Main points of investment:
The performance is steady and the advantage of low valuation is obvious. In 2016, the company achieved operating income of 7.89 billion yuan, an increase of 10.51% over the same period last year; net profit of 672 million yuan, down 3.72% from the same period last year; and net profit belonging to the parent company was 673 million yuan, down 4.27% from the same period last year. The company now has the whole industry chain of publishing, distribution and material printing, and its main business is solid and steady. At present, the company's price-to-earnings ratio (TTM) is now in the lowest position in the sector (publication and distribution), and the valuation advantage is obvious.
Publishing business: the social effect of mass publishing is remarkable, the cooperation between education and publishing is strengthened, and publications are steadily rising. As the leader of the publishing and distribution industry in the Central Plains, the company had a significant social effect on public theme publishing in 2016. In 2016, 19 kinds of books were selected into the national key book publishing plan of the 13th five-year Plan. The company's Haiyan Society "fighting year Beast" and the Elephant Society "Celebrity Family style Series" were selected by the General Administration in 2016 to recommend 100 excellent publications to young people across the country. In the field of educational publications, the company has strengthened its cooperation with local education departments, and educational publications have increased steadily. In 2016, the company carried out 213 sessions around the teaching materials of "Ministry compiling three subjects", trained 37685 teachers, and trained more than 300,000 teachers for 7589 online training sessions, which achieved good cooperation results.
Distribution business: offline bookstore upgrade to improve service quality, online distribution orderly layout. In 2016, the company accelerated the upgrading of existing theme bookstores, launched the construction of 20 large-scale cultural complexes with an area of more than 10,000 square meters, renovated and expanded more than 70 modern composite bookstores, and built 31 community bookstores and campus bookstores to form a multi-level cultural communication service network system to effectively improve the service quality of offline bookstores. In terms of online distribution, the company's Yunshu e-commerce and logistics express business are developing well. Among them, "Yunshu Network" strives to build an integrated e-commerce platform featuring knowledge services, with more than 3 million online products. In terms of offline logistics and distribution, the company creates a "Xinhua Express" network system, and expands the county express market by integrating county logistics express resources. the formation of the county-level logistics sorting center, "Xinhua Express" shuttle bus, rural service station as the core of the Xinhua express network system.
Digital business: digital publishing business is firmly promoted, and digital education is expected to become a bright spot in the future. In terms of digital publishing, by the end of 2016, the company had introduced more than 5000 copies of e-book public domain resources and more than 8100 copies of general books. The company actively integrates the content stock of internal publishing houses and independent construction resources, and now there are nearly 20000 e-books on the Zhongyue.com platform. In terms of digital education, 12 products of the company's China Education Publishing Network have entered the audio-visual teaching materials procurement catalogue, Elephant Society ADP5 Digital Publishing and Learning platform version 1.0 has also been officially put into operation, the "Elephant examination Evaluation system" has been put into use, and the compound digital teaching assistant "High School Learning and guidance" has been issued up to 160 million copies. We believe that the launch and launch of the company's many excellent digital education products may become a bright spot for future growth.
The future of the company and profit forecast. The company's publishing and distribution business is growing steadily. In the future, the digital education business is expected to form effective coordination with the traditional main business to enhance the flexibility of the company's performance. We estimate that the EPS of the company from 2017 to 2019 is 0.71 yuan, 0.75 yuan and 0.81 yuan respectively. Referring to the same industry, Changjiang Media, Phoenix Media, Wanxin Media and Xinhua Wenxuan's PE in 2017 are expected to be 15,18,32 and 35 times respectively. We give the company 21 times the dynamic PE in 2017, corresponding to the target price of 14.91 yuan.
Risk Tip: traditional publishing is mainly engaged in downside risk, and the layout of the company's digital business is not as good as expected.
