Operating revenue and net profit grew steadily in 2018. In 2018, the company achieved an operating income of 2.17 billion yuan, an increase of 10.19% over the same period last year. The net profit belonging to the shareholders of the parent company was 348 million yuan, up 5.66% from the same period last year. If the loss factors such as depreciation of reinforcements and assets newly added by Qingdao Media Development Co., Ltd. were excluded, the net profit of the company belonging to the shareholders of the parent company increased by 16.65%. In 2018, the company's operating cash flow was 327 million yuan, an increase of 55% over the same period last year. Against the background of the slowdown in macroeconomic growth in 2018, the company's main book business maintained steady growth, the transformation business continued to advance, and corporate governance continued to optimize. In 2018, the company and its Xinhua Bookstore in Qingdao were selected as the top 30 cultural enterprises in Shandong, and Qingdao Publishing House was awarded the title of the most influential enterprise of copyright in China in 2018, achieving a bumper harvest of both operational and social benefits.
Publishing: steady revenue growth, enhance the influence of children's and food books brands. In 2018, the company's publishing sector achieved business income of 928 million yuan, an increase of 10.48% over the same period last year. 7518 books were published, an increase of 13% over the same period last year. The comprehensive reprint and reprint rate was 85.6%, an increase of 5.6% over the same period last year. In the children's books section, the company has made efforts to publish original picture books, and the published best-selling books such as "Love yourself" series, "Gong Xi Da Ye" series, "Juvenile Reading" series and other best-selling books have sold well on many platforms and won important domestic awards. The influence of children's books brand has been further improved. In the section of fashion and lifestyle books, the company has further cooperated with gourmet Cai Lan to publish a series of books, forming a green version of Cai Lan IP, and further consolidate its brand position in food books.
Release: create a new sales model of offline theme bookstores, and new media online marketing has initially taken shape. In 2018, the operating income of the company's issuance sector reached 1.77 billion yuan, an increase of 9.60% over the same period last year. In the offline field, the company focused on creating a theme bookstore operation model, and gradually formed a theme bookstore group with different theme positioning, such as BC Food Bookstore, Qingdao study, Mingyue Island 24-hour Bookstore, Hanyong "compound Reading Space, Trestle Bookstore and so on. The BCMIX "compound cultural consumption space" created by the company has opened more than 30 stores, and successfully bid for the operation right of IMAGE image gift shop with a total of five stores in the four headquarters of Tencent. In terms of online distribution, the company focuses on cultivating bestseller product groups and effectively boosts the overall sales of green books, with an online shipping code of more than 300 million yuan for the whole year. In addition, the company also makes use of Weibo Corp, Mini Program and other new media for book sales, the current marketing effect is beginning to show, its own marketing carrier matrix has been initially formed.
Investment and new business type: increase digital reading, film and television and other new media development, mergers and acquisitions to increase the layout of the whole industry chain. In 2018, the company increased the development of VR and digital reading products, in which Carpenter's "just right" radio program entered the top 10 of the Himalayan women's list, and a number of projects of film and television companies are also moving forward in an orderly manner. In addition, the company extends the industrial chain by means of investment and mergers and acquisitions. In 2018, the company invested US $40 million indirectly in XimalayaInc, the main body of the red chip structure of Shanghai Zenda Himalayan Network Technology Co., Ltd. Round E financing, this investment is expected to bring better investment returns to the company.
Profit forecast and valuation analysis: we believe that the company's main book business growth rate is steady, the company's book planning, marketing and distribution capacity is strong, and there is no rental income in the book business, brand influence is good. We believe that with the continuous development of the company's mass book market and the continuous layout and extension of the new media industry chain, the company is expected to maintain a high growth rate in the future. We estimate that the company's EPS in 2019-2021 will be 0.60,0.70,0.81 yuan. With reference to the industry companies Zhongnan Media, Xinhua Wenxuan and New Classics wind in 2019, we expect the PE to be 17 times, 17 times and 26 times respectively. We give the company 17-20 times dynamic PE valuation in 2019, corresponding to a reasonable value range of 10.20-12.00 yuan, which maintains a rating better than that of the market.
Risk hint: traditional publishing focuses on downside risks, while new business development is not as good as expected.