Modern Media (0072.HK/ HK $2.11, unrated) is a leading integrated media company based on a multimedia information and services platform, with businesses including magazine distribution, mobile digital media and television media. The company, which focuses on the Chinese elite, is estimated to have reached 20 million readers in 2012 and will expand to 70 million by 2015. The company has a strong influence and rich resources in the fashion industry. "internationalization, fashion, social status and high grade" is the consistent purpose of the company. Weekend Pictorial is the weekly magazine with the largest circulation in mainland China. Youjia Pictorial is also one of the top women's fashion weeklies. Since 2012, the company also has the exclusive distribution rights of Bloomberg BusinessWeek in Hong Kong / Taiwan / Macau.
According to the company's recent announcement, revenue and profits fell in the first five months of this year compared with the same period last year, mainly due to increased capital expenditure caused by cuts in advertising spending by mainland advertisers and the expansion of mobile media businesses. Although the company's 2013 results will be affected by China's macroeconomic downturn, we are optimistic about its mobile digital products and advertising growth prospects.
1. Business introduction
1) print Media:
Weekend Illustrated is the leading advertising magazine in mainland China, with 55% of its readers being female and 45% male. Youjia Pictorial has been published for more than three years and has a weekly circulation of 1.3 million copies. Bloomberg BusinessWeek was launched in November 2011, and the Chinese version is expected to be released in July this year. Bloomberg BusinessWeek broke even after only one year of operation. In addition, the company also cooperates with local newspapers such as Hangzhou Fashion weekend and Chongqing Chongqing newspaper. We believe that its advertisements mainly come from areas such as fashion clothing (30%), jewelry watches (25%) and high-end cars and cosmetics.
2) Mobile Media:
The company's first mobile media product was iWeekly, the mobile terminal of Weekly Illustrated, with nearly 50 per cent of its content coming from paper-based Weekly Illustrated and the rest original content. "iWeekly" was launched in 2010 and generated 15 million yuan in revenue in 2011. The number of downloads and advertising revenue of "iWeekly" in the iOS Apple Inc app store ranks first in the media APP. In 2012, "iWeekly" had advertising revenue of 30 million yuan and more than 100 cooperative advertisers. In 2012, the number of downloads grew by 33 per cent to nearly 8 million. "iBloomberg": launched in November 2012, and the cumulative downloads have reached 2.5 million. Since its launch, it has been among the top five downloads of magazines in Apple Inc's iOS app store. It was also named the best APP in iOS app store in 2012. The mobile media business has more than 100 employees, mainly around content development (including the LC-style network with more than 30 employees). In addition, the company has just signed cooperation agreements with the New York Times and Agence France-Presse (which translates and publishes its content into Chinese), which will help readers to use fragmented time to get the best reading experience, thus avoiding direct competition with traditional print media.
The core members of the company's mobile media team are mainly from Internet giants such as Sohu.com Ltd, Tencent and Taobao, and invested and acquired a 20% stake in Japan's rakuraku company in September 2011.
3)。 E-commerce and online shopping: different from Meili, Mogu Inc and other e-commerce guide sites that receive commission by sales, its e-commerce platform will provide brands with a series of services such as brand image promotion, orderly shopping environment, user community, terminal marketing, new product promotion and so on, so as to bring real added value to customers (such as registered users of new products).
4)。 Modern TV: a 10000 square foot multi-purpose recording studio located in the center of Shanghai, tailor-made life and entertainment programs.
two。 The overall slowdown in advertising spending of high-end consumer brands may affect the performance of the company. In particular, the advertising revenue of weekend Illustrated is greatly affected by the recession in the field of luxury and timely consumer goods, which also confirms the reality that the print media is highly sensitive to the macro-economy. Looking ahead to 2013, the main driver of growth will come from new areas of advertisers brought about by new products such as Bloomberg Weekly.
3. The established "Mobile Internet Advertising" platform. We believe that without the positioning of "elite media", mobile content advertising is very difficult to achieve good profitability. The company has a potential readership of 70 million, coupled with more than 20 years of in-depth understanding of jewelry, watches, high-end clothing, luxury cars and other brands, which are crucial to winning the favor of fashion brand advertisers. At present, the average income of each advertiser on the mobile platform is basically the same as that of the print media. We expect that "iWeekly" will be revised and upgraded in July this year, when it will include more international and exclusive content (columns, better interactive experience, more advertising space, which will generate potential revenue of nearly 100 million RMB). The advertising business on mobile platforms is experiencing explosive growth.
4. Cultivate "i_shopping" closed loop, focusing on female consumers. Youjia Pictorial www.metroers.com (social network) and LC style network (e-commerce guide) will be merged into a comprehensive fashion life platform for Chinese elite women. We expect that the company may introduce strategic partners by the end of this year and may face a break-up in the future. Given that e-commerce has become one of the most widely accepted profit models for the realization of Internet traffic, the company's i-shopping strategy is undoubtedly wise. In view of the fact that the threshold for entry into the domestic Internet market has been controlled by Baidu, Inc., BABA and Tencent, we believe that it is not easy for newcomers to establish their own traffic portals. However, the advantages of modern communication lie in its leading fashion acumen, market positioning, mature and stable workforce and good relationship with brand advertisers. The company's business strategy is to deepen the exploration of fashion market segments and is expected to achieve a "double helix" of quality marketing (upgrading from "fast fashion" to "mild luxury") and traffic growth.