Summary of the report:
Select the logic of wisdom shares from the perspective of the industry: be optimistic about the giant Internet media management or service platform according to the laws of the industry. Because the strong media has the top traffic, the media-SSP platform can get 60% 70% share of the industry chain. in addition, the market pattern of foreign giants' Internet media is relatively simple, such as the search advertising market. Considering the slightly reduced advertising share of foreign antitrust and domestic BAT, the third-party foreign media management service platform still has investment value.
The 16-year transformation of Zhi du shares has realized that Internet media and digital marketing go hand in hand, accounting for 22% and 76% of revenue, but contributing 69% and 19% respectively. Spigot, an overseas media platform, contributes more than 50% of profits, which is also the key to the company's great-leap-forward growth in 17 years (revenue + 170%, net profit + 67%). In 18 years, the subsidiary company is still ensuring the certainty of performance during the gambling period. Horizontal comparison, the company's ROE, net profit margin and gross margin are better than their peers, abundant capital, low leverage and stable long-term user model ensure that the company has sustainable profit space.
Spigot, the core driver of performance, is a media platform service provider with its own traffic, which can realize commercial realization through guest diversion. Spigot42% 's high gross margin because of its high advertising proportion, behind is a strong barrier to algorithm technology, not afraid of the risk of customer loss. Algorithm technology provides a guarantee for the profit model: the number of users depends on the user promotion cost, and the per capita income depends on the proportion of customers. Spigot's own users have an average life cycle of 18 months. Under the premise of a stable profit model with cost recovery in 6 months, Spigot looks at the industry space of the search engine market where the client is located.
The growth of domestic media platform looks at the acceleration of scale, and digital marketing expects gross profit margin to stop falling and pick up. The operating profit margin of 33% of the domestic media platform is higher than that of overseas, and it is expected that high growth will be reaped by high investment in the future. Domestic media platforms include FMOBI, ValueMaker of Wanliu and the application exchange of the world. Because the market pattern of the application sink is relatively stable, the long-term space of domestic media business will improve moderately under the evolution of SSP competition pattern. In addition, digital marketing business is committed to integrated marketing, gross profit margin is expected to rebound, other business online gold and games make steady progress.
Profit forecast: the EPS in 18-20 is expected to be 0.75,0.98 and 1.28 yuan, corresponding to 16 times, 12 times and 9 times of PE, covering for the first time and giving a "buy" rating.
Risk tips: market competition risk; brain drain risk; team integration risk at home and abroad.