In 2021, the overall performance of the media sector came out of the trough, and the profits of 2022q1 were under pressure due to the impact of the epidemic. In 2021, the annual revenue of the media sector was 532447 billion yuan, a year-on-year increase of 11.40%; The net profit attributable to the parent company was 36.218 billion yuan, with a year-on-year increase of 92.13%. The revenue and profit level of the sector gradually got rid of the impact of the epidemic in 2021. In terms of volume, the top three sectors of revenue are publishing and reading, Internet and advertising marketing, and the top three sectors of net profit attributable to the parent are publishing and reading, games and advertising marketing. In 2022q1, the media sector achieved an operating revenue of 120805 billion yuan (YoY + 0.98%), and the net profit attributable to the parent company was 8.431 billion yuan (yoy-23.05%). The decline in the net profit attributable to the parent company in 2022q1 was due to the outbreak of local epidemic, the shutdown of offline entertainment venues, the suspension of logistics and the failure of many businesses.
Game: 22q1 performance growth recovery, policy risk clearing. In 2021, the revenue of the game sector increased by 6.4% to 68.55 billion yuan, of which the overseas revenue increased by 19.7% to 22.51 billion yuan, a record high; Affected by policy regulation, the overall cost rate of the sector rose, and the profit side was under pressure. The net profit attributable to the parent company in 21 years decreased by 36.8% to 10.58 billion yuan. The revenue of 22q1 game segment increased by 4.5% to 17.8 billion yuan, and the net profit attributable to the parent company increased by 15.4% to 3.75 billion yuan. The performance growth of leading companies Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Perfect World Co.Ltd(002624) performed well. In April, the release of game version number was restarted, and the profitability of subsequent sectors is expected to continue to rise.
Internet: business performance differentiation, goodwill impairment pressure further released. In 2021, the revenue of the Internet sector increased by 34.0% to 102.1 billion yuan, and the net profit attributable to the parent decreased by 79.7% to 2.2 billion yuan, mainly due to the impairment of individual companies. The goodwill of the sector decreased by 16.4% to 7.47 billion yuan, accounting for 5.4% of the total assets. 22q1 affected by the epidemic, the performance of the sector was under pressure, the revenue increased by 25.1% to 26.02 billion yuan, and the net profit attributable to the parent decreased by 90.2% to 70 million yuan. At the industry level, the current growth of Internet traffic is slowing down and commercialization is accelerating. QM data shows that 22q1 long video / short video Mau were 863 / 925 million respectively, with a year-on-year increase of – 0.1% / + 4.5%. Raising arppu value has become the core driver of the growth of long video platform, and short video advertising + e-commerce realized.
Advertising and marketing: affected by the epidemic situation, the sector is under pressure for a short time, and follow-up attention will be paid to the recovery of the epidemic situation. In 2021, the revenue was 129.26 billion yuan (YoY + 3.5%), and the net profit attributable to the parent company was 6.96 billion yuan, a year-on-year increase of 197.37% over 2019. 22q1 achieved a revenue of 24.847 billion yuan (yoy-19.3%), and a net profit attributable to the parent company of 1.281 billion yuan (yoy-41.04%). Affected by the epidemic, the advertising market of 22q1 declined, driving the short-term profit fluctuation of the sector. Follow up attention will be paid to the recovery of the epidemic and the recovery of consumer demand.
Film and television: the industry is still in the recovery stage, and the business focus has shifted to “reducing cost and increasing efficiency”. In 2021, film and television realized a revenue of 19.16 billion yuan, a year-on-year increase of 13.04%, a net profit attributable to the parent company of -3.28 billion yuan, and a loss narrowed by 73.7% year-on-year. In 2022q1, the revenue was 4.42 billion yuan, a year-on-year decrease of 6.57%, and the net profit attributable to the parent was – 140 million yuan (the profit in the same period of last year was 390 million yuan). The gross profit margin of the film and television industry in 2021 was 24.1%, up 3.2pct from 2020. At the industry level, 41 TV drama production licenses (category A) were held from 2021 to 2023, a significant decrease from 73 in 20192021. Medium and long tail film and television institutions continue to clear, and the share is expected to concentrate on leading companies.
Cinemas: repeated epidemics have put pressure on performance, and the rhythm of cinemas’ expansion is more cautious. In 2021, the cinema realized a revenue of 23.81 billion yuan, a year-on-year increase of 102.59%, restored to 72.67% in 2019, and the net profit attributable to the parent company was – 150 million yuan, which was significantly narrowed compared with 2020. In 2022q1, affected by the epidemic, the cinema realized a revenue of 5.83 billion yuan, a year-on-year decrease of 18.84%, and the net profit attributable to the parent was 160 million yuan, a year-on-year decrease of 82.27%. In terms of operating data, at the end of 2021, the total number of cinemas of the six listed cinema companies was 1595, an increase of 6.3% compared with 1501 at the end of 2020. All companies have dynamically adjusted the stock of cinemas Wanda Film Holding Co.Ltd(002739) box office share increased from 13.2% in 2019 to 14.5% in 2021. The epidemic situation may accelerate the integration and liquidation of the cinema industry. With the gradual withdrawal of the medium and long tail cinema, the competitive environment of the head company is expected to improve.
Publication and reading: the short-term epidemic has a great impact, and we expect the industry order to be standardized. In 2021, the revenue was 141.22 billion yuan (YoY + 5.8%), and the net profit attributable to the parent company was 16.59 billion yuan (YoY + 38.7%). The gross profit margin and net profit margin of the whole industry improved, among which the teaching materials and teaching aids sector performed better. 22q1 industry achieved an operating revenue of 31.59 billion yuan (YoY + 9.5%) and a net profit attributable to the parent company of 2.83 billion yuan (yoy-10.8%). The short-term epidemic had an adverse impact on the logistics and terminal demand of the publishing industry. The press and publication administration clearly required to “standardize the online and offline publishing order”, proposed to promote the legislation of book price, and paid follow-up attention to the profit changes of the sector under the policy.
Plate views and recommended targets: 1) game: at present, the valuation of the sector is at the bottom of history. After the release of the version number, the performance growth is guaranteed by the policy, and going to sea opens up the profit space of the enterprise. This year, byte made concerted efforts in Pico marketing + channel + content and improved the sales target of head display, which is expected to bring the beta market of the sector. It is suggested to pay attention to the core targets [ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Perfect World Co.Ltd(002624) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) ] and Pico main line targets [ Wuxi Boton Technology Co.Ltd(300031) , Kaiser (China) Culture Co.Ltd(002425) , Jiangsu Zitian Media Technology Co.Ltd(300280) ]; 2) [ focus on high-quality video and industry changes] ; 3) Yuancosmos: meta’s latest financial report yuancosmos business has exceeded expectations, driving the activity of the sector. At present, the valuation has been corrected to the low level, focusing on the landing of industries in NFT / VraR / virtual human and other directions and the fulfillment of enterprise financial reports, with key targets [ Visual China Group Co.Ltd(000681) , Hylink Digital Solution Co.Ltd(603825) , Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) , Bluefocus Intelligent Communications Group Co.Ltd(300058) ]. 4) Hong Kong stocks: recommend platform enterprises [Kwai] that reduce costs and increase efficiency, promote the narrowing of losses, and pay attention to the progress of epidemic recovery and the leader of fashion blind box [bubble Mart].
Risk tip: there is a risk of changes in industrial policies and supervision, product performance falling short of expectations, and deterioration of competition pattern
