Performance review
The 2021 results are basically in line with our expectations, and the 1Q22 performance is lower than our expectations. The company announced its 2021 results: revenue of 9.069 billion yuan, a decrease of 9.6% over the same period last year; net profit of 1.86 billion yuan, an increase of 14.8% over the same period last year. Deducting the non-return net profit of 354 million yuan, a decrease of 67.5% over the same period last year, the performance is basically in line with our expectations. Compared with the company's 2021 financial budget, the completion of revenue and return net profit is 88.9% and 103.4% respectively. At the same time, the company announced 1Q22 results: revenue was 1.698 billion yuan, down 16.0% from the same period last year; net profit from home was 180 million yuan, down 36.3% from the same period last year; and net profit from non-return to home was 117 million yuan, down 36.3% from the same period last year, which was lower than we expected, mainly affected by the epidemic in Shanghai in March. The company's offline travel and video shopping business is limited.
Trend of development
In 2021, the streaming media strategy continues to advance, and the radio and television network business is still in the period of transformation and exploration. 1) online business: by 2021, the company's BesTV+ streaming video platform serves 1013 million TV monthly active users, 60.12 million IPTV users and 83.4 million OTT users, covering multiple terminal channels. However, we believe that due to the fierce competition in pan-entertainment, the revenue of streaming media business fell 12.7% to 3.133 billion yuan in 2021 compared with the same period last year. In 2021, the company's radio and television network business continued to promote the development of radio and television media integration, national network integration, radio and television 5G construction and other tasks, but also to support the streaming media strategy to promote business transformation and upgrading. In 2021, radio and television network business revenue fell 1.2% year-on-year to 3.392 billion yuan. We believe that the development tone of the company's radio and television media integration may continue, but the ability of streaming media business to integrate products, content, channels, shopping and other online core resources still needs to be further improved. Radio and television network business is still in the early stage of transformation. 2) offline business: due to the repeated impact of the epidemic in 2021, the company's offline business dropped 15.2% to 2.485 billion yuan compared with the same period last year. Due to the increase of low gross margin indemnificatory apartment project in 2021 real estate projects, the company's 2021 gross profit margin fell by 6.2ppt to 28.0% year on year. In addition, the company transferred 50% of its wholly-owned subsidiary Donglong in December 2021, resulting in a transfer income of 1.11 billion yuan, but the net profit deducted from non-return decreased significantly.
The epidemic situation in 1Q22 Shanghai has been repeated, which has greatly affected the offline travel and video shopping business. Since March 2022, affected by the COVID-19 epidemic in Shanghai, the company's TV tower will be closed on March 21, as well as the Congress Center and Mei Ben Cultural Center. Due to logistics restrictions, the normal operation of video shopping business has also been affected. The company's revenue and profits have declined to a certain extent. We believe that there is still a local recurrent risk of the domestic epidemic, and we suggest that we pay attention to the impact on the company's offline and shopping business.
Profit forecast and valuation
Considering that the impact of the epidemic in Shanghai is more than we expected, we reduced the net profit of 2022 Universe by 15.3% 12.9% to 1.631 billion yuan in 2023. The current price corresponds to 14.9 Universe 14.4 times 2022 Placement 2023. To maintain the neutral rating, due to the adjustment of earnings forecasts and share buybacks, we lowered our target price by 14% to 7.51 yuan, corresponding to 16x15x 2022max 2023 Pmax E, which has 7.6% upside space compared to the current price.
Risk.
The impact of the epidemic exceeded expectations, competition intensified, and the promotion of new business was less than expected.
