Events:
The company released its 2013 report that the total revenue in 2013 was 1.67 billion, down 11.15% from the same period last year; the net profit attributed to the parent company was 308 million, up 11.72% from the same period last year, corresponding to the 2013 EPS of 0.4451 yuan, up 11.72% from the same period last year.
We have a different view from the market:
Affected by the decline in newspaper advertising revenue and "revenue change", although the company's revenue has dropped by 11%, fine management and active expansion of new business have made the company's net profit rise by 11.72% against the trend, basically completing this year's revenue task.
We think that in the near future, we can pay attention to three bright spots of Guangdong media: (1) the cloud color network has entered the final testing period, and the professional information analysis ability builds product barriers, which is expected to achieve the first batch of docking with millions of readers of the "football lottery winner". The customer base is huge (2) the online frequency of the game is accelerated, and the expansion of the game industry chain is prospected. (3) Champs Elysees is expected to merge successfully in 14 years. LED screen is the first to enter the era of "new screen interaction" with strong performance lock. According to the performance commitment, the EPS will be thickened by 0.08 yuan and 0.10 yuan respectively in 14-15 years. We believe that 2014 is the year of transformation of Guangdong Media, and there is a lot of layout work in both old and new media business. it can be predicted that the company will be spread frequently in the future, and the establishment of the company into a comprehensive media group integrating distribution, print advertising and new media is just around the corner. We are firmly optimistic about Guangdong Media and maintain the "strong recommendation".
Main points of investment:
The expansion of new business to cope with the traditional decline, the expansion of profits against the trend shows the leading strength of print media. Affected by the decline in macroeconomic growth, the impact of new media business and "revenue growth", the company's revenue fell by-11% in 2013, similar to the contraction of the industry. However, on the one hand, the company actively saves fees and costs, on the other hand, it expands new business to open source, and the final annual net profit achieves 308 million yuan, an increase of 11.72% over the same period last year, which is basically in line with our expectations.
Accelerate the transformation and enter the critical year in 2014
With the traditional transformation, the community newspaper model is expected to usher in the second spring of print media. The company creates an original community newspaper model to create an exclusive community newspaper that is different from portals and major newspapers for the local community, with clear advertising positioning and customers targeting local advertisers. 12 were set up in 2013 and increased to 30 in 14 years, and 100 are planned to be built in the next three years, with an average profit of 1 million yuan each. When the business matures, the profit contribution is expected to exceed 100 million yuan, accounting for 4% of the current net profit.
Sports lottery APP has entered its final testing period and is looking forward to enjoying the World Cup feast. (1) all the popular teams in this year's World Cup are in the death group, and football enthusiasm will further promote the growth of football lottery, and the growth rate of guessing lottery is expected to exceed 102% in 2010; (2) relying on the millions of loyal readers of the Football Daily, it is expected that there is a huge space for the first batch of lottery fans to dock with customers. Assuming that 20% of the readers are successfully docked, buying 100 yuan a week and returning it according to the proportion of 7% of the lottery revenue, the company's gross profit can reach 72.8 million yuan, and the business prospect is considerable; (3) the professional information team of the Football Daily is the core competitiveness of the platform.
Increase investment in game companies to accelerate the expansion of the industrial chain. The company announced on March 19th that it will increase its capital with 4.8 million yuan in cash, demonstrating the company's determination to accelerate the expansion of the game industry chain. The company's Guangyou platform currently operates four super popular ARPG games "Wuyi", "Dark Dragon Slayer", "Miracle is coming" and "Biography of chivalrous Heroes". Among them, the first two games are currently ranked 4th and 8th in the top 10, with monthly running water exceeding 10 million yuan, effectively accumulating popularity effects for the platform. And most of the games of the target company have been online on the game platform of listed companies, so the capital increase action will help to improve the level of platform issuance agent business and enhance the core competitiveness of game business. It is expected that the game launch speed of the company will accelerate in the second and third quarter, and with the dual promotion of internal media traffic and external traffic, the market effect is expected to exceed expectations.
Increase the capital of Feifei Mall and increase the layout of e-commerce industry chain. The company intervenes in Feifei Mall in the mode of equity participation, which is intended to enhance the operation ability of its "Mansion convenience" electronic mall and form a better synergy with Feifei Mall. The company has three advantages in operating electronic shopping malls: (1) the huge advertising distribution team can easily realize the "last kilometer" of logistics and distribution, with a proper investment rate of 97%, ranking first in South China; (2) the company is rich in all kinds of media resources. effectively achieve online and offline integration and publicity advantages (3) the company's "House convenience" Mall provides inconvenient goods such as household and cold chain, which is especially suitable for logistics and transportation.
The merger and acquisition of Champs-Elysees opens a new journey to integrate LED advertising. The company bought Shanghai Champs Elysees in October last year and officially entered the LED outdoor advertising market. According to the betting agreement at the time of the merger and acquisition, the profits of Champs Elysees in the next three years will not be less than 56.83 million yuan, 68.7 million yuan and 81.56 million yuan, with an average growth rate of 20%. Considering the integration of the resources of the two companies after the merger and the incentive mechanism for implementation, we believe that the performance is more likely to be completed. Our bigger expectation for Champs Elysees is to integrate the outdoor LED advertising market with the help of Guangdong Media listing platform: (1) the number of Champs Elysees' own screens is 16, accounting for nearly 1 inch of the leading enterprises' own screen resources, and the leading position advantage is obvious; (2) with the help of Guangdong Media's huge advertiser resources, improve the digestibility of orders (3) the current published price of Champs Elysees is 1.06 yuan per second, which is much lower than the price of 1.6 yuan per second of its peers. Every 0.1 yuan increase in publication price will contribute 7% to the increase of Champs Elysees.
Profit forecast and valuation: assuming that Guangdong Media successfully completed the merger and acquisition of Champs Elysees in 14 years, and began to merge in the second half of the year, considering the increase of equity to 725 million shares, the acquisition of Champs Elysees to Guangdong Media in 14-15 EPS increased by 0.08 yuan and 0.1 yuan respectively. We estimate that the EPS of the company's 14-15 exam preparation is 0.52 and 0.63 yuan respectively, corresponding to 43 and 35 times PE. The target price is expected to be 26 yuan and will continue to be rated as "highly recommended".
Risk tips: M & A target performance is not up to expectations, follow-up integration work is not good; community newspaper construction work is lower than expected, local advertising revenue is sharply reduced; new media business progress is lower than expected.