Performance summary: Xinhua Wenxuan released its annual report for 2021, according to the contents of the announcement: 1) the company achieved revenue of 10.46 billion yuan in 2021, an increase of 16.1% over the same period last year; net profit of 1.31 billion yuan, an increase of 3.4% over the same period last year; and net profit of 1.31 billion yuan, an increase of 11.9% over the same period last year. 2) the single-quarter revenue of 21Q4 was 3.4 billion yuan, an increase of 3.7% over the same period last year, and the net profit of parent was 600 million yuan, an increase of 18.7% over the same period last year.

There has been a steady increase in the publication of teaching materials, and general book publishing has gradually recovered from the epidemic. In terms of business, the group's publishing business 2021 recorded revenue of 2.83 billion yuan, an increase of 15.9% over the 1.86 billion yuan in 2020, while the gross profit margin decreased by 1.99%. In terms of subdivision, teaching materials and teaching assistance and mass publishing are the two core sources of income of the publishing business; in the publishing business, the sales code of teaching materials and teaching assistance is 2.89 billion yuan, realizing sales revenue of 1.62 billion yuan, an increase of 12.1% over the same period last year, and the gross profit margin is 44%, an increase of 0.39% over the same period last year. In the publishing business, the sales code of general books is 3.11 billion yuan, and the sales revenue is 810 million yuan, an increase of 19.5% over the same period last year. This is mainly due to the fact that the compilation, printing and distribution of self-published books have all recovered from the damage caused by the epidemic in the past 20 years, with a gross profit margin of 24.5%, a decrease of 5.6% over the same period last year, mainly affected by increased sales discounts and contract performance cost adjustment.

The distribution business continues to grow, and education services have great potential. In 2021, the revenue of the issuance business reached 9.02 billion yuan, an increase of 15.7 percent over the same period last year, with a gross profit margin of 29.9 percent. Among them, the sales of teaching books made a great contribution, with sales revenue of 5.37 billion yuan, an increase of 12.5%. 2021, the educational service business continues to develop, and the Group makes full use of the strategic opportunity of the new college entrance examination reform and the educational informatization action plan to continuously promote the optimization and upgrading of the online service platform for "excellent learning and excellent education", covering a total of 6250 schools and serving 4.27 million students. In 2021, the total sales of labor and practical education services in the province reached 49.98 million yuan, serving nearly 120000 students. Teacher training business organized and landed 539 projects, realized the order amount of 35.57 million yuan, trained more than 102000 teachers.

Embrace the new era of Internet e-commerce and optimize logistics management. The revenue of Internet sales in 2021 was 2.3 billion yuan, of which the main business income was 2.26 billion yuan, an increase of 39% over the same period last year, mainly due to the expansion of all channels, including third-party e-commerce platforms, the company's official website, and new media e-commerce, as well as the improvement of logistics management capacity. In 2021, through the way of "self-management matrix + cooperative talent matrix", the company has carried out more than 1000 live broadcasts, the number of original short videos has exceeded 250 million times, and the sales code has exceeded 40 million yuan.

Profit forecast and investment advice: it is estimated that the return net profit of the company from 2022 to 2024 is 14.3,15.7 and 1.74 billion yuan respectively, corresponding to PE of 8 times, 7 times and 6 times respectively. Taking into account the steady growth of the company's main distribution business, mass publishing, physical store sales and other main businesses have basically come out of the haze of the epidemic, education information contribution new increment, maintain the "buy" rating.

Risk tips: 1) the relaxation of market access or industry regulation; 2) the risk of aggravating market competition; 3) the management risk caused by the expansion of the company.