\u3000\u3 China Vanke Co.Ltd(000002) 027 Focus Media Information Technology Co.Ltd(002027) )
Event:
The company released the annual report of 2021 and the first quarterly report of 2022: 1) in 2021, the operating revenue reached 14.836 billion, a year-on-year increase of 22.64%; The net profit attributable to the parent company was 6.063 billion, a year-on-year increase of 51.43%; The company plans to distribute 1.3 yuan in cash to all shareholders for every 10 shares; 2) In 2022q1, the operating revenue was 2.939 billion, with a decrease of 18.19%; The net profit attributable to the parent company was 929 million, a decrease of 32.12%.
Comments:
The annual performance in 2021 was in line with expectations, and the performance in 2022q1 fluctuated due to the epidemic.
1) in 2021, the operating revenue reached 14.836 billion, with a year-on-year increase of 22.64%; The net profit attributable to the parent company was 6.063 billion, with a year-on-year increase of 51.43%, and the performance was in line with expectations. The growth of performance in 2021 is mainly due to the macroeconomic recovery and the continuous and rapid increase of customer investment in consumer goods, which drives the growth of income; In addition, the revenue of cinema media also rebounded. In 2021, the revenue of cinema media was 1.173 billion, an increase of 145% at the same time. However, due to the buyout type of cinema point resource procurement, there are rigid costs, and the cinema is still in a state of loss.
2) in 2022q1, due to the impact of the epidemic, the weak demand of the advertising market, the limited release in some cities and the impact of the high base in the same period last year, the revenue side decreased year-on-year, of which the building media decreased by 18.15% year-on-year; Cinema media fell 16.85% year-on-year. In 2022q1, the company’s promotion of personnel optimization reduced the operating cost by 12.58%, but the provision of personnel optimization compensation resulted in an increase of 40.13% in the management expense and 2.49pct in the management expense rate; In addition, it is also affected by the provision for impairment and changes in fair value. Comprehensively, the net profit attributable to the parent company of 2022q1 decreased by 32.12% year-on-year, and there are certain fluctuations in short-term performance.
In 2022q1, the proportion of consumer goods revenue continued to increase, making the company’s operation more resilient. After the adjustment of customer structure in the past few years, consumer goods have become the largest category of customers of the company. In 2021, consumer goods accounted for 39.12% of building media revenue, an increase of 3.67 PCT at the same time. According to the disclosure of the company’s public performance exchange meeting, the contribution revenue of consumer goods customers still increased in 2022q1, and the proportion of revenue continued to increase. We believe that the media value of the company has been fully verified by the market. Consumer goods customers have a stable advertising budget investment every year, which will become the ballast of the company’s performance. While ensuring the continuous stability of the company’s performance, it also improves the company’s ability to resist cycles and further strengthens the resilience of operation.
The newly added points are mainly elevator video media, and the first and second tier cities are still the core basic sector. According to the disclosure of the 2021 annual report, as of March 2022, the total number of self operated building media points of the company was 2.33 million, a decrease of 5.44% compared with July 2021, and the number of points decreased; Among them, the number of self operated elevator TV media points is 781000, and the number of self operated elevator poster media is 1549000, an increase of 3.3% and – 9.31% respectively compared with July 2021. We infer that the company’s current point expansion is mainly based on smart screen. From the perspective of regional distribution, the number of self operated elevator TV media and elevator poster media points owned by the company in the first and second tier cities in 2021 accounted for 80.15% and 85.71% respectively, with an increase of 0.55pct and 2.58pct respectively. The company still takes the points in the first and second tier cities as the core base.
Overseas business continues to advance, and its Korean subsidiary plans to be spun off and listed in Korea. While continuously consolidating the leading position of ladder media, the company is also actively expanding its overseas business layout. By the end of March 2022, the company’s overseas media network has covered more than 50 major cities in South Korea, Thailand, Singapore, Indonesia and other countries, with 98000 elevator TV media. At present, the overseas business layout is advancing in an orderly manner. On the evening of April 28, the company announced that it planned to spin off its Korean subsidiary FM Korea and list it on the Korean stock exchange. After the spin off, the company will still maintain control over FM Korea. We believe that this is in line with the company’s business plan to grow into a global ladder media group. Listing in Korea is expected to improve the company’s brand awareness in Korea and help further open the market.
Investment suggestion: Although the company’s short-term performance is disturbed by the epidemic and there is some uncertainty, we believe that after early competition and adjustment, the company has been reshaped and upgraded from the aspects of customer structure, product power and digital ability, and has grown into a company with more business toughness. At the same time, the company’s media value has been recognized by the market, and the performance is basically stable. We expect that the company will realize a net profit attributable to the parent company of 54.89/68.32/8.624 billion from 2022 to 2024, corresponding to EPS of 0.38/0.47/0.60 yuan. As the leader of ladder media industry, the company has a valuation premium, giving 20 times PE in 2022 and a six-month target price of 7.6 yuan, maintaining the investment rating of “Buy-A”.
Risk warning: the impact of the epidemic exceeds expectations; Advertisers’ budget growth is less than expected; Industry competition intensifies.
