\u3000\u3 Bohai Water Industry Co.Ltd(000605) 168 Three’S Company Media Group Co.Ltd(605168) )
Core view
Core customers have strong stickiness and stable revenue, and continue to expand new customers and new tracks. The company’s customers cover communication, FMCG, Internet, automobile and other industries. Its core customers include three major communication operators, Industrial And Commercial Bank Of China Limited(601398) and other state-owned banks, Yili Group, JD group and other industry leaders. The cooperation time has exceeded 7 years. The high viscosity of core customers supports the growth of the company’s income. On the one hand, the company digs deep into the marketing value of existing customers, on the other hand, it actively develops new customers and new tracks: in 2021, the company newly expands FMCG customers such as “Yibao” and ” Foshan Haitian Flavouring And Food Company Ltd(603288) ” under China Resources Group; It also newly expands the leading giant biology and other customers in the medical and beauty industry; In 2022, the company will vigorously expand its customers in the automotive industry, mainly including SAIC, Dongfeng, FAW and other leading enterprises.
The performance growth is stable, the profitability is outstanding, and the equity incentive shows the long-term development goal of the company. The company’s performance maintained stable growth. In 2021, the company’s revenue was 3.57 billion yuan, a year-on-year increase of 27.2%, and the compound growth rate in recent three years exceeded 47%. The profitability of the company is outstanding, with a gross profit margin of 21.15% and a net profit margin of 25.16% in 2021, both of which are higher than the average level of the industry for a long time. In 2022, the company issued an equity incentive plan for 52 executives and business backbones of the company, set performance targets for 20222024, and achieved a net profit of 730 / 10 / 1.3 billion yuan respectively, with a compound growth rate of more than 33%, indicating the confidence of the company in long-term development.
The layout of digital collections and virtual human business is expected to open the second growth curve. The company grasps the new trend of marketing changes and actively carries out business layout related to yuanuniverse. According to the prediction of AI media consulting, the market scale driven by virtual people will reach 186.61 billion yuan in 2022, and many Chinese manufacturers begin to use virtual people to carry out marketing. The company cooperates with magic Pharma technology, a front-line manufacturer of virtual human, to create its own virtual human, explore a new marketing model of virtual human, and meet the new marketing needs of advertisers. In 2021, the transaction amount in the global NFT market exceeded US $17 billion. The company cooperated with beiwen center to build a digital cultural and creative products trading platform. Beiwen center is a state-owned property rights trading center with state-owned assets background, and the cooperation platform is expected to be launched in 2022. Virtual human business combined with digital collection trading platform is expected to help the company open the second growth curve.
Investment suggestion: the company’s integrated marketing business is leading in the industry, its core customers have stable cooperation and high viscosity, and are all state-owned enterprises or industry leaders. The company continues to explore new customers and new tracks. We expect the company’s EPS to be 10.54, 13.86 and 17.39 respectively from 2022 to 2024, corresponding to 11 times, 9 times and 7 times of the current share price, and give the company a “buy” rating.
Risk warning: economic downside risk; Market competition intensifies risks; Customer marketing budget, risk reduction, etc.
