The net profit in 2010 was lower than expected, and the net profit in the first quarter was in line with expectations: in 2010, the company achieved operating income of 2.31 billion yuan, an increase of 1.32% over the same period last year, and net profit of 200 million yuan, a decrease of 14.1% over the same period last year, corresponding to EPS0.19 yuan, which was lower than our expectation of 0.21 yuan per share. The company also plans to pay a cash dividend of 0.50 yuan for every 10 shares. In the first quarter of 2011, revenue was 447 million yuan, an increase of 0.13% over the same period last year, and net profit was 41 million yuan, an increase of 38.95% over the same period last year, corresponding to EPS0.04 yuan, in line with our expectations.
The gross profit margin of the main business is relatively stable, and the period expenses and other items affect the year-on-year increase in net profit: the company's gross profit margin was 37.12% in 2010 and 36.18% in the first quarter of 2011, and the gross profit margin was relatively stable. The decrease in net profit in 2010 compared with the same period last year is mainly due to the increase in sales expenses, financial expenses and asset impairment losses exceeding the increase in income. The year-on-year increase in net profit in the first quarter of 2011 was affected by financial charges (- 438%), asset impairment losses (down 89.8% from a year earlier) and changes in investment income (27.79%).
The format of chain commercial real estate promotes the asset value of the company: drawing on the successful experience of the book industry at home and abroad, the company has acquired the Chengcheng Shopping Center project in Dahongqiao Business District, and plans to build a large-scale cultural MALL, new business type, to further support the development of the book business. In addition, on the basis of the previous network optimization, the chain company has opened eight new stores this year, including Songjiang Mediterranean Store, Fengxian Nanqiao Bailian Store, Gexing Longming Store, Xulu Friendship Mall Store, and Pudong Securities Building Store, with an area of nearly 5000 square meters. it is conducive to the sales of books and other supplies.
The reorganization of Yang Hang Media reflects the new idea of channel management: the company also announced that it will invest 18.06 million yuan to acquire 30% of Yang Hang Media held by Zhongrun Advertising, and upon completion of the acquisition, Yang Hang Media will become a wholly-owned subsidiary of the company; in addition, the company increased RMB 100 million in cash to Yang Hang Media, and renamed Yang Hang Media Co., Ltd., highlighting its channel-specific market segment positioning. We expect that after the completion of the reorganization, the channel media company will copy its successful experience and model in Shanghai to expand to other cities in the country and realize the strategy of making the channel media bigger and stronger.
Risk factors: the substitution effect of new media on traditional media; based on the risk that the development of mobile terminal business is not as expected.
Profit forecast, valuation and investment rating: Xinhua Media, as an important media and culture company in Shanghai, an important economic hub of China, needs new ideas for its development under the background of deepening the reform of the cultural system, and we need to follow up and observe. maintain the company's "overweight" rating. Xinhua Media (11 / 12 diluted EPS0.20/0.21/0.22 yuan, 10tap 11 / 12 PE37/36/35 times, current price 7.31 yuan, maintaining "overweight" rating)
