Key points of investment
Next Wednesday (August 24), a GEM listed company “Rongxin Culture” will ask for a quote.
Rongxin Culture (301231): The company is mainly engaged in the planning and distribution of children's books and the export of children's cultural products. The company founded the “Le Fun” brand positioned in the middle and high-end children's book market in 2006, and founded the “Aoyouma” brand positioned in the mass consumer children's book market in 2019. The company achieved operating income of 402 million yuan/382 million yuan/379 million yuan respectively in 2019 and 2021, YOY was 14.69%/-5.06%/-0.85% in that order, and the three-year compound annual revenue growth rate was 2.58%; achieved net profit of 46 million yuan/47 million yuan/41 million yuan, YOY was 11.34%/2.25%/-13.70% in that order. In the latest reporting period, 2022H1 achieved operating income of 167 million yuan, a year-on-year decrease of 3.91%; it achieved net profit of 12 million yuan to its mother, a year-on-year decrease of 25.01%.
Investment highlights: 1. The company is the second largest children's book planning enterprise in China; it occupies a leading position in the two categories of children's science encyclopedia and early childhood enlightenment. Children's reading is due to high health requirements and demand for interactive parent-child reading, etc., and new reading methods such as e-reading are less likely to replace this category of paper books; in recent years, the children's book industry has developed rapidly, and in 2016 it became the market segment with the largest share of Code Yang.
Since its establishment in 2006, the company has focused on the children's book market, created many outstanding works, and achieved a leading position in this market. In 2021, Manyang ranked second in market share among children's book planning companies. Children's science encyclopedia books and children's enlightenment children's books are the company's core book categories. The company has a prominent market position in the above two segments. In 2021, the company ranked first in the children's science encyclopedia and young children's enlightenment market segments. 2. The company continues to increase its investment in independent copyright and deepens its independent copyright strategy through the “planning+creation” business innovation model. In recent years, the reserve of copyrighted books from owners has continued to increase. In recent years, with its experienced creative team and strong original ability, the company continued to develop and create independent copyright books and deepened its independent copyright strategy. The amount invested in independent copyright continued to increase during the reporting period. Moreover, as a book planner over the years, the company has accumulated rich experience in selecting and planning topics for children's books, developed a more accurate ability to select topics, and has effectively improved the development efficiency of book creation through the organic combination of planning and creative business. During the reporting period, the company's independent copyright book reserves reached 649, 736 and 893 books respectively; the increase in high-quality reserves led to a compound annual growth rate of 4.81% in independent copyright book revenue, and its share of revenue continued to increase during the reporting period, reaching 45.91%, 49.90% and 56.45% respectively.
Comparison with listed companies in the same industry: The company's main business is children's book planning and distribution business. Listed companies specializing in book planning and distribution were selected as comparable companies, such as New Classics, Century Tianhong, Reader Culture, and Guomai Culture, which specialize in book planning and distribution. According to the situation of comparable companies, the average revenue scale was 578 million yuan, the average PE-TTM was 44.64X, and the average gross sales margin was 41.02%. In comparison, the company's revenue scale and gross sales margin are lower than the industry average.
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