In the first half of 2021, both revenue and net profit increased, and the business of reading and going to sea increased significantly. In the first half of 2021, the company achieved operating income of 1.094 billion yuan, an increase of 11.64% over the same period last year, a net profit of 134 million yuan, an increase of 21.10% over the same period last year, and a net profit of 132 million yuan, an increase of 20.75% over the same period last year. The growth of the company's operating income mainly comes from the growth of digital reading and copyright product business. Among them, the sea business of reading is growing rapidly. The company's revenue in the first half of the year reached 148 million yuan, an increase of more than 100% over the same period last year. The expansion of the company's main business scale led to an increase in operating costs by 6.37% compared with the same period last year, while the cancellation of preferential policies under the epidemic and the increase in personnel introduction and R & D investment in 2021 also led to a corresponding increase in various expenses. The company's sales expenses, management expenses and R & D expenses increased by 3.32%, 46.98% and 17.54% respectively compared with the same period last year.
The steady growth of digital reading business, supported by China Central Taiwan, takes into account the improvement of user experience and commercialization ability.
From the perspective of the general environment, the digital reading industry is still in the growth stage. According to the company's 2021 semi-annual report citing the 2020 China Digital Reading report, the digital reading industry reached 35.16 billion in 2020, an increase of 21.8% over the same period last year. In terms of digital reading, the company insists on taking the data as the driver and the platform as the support, and enhances the commercial value of the platform through the "pay + free" integration model. In terms of growth, the company has further deepened its pre-installed cooperation with Huawei, OPPO, VIVO and other mobile terminal manufacturers in reading products.
In terms of commercialization, the ability of commercialization in China and Taiwan has been further enhanced, and the commercialization revenue has increased rapidly compared with the same period last year.
The company continues to cooperate with the "Pangolin Alliance" in depth, and through its own brand advertising sales, optimization of advertising scenes and other means of continuous exploration and innovation. There is still much room for improvement in the commercialization level of the company in the future.
Based on high-quality and rich content resources, continue to build IP derivative industry chain. The company already has 500000 volumes of digital reading content. in order to continuously improve the user experience, the company continues to improve its content, on the one hand, to enhance its own content output capacity, and on the other hand, it continues to introduce high-quality content, adding tens of thousands of new copies of original content. more than 100,000 hours of new audio content, and reached a high-quality book launch strategy with dozens of head publishers.
Based on the advantage of content, the company continues to lay out the IP industrial chain. In terms of short plays, the company has invested in professional short video drama production companies to launch plans for shooting hundreds of short plays, and five short plays adapted from the company's IP have been launched on Douyin. In addition, with the rise of domestic animation and the maturity of the animation industry chain, the company drives high-quality IP value-added through animation first strategy. Animation works such as "Ling Jian Zun", "Wu Shenzhu" and other animation works have reached 1 billion + in Tencent Animation and Comic and rank in the top 10 of the platform. The animation film "Yuanlong" adapted by the company continues to dominate the list in the second quarter, and every year there will be more than 10 animation works adapted by the company IP online.
Profit forecast and valuation analysis. We estimate that the EPS of the company in 2021-2023 will be 0.75,0.96,1.18 yuan. With reference to comparable companies in the same industry, we give the company 35-40 times PE in 2021, corresponding to a reasonable value range of 26.25-30.00 yuan per share, maintaining a "better than the market" rating.
Risk Tip: the number of households paying fees has declined, and the business of free reading has not been realized as expected.
