Main points of investment
The growth rate is slightly lower than we expected. In 2016, the company achieved an operating income of 1.824 billion yuan, an increase of 17.39% over the same period last year, a net profit of 223 million yuan, a decrease of 21.32%, and a non-return net profit of 218 million yuan, an increase of 9.11%. The company's operating income and deduction non-net profit have both increased, and the decline in net profit is mainly due to the larger investment income recognized last year, and the growth rate of net profit is slightly lower than we expected.
Print advertising gross profit margin improved, outdoor advertising rapid expansion. During the reporting period, the company realized 570 million yuan in revenue from print advertising and event planning, down 2.57% from the same period last year; gross profit margin was 46.12%, up 2.71pct from the same period last year. Under the background of the overall cliff decline of the newspaper industry, the company operates the media with platform thinking and makes breakthroughs in integrated marketing methods such as whole-case planning and exhibition planning, thus alleviating the decline of the main business. During the reporting period, the company merged all its outdoor and subway media business with its Fengsheng Media. The company's outdoor advertising revenue reached 148 million yuan, an increase of 68.67% over the same period last year. The subway media operated by Fengsheng Media has covered all three lines (road sections) that have been opened in Hangzhou, becoming the exclusive advertising operator of Hangzhou Metro.
The new media business is developing well, and the transitional education enjoys the industry dividend. During the reporting period, the company's new media business achieved revenue of 380 million yuan, an increase of 35% over the same period last year. Hangzhou net, Express Room Network and Xiaoshan Network are the core subjects of the company's web website, mobile Internet products and video content construction. During the reporting period, 51% holding Fast Communication became an important platform for the company's mobile Internet content distribution, with revenue of 210 million yuan and net profit of 40.31 million yuan in 2016. In 2016, the company acquired 60% of the future equity of secondary education. During the reporting period, the company added 3 vocational education projects, 7 international education projects, 4 art education projects, 12 IT education projects and 13 online education projects, achieving a net profit of 59.57 million yuan and successfully completing the performance bet. We expect that the follow-up educational layout of the company will continue.
Actively promote capital operation and create a leading cultural media operator in the industry. During the reporting period, the company actively promoted capital operation: started the private placement work, has identified intermediaries, and is currently in the process of writing a fund-raising project demonstration and feasibility analysis report; in addition, the company has invested 35% of the classic Bowei to successfully complete the performance bet. We believe that the company's traditional media and new media business are developing steadily, and in the future, the company will continue to take "Mobile Internet plus" as the development idea, rely on the company's capital platform, and focus on building the two core sectors of culture and education. to create a leading cultural media industry operator.
Risk hint. 1. M & An integration is less than expected risk; 2. The decline of the traditional newspaper industry aggravates the risk. The growth of new media business is less than expected.
Profit forecast and valuation. The company's traditional main business has maintained steady development, mobile Internet new media business has maintained rapid growth, and education business has maintained medium-and high-speed growth. Taking into account the downward pressure in the company's traditional newspaper and print advertising business, we slightly reduce the company's EPS profit forecast for 2017-18 to 0.26 EPS 0.29 yuan (the original forecast is 0.29 shock 0.32 yuan), and increase the profit forecast for 2019 to 0.32 yuan, the current price is 8.14 yuan, corresponding to 2017-19 PE is 31-28-25 times Considering the expectation of fixed increase, the medium-and long-term growth prospects of the company's education business and the good development of new media business, the company is given 35 times PE in the middle line, corresponding to the target price of 9.1 yuan, maintaining the "over-holding" rating.
