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阅文集团(00772.HK):业绩基本符合预期 降本增效下运营效率提升

China Literature (00772.HK): the performance is basically in line with the expected cost reduction and efficiency improvement.

Gelonghui Finance ·  Aug 16, 2022 17:06
The net profit of 1H22 Non-IFRS is basically in line with our expectations.
The company announced 1H22 results: the company will shift its focus from giving priority to current revenue growth to operational efficiency and cost structure optimization. Revenue is 4.087 billion yuan, down 5.9% from the same period last year. Nonmusic IFRS net profit is 666 million yuan, higher than market expectations (618 million yuan), basically in line with our expectations (690 million yuan).
Trend of development
The online business focuses on incubating boutiques, and the copyright operation business is dragged down by proprietary games. 1) online business: 1H22 online business revenue was 2.307 billion yuan, down 9.2% from the same period last year. 1H22 online business MAU 265 million, an increase of 13.8% over the same period last year, of which 14 million were free reading DAU. Due to the development of free reading business, the number of paid households fell 12.9% to 8.1 million, and the paid reading ARPPU was 38.8 yuan per month, up 6.6% from the same period last year. Revenue from 1H22's own platform and Tencent's proprietary channel fell 6.3% and 1.7% respectively from the same period last year, while revenue from third-party platforms fell 35.8% year-on-year due to the suspension of some cooperation. We believe that the company's online business focuses on incubating boutiques and strengthening the IP content ecology, and the growth potential of the business itself is limited in the short term. 2) copyright operation business: although the company's revenue from drama, film, copyright licensing and animation grew steadily, due to the decline in the flow of proprietary games, the revenue from copyright operation of 1H22 except Xinli Media decreased by 28.3% to 814 million yuan compared with the same period last year. Xinli Media has a revenue of 967 million yuan and a profit of 210 million yuan.
The strategy of reducing cost and increasing efficiency has been continuously promoted, and operational efficiency has been improved. The gross profit margin of 1H22 was 52.5%, down from the same period last year, in which the gross profit margin of online business and copyright operation business increased 2.9ppt and decreased 4.8ppt respectively. We believe that the decline in gross profit margin may be due to the structural impact confirmed by the decline in proprietary game revenue and the total amount of some projects of Xinli Media. The 1H22 sales expense rate is 27.2%, down 3.9ppt from the same period last year; the management expense rate is 13.6%, which is 1ppt lower than the same period last year; and the operation efficiency is improved under the strategy of reducing costs and increasing efficiency. The company also mentioned at the 1H22 results meeting that it would continue to control sales and administrative expenses in the second half of the year. We believe that in the current macro environment, the company pays attention to ROI ahead of priority, and operational efficiency is expected to be continuously optimized.
The promotion of IP visualization and commercialization is optimistic about the long-term value space of copyright operation. Company IP visualization, film and television and animation products produced a number of popular styles, while IP supply-side diversification came to the fore, such as science fiction platform 1H22 the fastest growing reading category, we think this also conforms to the domestic entertainment products industrialization trend; IP commercialization preliminary exploration, "fight the firmament" Medusa statue GMV of 5 million yuan.
Looking forward to the launch of 2H22 Xinli media series or to be broadcast, including "Battle of the Rose" (broadcast on August 8), "despite the Wind", "Xinchuan Daily", "lurk" and so on. We believe that the company's IP platform capability is solid, has a competitive advantage in IP incubation, development and operation, and pays attention to its long-term development space.
Profit forecast and valuation
Due to the decline in revenue from proprietary games, we lowered the net profit of Non-IFRS homing in 2022 by 7.4% to 1.44 billion yuan, leaving the forecast of Non-IFRS homing net profit in 2023 unchanged. The current price corresponds to 19max 14 times 2022 Non-IFRS 2023. To maintain the outperform industry rating, due to the profit forecast downgrade, excluding the impact of changes in the number of shares (changes in the number of shares granted to employees) lowered the target price by 7.4% to HK $42.2, corresponding to 2022 Greater 2023 25xpxt Non-IFRS P Universe E, which is 32.5% upside from the current price.
Risk
Content regulation has been tightened; online reading user growth and IP operating revenue have been lower than expected.

The translation is provided by third-party software.


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