Securities code: Guomai Culture & Media Co.Ltd(301052) securities abbreviation: Guomai Culture & Media Co.Ltd(301052) Guomai Culture & Media Co.Ltd(301052)
Record of investor relations activities on April 28, 2022
No.: 2022004
□ specific object research □ analyst meeting
□ media interview □ performance briefing
Investor relations activities
□ press conference □ Roadshow
Dynamic category
□ site visit
√ others (teleconference)
Name of participant China Industrial Securities Co.Ltd(601377) : Yang Shangdong
Wanjia Fund Management Co., Ltd.: Ding Yujie
And name of person: Haifutong Fund Management Co., Ltd.: Peng Zhiyuan
Time: 15:30-16:30, April 28, 2022
Location: Block B, No. 181, Guyi Road, Xuhui District, Shanghai
Reception of listed companies Qu Hongbin (president)
Name of the chief financial officer (CAI Yuru)
The main contents of this investor relations activity are as follows:
1、 Overview of the company’s operation in the first quarter
The profit in the first quarter decreased by 43.2% compared with the same period in 2021 for two reasons: first, the release result of the film “Four Seas” invested in 2021 was not as expected, resulting in a loss of more than 8 million non recurring profits and losses; Second, the equity incentive plan announced in 2021 has a non business impact of 4.1 million from the implementation of the plan in December to the first quarter of 2022. Therefore, the non business level profit and loss in the first quarter reached more than 10 million. The net profit excluding non recurring profit and loss increased by 50% over the same period in 2021. If the amortization expense of equity incentive is added back, it only depends on the main business, and the increase has reached 100%.
Compared with the same period in 2021, the revenue in the first quarter increased by 14%, the cost increased by 7%, and the gross profit ratio increased from 47% in the first quarter of 2021 to 51% in the first quarter of 2022, an increase of 8%, which was in line with the expectation. In terms of the proportion of expenses, the proportion of expenses in revenue in 2021 was 34.65%, which increased slightly to 35.49% in the first quarter of 2022. Excluding equity incentives, the proportion in the first quarter was 32%, which actually decreased. Thanks to Guomai’s “publishing + Internet” strategy, Guomai focuses on product efficiency, breaking through each single product to achieve economies of scale, so as to reduce the unit cost.
In terms of books, Luo Xiang’s details of the rule of law, published at the end of 2021, has sold 500000 copies in just three months by 2022. Under the new playing method of “publishing + Internet”, the sales of many old books have also increased by 50%, 100% and 200% in 2022, benefiting from this quarter. At the same time, many new big books are waiting to be published. Under the new playing method, We are very confident in the overall growth rate of wheat this year. 2、 Interactive Q & A Q1: from the perspective of the whole mass publishing industry, the growth of the market is not good. What advantages does the company based on to maintain an excellent growth rate of the main industry when the growth of the whole industry is relatively weak? A: The difference between Guomai and the traditional publishing industry is that Guomai currently operates the “publishing + Internet” model. The existence of this model makes Guomai establish a direct communication mechanism between upper publishers and end consumers, so it has created a new business model “CBC”. In this mode, the first wave of book traffic completely depends on the internal private domain traffic to the readers’ to C sales. After the first wave of traffic is released, it will be handed over to the public domain traffic or book channels, and then sold according to their respective business laws. When it reaches the end, the final inventory will return to the C end again and be fully digested by the private domain traffic. At the same time, due to the rapid growth of Guomai’s Internet business, it is directly reflected in the large growth of the number of Internet users, which has increased from 63 million at the beginning of 2022 to 68 million now, which has played a role in promoting book sales. The application of Internet strategy has broken the division of off-season and peak season in the publishing industry, and 365 days a year is a normal book sales period. Q2: since late March, the epidemic in Shanghai has become more and more serious, and the company’s headquarters is also in Shanghai. Where are the company’s book warehouses mainly distributed? What is the current epidemic prevention policy? Can we look forward to whether the company’s Q2 quarter performance will be affected by the epidemic? A: As a cultural company, Gome works mostly on computers. Modern communication tools can solve some problems. It may be the physical bookstore that is really affected. Before the epidemic, the whole physical bookstore was in a shrinking state, and the shrinking was more serious during the epidemic. Therefore, most of the revenue of Guomai has come from online revenue, accounting for about 85%, and the offline 15% will not be particularly affected by the epidemic. The company is also thinking about whether it can make up for it online.
In terms of logistics and transportation, Guomai belongs to three offices. The warehouse is in Langfang. There are sales and creation teams in Beijing, Shanghai and Hangzhou. There was a wavelet epidemic in Langfang from the beginning of March to the middle of March. Logistics has indeed been affected to some extent, but Guomai always believes that there are more methods than problems, so the proportion in to C has increased from 11% in 2021 to about 16% this year. In addition, when Guomai can’t send express, it will go to Dangdang Jd.com cooperates with them to complete the distribution of express delivery. Even because of the scale effect, the cost is lower. However, due to the payment of labor fees, the final cost is equal. Generally speaking, the epidemic has little impact on the operation of fruit and wheat. Q3: April 23 is World Book Day, which is a very important sales day for book companies. Will the company’s book sales on this day in 2022 change compared with previous years?
A: The activity of the company’s World Book day lasts from April 18 to April 25. Due to the great marketing efforts, the increase is about 5% compared with previous years.
Because the growth budget of the first quarter is very low, and the first quarter is the off-season of books, it is expected that the growth rate of the second quarter can be higher than that of the first quarter. However, the epidemic has indeed had an impact, resulting in the loss of the whole Shanghai market, so it has not reached the expected level, but it still has a certain increase. At present, the epidemic is coming to an end, and people will have more time to read in the process of living at home, so there is also a process of recovery. Does the company plan to invest in some films before 2024? A: Neither. As a derivative of IP, film and television will be the development direction of Guomai in the future. However, the impact of the epidemic on the film and television industry will be much greater than that of the book industry, so Guomai will not invest in it this year.
Q5: in addition to the details of the rule of law, what other new books do the company expect to have great potential? A: There are many heavy new books this year. First of all, Cai Chongda’s new book, which is expected by the publishing circle and readers in the industry, will be published this year, and it is thicker and heavier than “leather bag”. In addition to CAI Chongda, Liu Tong’s new book will also be listed in the near future. In addition, new books by Dai Jianye and Yi Zhongtian will also be published this year.
However, Gome emphasizes the operation ability of conventional books. In the past few years, some products with ordinary sales volume can also reach the level of celebrity popular books through the cooperation of the company’s operation end. This is what the company is happy to see, which shows that the whole operation chain of the company is smooth and the mechanism is perfect. Under this background, as long as good content can be created, even if they are not famous works at the beginning, they can have a larger market, Achieve higher sales. Q6: the number of users of the company’s Internet matrix is very considerable and growing rapidly. What is the experience of the company in continuously attracting new customers and retaining old customers in the process of Internet content operation? A: There is a saying within the company called content confrontation algorithm. Both Tiktok and other platforms with strong cargo carrying capacity need to spend money to buy traffic. For example, Tiktok uses dou+, and each video of gomai spends very little dou+. For example, in Luo Xiang’s details of the rule of law, there are about 45000 videos carrying cargo in 60 seconds. The company thinks that other things may be framed by the algorithm, But the content that moves people’s hearts can resist the algorithm, so the core thing of Guomai is that Guomai really comes from the content.
In addition, there is another saying that the cost of understanding the content is the highest, so when the content is understood, it can be made with a variety of carriers, including books, stage plays, short videos, etc. the truly moving things made after fully understanding the content can bring new increment to Guomai and retain customers. The company has done the comparison of pushing books by up-to-date bloggers. Some high-quality content can touch people’s hearts in the first second or the first 10 seconds, and then stimulate people’s desire to read or become better people. This is the most core place.
The biggest reason why the number of users of Guomai has maintained a large growth is that Guomai’s Internet is a national movement, which is not the specific business of individual departments, but the Internet transformation jointly carried out by all departments of Guomai group. Guomai even has an independent new media account in the warehouse. Therefore, within Guomai, for the Internet, new media, content Traffic and communication have formed an atmosphere of all-round circulation, which is more effective than sending only a small number of people to do the Internet. Q7: the company’s Internet advertising revenue increased by 40% in 2021. What industries are the customers of the company’s Internet advertising business mainly distributed in? And what are the company’s future goals and plans in the Internet advertising business? A: At present, the company has a large number of fans. There are two ways to realize fans. The third one is still under planning, one is to bring goods, and the other is advertising. In the advertising business in 2021, there are more advertisements for receiving orders from the platform, such as cosmetics, cars, etc. advertisements that are more consistent with the company will take the initiative to find the company, as well as wechat, microblog receiving orders or patch advertising.
Since 2021, there has been a good phenomenon that the anchor incubated within the company has begun to receive orders, such as some large beauty brands. This year, the company’s advertising business will continue to advance, not just in the form of receiving orders, but more focused on business advertising. Because Guomai has many writers and scholars, representing different classes and different aspects of life, the company will make further efforts to make a major breakthrough in business advertising. Q8: in the long run, can the trend of the company’s gross profit margin rising and expense rate falling be maintained? A: The company is very confident that the gross profit margin will rise in the next five years, but the gross profit margin cannot rise forever and the cost cannot decline forever. However, the book industry has a scale effect and does not need to invest more machinery and equipment to expand. It comes more from creativity and strategy.
Guomai’s “publishing + Internet” strategy will really affect and change the structure of the whole financial statements, and the gross profit margin may continue to rise to 55% – 60%. In the years of 17, 18 and 19, the gross profit margin was slightly or relatively stable, because the Internet strategy had not been found at that time, and the voice of the whole channel, that is, the four major websites, these big to B sales channels was becoming more and more important. When the proportion of online and offline was becoming more and more unbalanced, the platform had a greater voice. Therefore, from the change of gross profit margin, the company was struggling to keep the gross profit margin in the past few years. However, the company has made a great improvement this year because it has adopted the “CBC” mode. The first C is the launch of new books, and then has an exclusive launch period through the company’s we media account. When the exclusive launch is available, it can hold the discount, such as 69% discount or full price, and then wait until there is an initial traffic, that is, after the fermentation of short videos, it will get a better sales, and then the products will be deducted and spilled over to the whole network, There may be hot searches on the Internet, such as details of the rule of law, and further expand the sales volume. In the whole process, the company will benefit a lot from the gross profit margin and settlement discount. Therefore, the gross profit margin may continue to rise from 50% today to 60% in a few years. In terms of the growth of gross profit margin, on the one hand, the sales discount needs to increase. The chaos in the whole publishing industry is very serious, but the company does not adopt the strategy of reducing sales discounts. It should sell its books in a very fair way. This is the original intention of the company to establish its own business model of “CBC”. Because the proportion of direct C-terminal sales is higher and higher, the discount of this sales has also been on the rise.
Costs will keep falling. The first wave of initial flow of products is given by the company, but later, many book pushers will be willing to take the initiative to find Guomai and help the company increase sales, so there is no need to increase sales by increasing people. The company only needs to do a good job in the initial flow, then the flow will continue to flow to the company. The company does not adopt the crowd strategy, so it has a certain confidence in the continuous decline of expenses, but it is impossible to drop endlessly. The company hopes to find more high-end talents in the future. Gome attaches great importance to manpower, so it is constantly looking for the best creative elites and is willing to bear these costs. The company is now doing “soil” construction, such as the construction of rank system or performance system. The company hopes that the creative elites can
