\u3000\u3 China Vanke Co.Ltd(000002) 027 Focus Media Information Technology Co.Ltd(002027) )
Event: the company announced the financial report of 2021 and the first quarter of 2022: the revenue in 2021 was 14.836 billion yuan, a year-on-year increase of 22.64%; The net profit attributable to the parent company was 6.063 billion yuan, a year-on-year increase of 51.43%; In the first quarter of 2022, the revenue was 2.939 billion yuan, a year-on-year decrease of 18.19%; The net profit attributable to the parent company was 929 million yuan, a year-on-year decrease of 32.12%.
The retention rate of key customers is high and sticky, the proportion of consumer customers continues to grow, and the revenue stability continues: the retention rate of customers with more than 100 million yuan has reached 90% in the past six years, and the retention rate of customers with 50 million-100 million yuan has reached 82%. In 2021, daily consumption advertisers accounted for 42.67%, increased by 5.49% compared with 37.18% in 2020, and the revenue contribution increased by 35.36% year-on-year, further extending the stability of the company’s revenue. The high retention rate and changes in customer structure reflect the improvement of customers’ recognition of the value of ladder media. Compared with other industries, consumer advertisers have a more stable investment budget due to rapid product renewal and high promotion demand.
The core sites continued to expand and the operating costs fell steadily: the company’s core media sites continued to grow. In 2021, the number of elevator TV and poster media reached 2.673 million, a year-on-year increase of 8.26%, covering 307 major cities in China and more than 50 major cities overseas. The operating cost of the company decreased steadily. In 2021, the operating cost of the company’s building media decreased by 4.9%, which was mainly due to the decrease of employee salary caused by the optimization of technical promotion personnel, the year-on-year decrease of equipment depreciation amount and other cost control after the depreciation of some assets. Cost control has achieved remarkable results, which helps to improve the company’s ability to deal with the epidemic and other uncertain factors.
The short-term impact of the epidemic is expected, and the medium value of the recovery of the epidemic depends on the long-term: Q1 revenue declined year-on-year in 2022. In addition to the impact of the high base of education income, it is mainly due to the impact of the epidemic in Shanghai, Shenzhen and other places on the publication rate. Customers delayed the publication, and Q2 is expected to continue to be affected. Under the expectation that the epidemic situation will be controlled in the second half of the year, consumer advertisers will resume their delivery, and some advertisers will catch up, and their performance will be improved. In the long run, the leading position of the company in the industry is stable, the proportion of ladder media in brand advertising continues to rise, the growth of the number of customers has a high contribution to revenue growth, and the long-term value is worthy of attention.
Investment suggestion and rating: we expect that the company will realize the net profit attributable to the parent company of 5.23 billion, 6.73 billion and 8.01 billion from 2022 to 2024. The current share price corresponds to 16 times, 13 times and 11 times of PE respectively. Based on the company’s leading position in the field of ladder media, the long-term value is expected to return and maintain the “buy” rating.
Risk warning: macroeconomic downside risk; Risk of recurrent outbreaks; Industry competition intensifies risks, etc
