Performance is in line with expectations
Simei Media announced 17-year results: operating income of 4.187 billion yuan, an increase of 9.56%, and net profit of 231 million yuan, an increase of 63.25%, corresponding to a profit of 0.68 yuan per share. A cash dividend of 1.10 yuan (including tax) is distributed for every 10 shares. At the same time, the 1Q18 results were announced: the operating income was 1.401 billion yuan, an increase of 99.14%, and the net profit was 97 million yuan, an increase of 82.68%.
Trend of development
The table has led to a substantial increase in performance, and the content industrialization platform has been initially established. The three content industry chain companies acquired by the company began to consolidate in March 2017, contributing a total net profit of 5457 pounds to 82.14 million yuan, totaling 179 million yuan. The overall revenue of the content sector was 904 million yuan, accounting for 279 million of the gross profit, an increase of 115.25%. Due to the high gross profit margin of Quan Da Film and Television and Palm Technology, the gross profit margin increased by 19.41pct to 30.90%. The company has initially established a content industrialization operation platform of "IP Source + content production + Marketing publicity" covering a variety of business types, such as TV drama planning and distribution, variety shows and film and TV series promotion, integrated marketing and content production.
Traditional media agents continue to be in the doldrums, actively transforming the Internet advertising business. Affected by the downturn in the industry, the company's television advertising / outdoor advertising / other advertising business achieved revenue of 1058 million yuan, respectively, down 12.1%, 41.9%, 18.3%, respectively, and the gross profit margin was basically flat. At the same time, the revenue of Internet advertising business such as video delivery and search engine marketing increased significantly by 53.2%, accounting for 46.2% of the revenue in 17 years, and the agency business structure was optimized.
The new consolidated table leads to the high growth of 1Q18 performance and the continuous development of the content industry chain. The company's 1Q18 revenue and profit increased significantly, mainly due to the addition of Palm Technology / Quan Da Film and Television / Section Wing Communication for 1-2 months. In addition, the 48-episode TV series "warm Strings" of Quan Da Film and Television confirmed its revenue and will debut on April 29 at Hunan Satellite TV Golden Eagle solo Theater, which will premiere on Tencent Video / Youku Video / Mango TV Network. In the future, the company will continue to cultivate its own brand and actively develop content and content marketing business based on the advantages of content industry chain such as Guanda.
Profit forecast
Due to the continued downturn of traditional media agency business and the decline of gross profit margin of Internet advertising business, we have lowered our 2018 profit forecast by 12.96% to 309 million yuan, and introduced a profit forecast of 365 million yuan in 2019, corresponding to EPS 0.90max 1.07 yuan respectively.
Valuation and suggestion
The company's current share price corresponds to 2018 Accord 1923 peg E, and we maintain the recommended rating, but we downgrade the target price from 30 yuan to 25 yuan, and correspond to 23 times Pmax E for 18gamma, which has 21.6% upside compared to the current share price.
Risk
The traditional media agency business continues to be in the doldrums, and the business development of M & A subsidiaries is not up to expectations.