Event: the company announced that the operating income in the first three quarters of 2018 was 2.38 billion yuan, an increase of 227% over the same period last year, while the net profit of shareholders belonging to listed companies was 167 million yuan, an increase of 693% over the same period last year. At the same time, the company expects the net profit to change from 2.1 yuan to 250 million yuan in 2018, with a growth range of 344% MUE 429%.
Tencent's social advertising and Wechat's self-media business is growing rapidly, and the full-year performance guidance exceeds expectations.
From the revenue side, 2018 company's revenue in the first three quarters was 2.38 billion yuan, an increase of 227% over the same period last year, mainly due to the merger of giant network technology, and the Internet advertising business of giant network is growing rapidly. According to the breakdown data disclosed by the previous China News, the revenue of the Internet information service business in the first half of the year was 1.026 billion yuan (including 912 million of advertising business and 94.77 million of Wechat self-media, which was close to the revenue of the whole of last year), accounting for 71.82% of the company's total revenue, mainly due to the rapid development of Internet advertising business. the company continues to increase investment in the advertising business of Tencent's social products represented by Wechat. Ranked among the top SMB service providers of Tencent
The China report shows that the revenue of the network excellent business in the first half of the year was 375 million yuan, down 14.64% from the same period last year. Assuming that the network excellent business remains stable in the third quarter (238 million yuan), it means that giant net science and technology achieved revenue of 1.77 billion yuan in the first three quarters and 740 million yuan in the third quarter. Month-on-month growth continues to be rapid. On the whole, the company has basically realized the management and development strategy of "excellent communication network business and Internet advertising business at the same time", and the emerging Internet business is growing rapidly.
From the profit side, the return net profit in the first three quarters was 167 million yuan, an increase of 693% over the same period last year, which was close to the upper limit of the previous performance forecast (170 million yuan). If the 79.49 million yuan of newly added idle real estate disposal income in the third quarter is excluded, the net profit contributed by the business in the first three quarters is 87 million yuan. At the same time, the company's annual performance forecast range of 210 million to 250 million yuan, a substantial increase of 344% to 429% over the same period last year, slightly exceeding market expectations, mainly due to the rapid development of Juanwang technology Internet advertising business, and the apparent effect should be significant, while effectively disposing of idle assets. Excluding the disposal income, the company's annual business performance is 130 million ~ 170 million yuan, that is, 43 million ~ 63 million yuan in the fourth quarter, showing a trend of rapid development.
In terms of gross profit margin and expense rate, the gross profit margin in the first three quarters was 14.08%, down 12.12 percentage points from the same period last year, mainly due to the increase in the proportion of advertising business with low gross profit margin (5% in the China report). However, the net profit rate in the first three quarters was 7.23%, an increase of 3.36 percentage points over the same period last year, mainly due to the strong profitability of Giant net Technology. The rate of fees for the three items in the first three quarters was 6.7%, down 18.25% from the same period last year, mainly due to a substantial increase in the share of revenue from Internet information services on Giant net's science and technology. We believe that as the light-mode Wechat Internet business continues to grow at a high rate, the fee rate is expected to stabilize or decline in the future.
Nuggets Wechat traffic accelerated dividend + 5G waiting to bloom, the dual main business strategy is worth looking forward to.
In the emerging business, based on the long tail traffic and extensive customer resources accumulated over the years, the company works closely and deeply with Tencent, and social advertising orders are expected to grow rapidly; Wechat official account matrix has formed a large number of fans, and there is great potential for self-media traffic incubation. In terms of traditional network excellence, the company has always maintained a leading position in the industry in terms of products, solutions and services; as well as making major breakthroughs in overseas markets, actively adjusting the business structure, and developing and laying out small base stations for 5G preparation, the 5G era is still worth looking forward to.
Risk Tip: Wechat official account traffic realized less than expected, fierce competition in the mobile advertising industry, etc.