Performance declined, but better than expected
The operating income of Xinhua Media in 2011 was 1.92 billion yuan, down 8.5% from the same period last year, and the net profit attributed to the parent company was 180 million yuan, down 9.9% from the same period last year. After deducting non-recurring profits and losses, the EPS is 0.06 yuan, down 57.9% from the same period last year. The profit distribution plan is 0.4 yuan (including tax) for every 10 shares, and the dividend payout rate is 23.5%.
The main reasons for the better-than-expected decline in the company's performance are: (1) the financial expenses have decreased significantly, from 6.3 million in 2010 to-47.7 million yuan, because the company earned 83.5 million yuan in interest on the project financial assistance provided by the company to Shanghai Chengcheng Plaza Industrial Development Co., Ltd.; (2) the investment income increased significantly, from 39.5 million yuan in 2010 to 91.6 million yuan, an increase of 131.7% over the same period last year. Rigidity of cost and expense leads to decline in performance
Most of the decline in costs in 2011 is less than the decline in income, indicating a strong rigidity. Gross profit margin fell 4.2%, from 37.1% in 2010 to 32.9%, while sales and management expense rates increased by 2.2% and 1.1%, respectively, to 20.0% and 6.7%.
It may be difficult to improve the main business, and the management is lack of confidence.
The main reason for the decline in the company's revenue is the overall decline in the newspaper advertising business. Advertising revenue dropped significantly, to 898 million yuan in 2011, down 22.4% from the same period last year. Gross profit margin also dropped to 27.4%, down 12% from 39.4% in 2010. Under the impact of new media, newspaper advertising may further decline in attractiveness. In addition, the book business is also lack of vitality, with revenue falling 0.1 per cent to 845 million yuan. With the continuous promotion of e-books, this decline may be difficult to reverse.
From the management business plan, in 2012, the operating income is 1.93 billion yuan, the cost and expenses are 1.28 billion yuan and 480 million yuan respectively, and the profit is 170 million yuan, indicating a lack of confidence, and the decline in performance may continue.
Maintain a "neutral" rating
To maintain the company's 2012-13 profit forecast, the EPS is 0.15 Celsius 0.13 yuan, the 2014 EPS is 0.11 yuan, the corresponding share price PE is 46-55-61 times, maintaining a "neutral" rating.
