Main points of investment:
Shanghai newspaper Group has become a new controlling shareholder: Jiefang Daily newspaper Group, the former controlling shareholder of Xinhua Media, and Wenhui Xinmin United newspaper Group were integrated and reorganized to form Shanghai newspaper Group on October 28th, 2013. the assets of the merged Shanghai newspaper Group are expected to reach 20.871 billion yuan and the net assets are 7.626 billion yuan. The development goal is to build a large-scale comprehensive cultural industry group.
Financial and economic new media is an important layout direction: with the advantages of brand and content, people's Daily online has become the first news website in China to be listed on A shares, and it is also the first central media in China to achieve news gathering and editing business and business listing as a whole. As a new media project under the people's Daily, the development of people's Daily has a certain reference significance for the layout of new media in Shanghai newspaper Group. Combined with the geographical advantages, we judge that the financial new media should be the important layout direction of Shanghai newspaper Group in the future.
The market-oriented reform of SMG is a frame of reference: in the course of its development over the past 10 years, the income of Shanghai Oriental Media Group (SMG) has increased from 1.7 billion yuan to 15.4 billion yuan, an increase of 800%. Its main business sectors, such as PepsiCo and Oriental Shopping, introduced external investors at the beginning of their establishment, operated in accordance with the market-oriented mechanism, and implemented a corporate governance structure led by the board of directors. We believe that these successful experiences have important reference value for the future development of Shanghai newspaper Group.
The company, as the group's only listed company platform, will benefit from this process. In the past few years, the company's newspaper and advertising revenue has experienced several consecutive years of negative growth under the impact of new media, and the total revenue is also in a declining trend, so business transformation is imminent. We believe that the company, as the group's only listed company platform, will benefit from the reorganization and optimization of newspaper assets by the major shareholder Shanghai newspaper Group and the layout transformation of new media business in the future.
Profit forecast and investment rating: under the existing business framework, we predict that the company's revenue in 2013, 2014 and 2015 will be 1.616 billion yuan, 1.778 billion yuan and 2.133 billion yuan respectively, and the net profit attributed to the parent company is 92 million yuan, 122 million yuan and 147 million yuan respectively. The company's current market capitalization is about 10 billion. In the future, with the development of new media business, the market capitalization has more room to rise, and it will be given a "buy" rating.
Risk hint: this newspaper group merger is strong, involving tens of billions of assets and a large number of personnel, and the process of reorganization is lower than expected risk; this is the first case of merger and reorganization of large newspaper groups, and there is no successful experience to learn from. There is still uncertainty about the reform direction, path and whether the original intention of the merger can be achieved.
