMB 6.063 billion, yoy: + 51.43%, and the net profit after deduction is RMB 5.414 billion, yoy: + 48.48%. The first quarter of 2022: the revenue is 2.939 billion yuan, yoy: – 18.19%, the profit attributable to the parent company is 929 million yuan, yoy: – 32.12%, and the net profit after deduction is 811 million yuan, yoy: – 33.33%. Profit distribution plan: cash dividend of 0.13 yuan per share (including tax).
Ping An View:
The performance was in line with expectations. The annual profit of 6.063 billion yuan was within the profit forecast range (the forecast annual profit range was 6.02 billion yuan ~ 6.2 billion yuan), an increase of 51.43%, mainly driven by new consumption and Internet brand advertising. The growth rate of Q1 revenue in 2022 is in line with expectations, and its decline factors are as follows: 1) the impact of high base in the same period of 2021, especially online education advertising; 2) This year, the impact of the epidemic is obvious, especially on core markets such as Shanghai. In addition, under the current pessimistic economic expectations, customers’ advertising budgets tend to tighten in the short term.
The total cost of Q1 was 1.832 billion yuan, lower than 2.072 billion yuan in the same period last year; The operating cost Q1 dominated by rent is 1.077 billion yuan, lower than the same period in 2019 and 2021, and the rent cost is well controlled. The overall location is stable, focusing on structural optimization. From 2019 to 2021, the number of self operated elevator TV media is 709000 / 683000 / 774000 respectively, and the number of self operated elevator posters is 1780000 / 1688000 / 1580000 respectively.
Spin off business in 2021: 1) building media business was RMB 13.618 billion, with a year-on-year increase of 17.64%; 2) The cinema media business was RMB 1.173 billion, with a year-on-year increase of 145.08%. Under the impact of the epidemic in 2020, most cinemas were closed, and the year-on-year business growth was rapid. According to the industry division of downstream customers, 1) the advertising of daily consumer goods reached 5.805 billion yuan, accounting for 39.12%, an increase of 35.36%, of which the incremental contribution of new consumption such as cosmetics and dairy products was significant; 2) Internet brand advertising was 4.02 billion yuan, accounting for 27.10%, an increase of 22.49%; 3) However, the advertising contribution of automobile, real estate and other industries is limited, which is highly related to the development of the customer’s industry.
Profit forecast and Valuation: in view of the impact of the current epidemic and changes in the macroeconomic environment, we adjusted our performance. It is predicted that the company’s profits in 202224 will be 4.484 billion, 5.571 billion and 6.534 billion respectively (the original forecast in 202223 was 7.273 billion and 8.65 billion), and the PE corresponding to the current share price is only 17.1 times, 13.7 times and 11.7 times respectively. Adhere to our judgment on the company: 1) there is great potential for Chinese consumption and brand upgrading, and the offline channel value of focus is indispensable. 2) The bottom logic of focus is the monopolization of community flow and high operating leverage. The company has huge and good cash flow. The short-term epidemic has impacted the performance, but the value has not changed in the long run, and the valuation has been at a historically low position, maintaining the “strongly recommended” rating.
Risk tips: 1) the epidemic situation is repeated, advertisements cannot be published, and cinemas continue to be “shut down”; 2) Macroeconomic fluctuations affect the overall recovery of the advertising industry, and advertisers carefully plan the advertising budget; 3) Policy fluctuations in the industry of downstream customers; 4) Competition suddenly intensifies, such as competitors obtain large amount of financing, expand the point scale or grab customers at low prices; 5) Reduction of major shareholders.
