Event: the company announced results KuaiBao, 2018 operating income of 3.591 billion yuan, an increase of 203.96% over the same period last year; net profit of shareholders belonging to listed companies was 213 million yuan, an increase of 350.67% over the same period last year.
Tencent's social advertising and Wechat's own media business is growing rapidly.
The company's total revenue in 2018 was 3.591 billion yuan, an increase of 203.96% over the same period last year, mainly due to the rapid development of Internet advertising business and the continuous expansion of business scale. The company has clung to the head media resources, further strengthened the influence and coverage of the industry, and has become an important partner of Tencent's social advertising. Assuming that the traditional communications business remains stable (the network competition is fierce, and the bottom of 4G to 5G), the revenue after deducting the giant network for 17 years is 989 million yuan, which means that giant network science and technology contributed 2.602 billion yuan (35.91,9.89) in 2018, an increase of 240.57% compared with the same period last year. The growth momentum is rapid.
In a single quarter, 2018Q4's revenue was 1.21 billion yuan, an increase of 26.97% over Q3 (9.53), which shows that the company's business scale is accelerating and its revenue continues to grow rapidly compared with the previous quarter. We believe that the company's high growth trend is expected to continue in the future as Tencent continues to expand his social advertising business and the company continues to expand its customers and markets.
The company's net profit in 2018 was 213 million yuan, an increase of 350.67% over the same period last year, mainly due to: 1) the sustained high growth of the Internet advertising business; 2) in order to optimize the asset structure, reduce operating costs, and improve the efficiency of operators, transfer some idle real estate; 3) receive dividends from two investment fund enterprises (partnership and limited partnership), which are included in the investment income. In addition, KuaiBao's net profit of 213 million yuan is in the lower limit of the previous forecast range (2.1-250 million yuan), which is expected to be caused by the company's provision for asset impairment.
Nuggets Wechat traffic accelerated dividend + 5G waiting to bloom, the dual main business strategy is worth looking forward to.
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.
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 can continue 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; and it has made major breakthroughs in overseas markets, actively adjusted its business structure, and developed and laid out 5G new products and new businesses in preparation for 5G. It's worth looking forward to.
Investment advice and profit forecasts:
On the whole, 3D has become the emerging ecological target of Wechat. Under the background of Tencent accelerating the ecological realization of Wechat, there is great potential for the incubation of corporate traffic; the social advertising market is in a stage of rapid growth. In terms of traditional network excellence, actively adjust the business structure, reduce costs and increase efficiency, while actively preparing for 5G. We believe that Wechat Internet traffic accelerated dividend + 5G will drive the company's sustained and rapid growth in the next few years. According to the company's performance KuaiBao, we lowered our profit forecast for 2018 from 240 million to 215 million yuan. at the same time, the company's emerging Internet advertising business showed high growth, maintaining its profit forecasts of 340 million yuan in 2019 and 470 million yuan in 2020, respectively, corresponding to 20 × PE in 19 years, reiterating the "overweight" rating.
Risk Tip: Wechat official account traffic realized less than expected, fierce competition in the mobile advertising industry, etc.