Summary:
After recovery, we will encounter the "cold spring". The impact of the epidemic that began in 2020 on the media industry lies in two aspects: one is the concentrated outbreak of online dividends, and the other is the continuous recovery after offline disturbances. These two effects will be transformed into the driving force of performance growth in 2021. In the second half of 2021, the supervision was strengthened, and the epidemic mainly occurred in first tier cities in early 2022 once again affected the overall performance of the media industry. However, in the long run, no matter how steep the spring breeze is, it will always be sunny after the rain, the regulation will develop normally, guide the standardized operation of the industry, and the epidemic prevention and control tends to be routine, with a diminishing marginal impact on living habits, which makes the recovery of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) in 2022 expected to be stronger than that in 2021.
From the perspective of valuation, game and advertising marketing are the most cost-effective. As of the closing on May 13, 2022, among all primary industries, the latest valuation of the media sector is about 18x, ranking 15th among 31 industries. Judging from the valuation trend of the media industry since 2021, it shows a continuous downward trend. The highest PE is about 25X, which appeared in early 2021, and then the valuation continued to decline. The second rise in valuation is that 2021q4 benefited from the catalysis of next-generation Internet technologies such as metauniverse and NFT. Since then, with the spread of the epidemic in many first tier cities across the country, it has a great impact on major segments such as film and television theaters and advertising marketing, and the overall valuation of the media industry has declined again. At present, the valuations of the four sub sectors of games (17.93x), advertising marketing (20.33x), publishing (11.46x) and television broadcasting (21.41x) have high cost performance. Most film and television cinemas and digital media companies are greatly affected by the progress of content production, and are expected to achieve a strong marginal recovery after the epidemic eases.
The policy is stabilizing, and support and regulation are equally important. On April 29, the Politburo meeting proposed to promote the healthy development of the platform economy, implement normalized supervision, and introduce specific measures to support the standardized and healthy development of the platform economy. The core of setting the tone lies in "support" and "standardization". Support "means that the platform economy will still play an important role in the development of the national economy, and" standardization "means that the platform economy needs to abandon the barbaric growth and move towards the rule of law. The media industry and the platform economy complement each other. Many media companies have grown into important platform enterprises, and many companies in the game, advertising and film and television industries are important participants in the platform economy. The stabilization of policy has reduced the uncertainty of supervision, while the distribution of game version numbers has returned to normal, and the epidemic has gradually eased, giving media companies a good recovery environment. After the "cold spring", it is expected to usher in a high heat midsummer.
Wuxi Online Offline Communication Information Technology Co.Ltd(300959) multiple businesses expect marginal improvement. During the epidemic period, the willingness of some advertisers to put Internet advertising and outdoor advertising decreased. With the epidemic controlled, it is expected to put additional advertising in the follow-up time. The darkest hour of the game has passed, and the normalization of the version number will help the company continue to operate stably.
As the content production of the video platform returns to normal, the amount of content is expected to be guaranteed. Cinemas will open one after another after the epidemic, and popular films may detonate the box office again.
Risk tip: policy supervision is tightening, and the impact of other optional consumption on entertainment demand is higher than expected.
