Core views:
The company disclosed its 2021 annual report and 2022 quarterly report: (1) 2021 revenue was 2,633 million yuan, up 4.33% year on year; return to mother's net profit was 486 million yuan, up 4.53% year on year; return to mother deducted non-net profit of 450 million yuan, a decrease of 0.19% year on year. (2) 22Q1 revenue was 370 million yuan, a decrease of 0.60% over the previous year; the net profit of the mother was 19 million yuan, a decrease of 20.02% the previous year; the net profit of the mother was 19 million yuan, a decrease of 19.33% from the previous year. The decline in short-term performance was mainly affected by factors such as the Omicron epidemic, the double reduction policy and settlement fluctuations.
Professional books have been growing steadily, and textbook teaching aids have declined due to the double reduction. In 2021, the general book publishing business achieved revenue of 834 million yuan, an increase of 14.53% over the previous year. The company's competitive advantage in the professional publishing field is obvious. The textbook teaching aid publishing business achieved revenue of 330 million yuan, a decrease of 16.65% over the previous year. The main reason was that the “double reduction” policy had a certain impact on the company's K-12 teaching aid products. The company is promoting the transformation and upgrading of K-12 teaching aid publishing.
Building a professional publishing brand has significant competitive advantages. Currently, the company publishes a total of 522 science and technology journals, of which 244 are English-language journals, accounting for about 1/3 of the total number of English-language science journals in China; SCI includes 97 journals, more than 1/3 of the total number of SCI journals in China, including 32 journals in the Q1 region, accounting for about 1/3 of China's Q1 journals; EI includes 80 journals, accounting for about 1/4 of the total number of EI journals in China. The influence factors of the company's core journals such as “National Science Review” and “Science Bulletin” have continued to increase.
Profit forecasts and investment recommendations. We expect the company's operating income for 2022-2024 to be 27.58/30.04/32.30 billion yuan, net profit of 507/569/620 million yuan, the corresponding EPS is 0.64/0.72/0.78 yuan, and the PE corresponding to the closing price on April 28, 2022 is 10.90X/9.73 X/8.92 X. The company's competitive advantage in the field of professional publishing is outstanding, and its performance is growing steadily. In the short term, it has been negatively affected by the pandemic and the double reduction policy. We gave the company 15 times the PE valuation in 2022, and the corresponding reasonable value of the company was 9.63 yuan/share, maintaining the “buy” rating.
Risk warning. Impact of the epidemic; digital projects falling short of expectations; risk of cooperation between overseas institutions; changes in industry regulatory policies.