Core ideas:
The company released its mid-2021 report: 21H1, its revenue increased by 11.64% to 1.094 billion yuan, its net profit increased by 21.10% to 134 million yuan, and its non-net profit increased by 20.75% to 132 million yuan. 21Q2, revenue increased by 10.51% to 540 million yuan, decreased by 2.47% compared with the previous month, net profit returned to the mother increased by 27.49% to 70 million yuan, increased by 11.25% compared with the previous month, and non-net profit returned to the mother increased by 29.07% to 70 million yuan, up 11.26% from the previous month.
Through mobile phone pre-installation + precision launch to maintain the leading scale, follow-up plans to increase efforts to drive the growth of users. (1) it has reached a long-term and stable cooperation with Huawei, OPPO, VIVO and other mobile phone manufacturers for reading pre-installed APP, and launched a customized version of Hongmeng; (2) effectively improve the delivery capacity by building the launch center. According to QuestMobile,21H1, the average MAU of APP is 56.04 million, continuing to maintain the first place of paid reading APP in China.
Cooperate with bytes to improve the realization ability in a multi-pronged way. (1) in the aspect of commercialization, deepen the cooperation with the pangolin alliance and achieve the rapid growth of advertising revenue by improving the commercialization of China and Taiwan. (2) in terms of copyright operation, tens of thousands of new copies of original content were published during the reporting period, value-added IP was driven by animation first strategy, and short dramas were created relying on the advantages of IP, mediocrity (strategic ownership) and channel advantages of Douyin. (3) in terms of reading and going to sea, the revenue of going out to sea during the reporting period reached 148 million yuan, an increase of more than 100% over the same period last year, building an original ecology of local content. So far, more than 8000 overseas authors have cooperated with more than 5000 people.
Profit Forecast and Investment advice: we expect the company's 2021-2023 net return profit to be 562 million yuan, and the corresponding EPS is 1.28 yuan per share. At the closing price on August 16, 2021, the corresponding PE is 27.66X, 21.26X, 16.98X. Considering that the company has accumulated a large number of users and original web text content, at the same time, byte jump shares further enhance the company's commercialization and copyright realization ability, giving palm technology a 40-fold PE valuation in 2021, corresponding to a fair value of 31.41 yuan per share, maintaining a "buy" rating.
Risk tips. Policy regulatory risk; free reading impact payment business; customer acquisition cost is too high; advertising revenue growth is not as expected.
