The 2018 mid-term report once again exceeded expectations.
The company disclosed its mid-term results in 2018 that its revenue in the first half of the year was 1.045 billion yuan, and the net profit of shareholders belonging to listed companies was 160 million yuan, up 12.49% and 15.57% respectively, exceeding market expectations again and slightly exceeding our expectations. From a quarterly point of view, Q2's revenue in the single quarter was 556 million yuan, an increase of 17.68%, and the net profit of shareholders belonging to listed companies was 75 million yuan, an increase of 7.53%. The year-on-year growth rate of Q2 net profit is lower than that of revenue growth, which is mainly due to the commercial use of urban media and large investment in the early stage. The city media plaza, which opened at the end of 2017, is still under development, with a loss of 33.8751 million yuan in the first half. After deducting its impact, the company's main business net profit grew by nearly 40 per cent in the first half. It is estimated that the EPS from 2018 to 2020 will be 0.53,0.65 and 0.78 yuan respectively, and the target price will be 7.35-7.88 yuan, maintaining the "overweight" rating.
During the reporting period, the company's publishing business achieved revenue of about 430 million yuan, an increase of 20.66%, and operating profit of 185 million yuan, an increase of 20.19%. Among them, Q2 achieved revenue of 206 million yuan in a single quarter, an increase of 17.59%, and operating profit of 83 million yuan, an increase of 16.21%. Maintain a high growth rate and have a good momentum of development. From the perspective of subdivision, the distribution of key publications in the humanities and arts section is smooth, while benefiting from the Shanghai Summit in Qingdao, "Wuyue is exclusive." Mount Tai "and" famous mountains on the sea. Laoshan has increased its influence; in the field of education and publishing, several sets of local teaching materials such as "I Love the Ocean", "Ocean Exploration", "legal Education Reader" and "quality Education" have been added, as well as a number of project books such as "Jiafenbao" and "New Curriculum Standard must read Literary Masterpieces". Drive revenue growth; the actual combat rate of children's books and readers' recognition are further rising, showing a multi-point blooming state; the market life book section remains at the top of the list.
The growth rate of revenue and profits of the issuance business has accelerated somewhat, and the city media plaza dragged down the profit release period. During the reporting period, the company realized issuance business income of 885 million yuan, an increase of 8.81%, and a gross profit margin of 21.99%, which remained stable. Among them, Q2 achieved revenue of 478 million yuan in a single quarter, with an increase of 11.91%. The growth rate is faster than that of Q1 (5.4%). The City Media Plaza began trial operation at the end of last year and is still in the early stage of investment. Its operating company, Qingdao Media Development Company, achieved a revenue of 12.3511 million yuan and a loss of 33.8751 million yuan in the first half of the year. If the influence of the city media square is removed, the operating profit of the company's distribution business will grow by more than 33%.
New business is actively promoted and is expected to blossom and bear fruit
The company's "BC MIX" is actively expanding in the way of light assets, among which the company plans to cooperate with JD.com to build a "compound cultural living space", which will be completed in 2017 and not less than 50 by the end of 2018. At present, it has opened nearly 20 stores, covering Qingdao, Jinan, Weifang, Changsha, Kunming, Beijing, Suqian and other cities. The company's film and television business has been actively promoted, in which the company has participated in the TV series "many years when you are late" (an urban emotional drama based on Yan Geling's novel Buyu Mountain residence, starring Huang Xiaoming, Yin Tao and Qin Hailu).
Raise the profit forecast and maintain the overweight rating
The company's main business is straight and straight. if the loss during the cultivation period of the city media square is deducted, the net profit growth rate of the company's main business will exceed 40%. As the company's main business slightly exceeded expectations, we raised our profit forecast to 3.69,4.57 and 550 million yuan from 2018 to 2020, an increase of 3.50%, 3.85% and 3.84%, respectively. At present, the average valuation of the publishing industry is 15x, and we believe that the reasonable valuation of the company in 2018 is 14-15X, corresponding to the target price of 7.35-7.88 yuan, maintaining the "overweight" rating.
Risk hint: paper prices fluctuate greatly to increase operating costs; the release of "many years you are late" has been postponed.