Event: on the evening of April 16, 2019, City Media released its 2018 annual report that the company's annual revenue was 2.17 billion yuan, an increase of 10.19% over the same period last year, and its net profit was 348 million yuan, an increase of 5.66% over the same period last year. Excluding the loss factors such as depreciation of converted assets newly added by Qingdao Media Development Co., Ltd., the net profit of the company belonging to the shareholders of the parent company has increased by 16.65%. The company plans to pay 2 yuan for every 10 shares.
The overall business grew steadily, and the growth rate of Q4 performance picked up in a single quarter. The company's revenue growth was steady, and the return net profit decreased compared with 2017, mainly because the city media square was put into use, depreciation amortization and previous investment brought certain pressure on the company's performance growth. excluding the loss factors such as the depreciation of fixed assets newly added by Qingdao Media Development Co., Ltd., the company's net profit increased by 16.65%. Under such circumstances, Q4 still achieved a year-on-year growth of 6.01% in a single quarter, reversing the downward trend of Q3 in a single quarter.
The profit margin is stable as a whole, and the expense rate increases slightly. The company's gross profit margin in 2018 was 39.09%, slightly higher than in 2017, 0.3pct, net profit 16.04%, slightly lower 0.69pct. The three fee rates have increased slightly, and the overall operating efficiency has been stable.
The cash flow is good and there is plenty of cash on hand. The net operating cash flow of the company in 2018 was 327 million yuan, an increase of 54.98% over the same period last year. With 1.101 billion yuan in cash on hand, abundant cash flow provides continuous power for the development of the company.
The proportion of dividends continues to rise. The company's proposed dividend in 2018 is 140 million yuan, accounting for 40.23% of the net profit returned to the mother. 31.91% in 2017 and 31.91% in 2016, and 30.88% in 2016.
Publishing and distribution business grew steadily. The company's publishing sector achieved revenue of 928 million yuan, an increase of 10.48% over the same period last year, with a gross profit margin of 47.17%, an increase of 0.62pct. The issuing sector achieved revenue of 1.77 billion yuan, an increase of 9.60% over the same period last year, with a gross profit margin of 20.73%, an increase of 0.32pct. The publishing section focuses on high-quality copyright resources, the publishing quality improves steadily, and copyright assets accumulate rapidly.
The diversified development of the all-media industry chain and the active promotion of the film and television business. The company's revenue from stationery and other business reached 70.91 million yuan in 2018, an increase of 242.43% over the same period last year. The growth mainly came from film and television copyright and film and television business sales. The company has accelerated the layout of VR, short videos and other fields, and the development of content products has been smooth. By undertaking the construction of a 360-degree panoramic platform for the Shanghai Summit and the theme exhibition of the International Virtual reality Conference, the company has expanded its influence in the virtual reality, press and publishing and education industries, and constantly enriched VR and digital reading products. A number of projects of film and television companies are being carried out in an orderly manner. In June 2018, at the first SCO National Film Festival, the film and television company officially launched a project to co-produce films on international economic and trade cooperation with Pakistan.
City Media Square put into use, the follow-up is expected to contribute to stable cash flow, the main business growth rate is considerable. Qingdao Media Development Co., Ltd. lost 58.3652 million yuan for the whole year, mainly due to the increase in depreciation and operating expenses of fixed assets after the city media plaza was put into use. This is an important measure to explore the integration of multi-element new business type. After the follow-up operation is stable, it will become another stable cash flow business of the city media.
Offline upgrade, accelerated landing of the theme bookstore. The company creates a theme bookstore operation model, which organically combines book sales with food and beverage experience, life and leisure, art appreciation, online interaction and other cultural elements. Continue to promote the upgrading of a series of bookstores. The BC MIX "compound cultural consumption space" created by the company in 2018 has opened more than 30 stores, covering many cities. "BCMIX" successfully won the operation right of IMAGE image gift shop in total five stores of Tencent headquarters in four places through competitive bidding. Accelerate the realization of light capitalization mode replication and output.
Actively explore the capital market, the investment sector has come to the fore. The company invested 40 million US dollars indirectly in Ximalaya Inc, the main body of the red chip structure of Shanghai Zendai Himalayan Network Technology Co., Ltd. Round E financing, this investment is expected to bring good investment returns to the company, and at the same time further expand the company's investment channels, optimize the company's investment structure, and speed up the diversified development of the company's all-media industry chain.
Profit forecast and investment suggestions: we predict that the realized income of City Media from 2019 to 2021 will be 2.388 billion yuan, 2.618 billion yuan and 2.925 billion yuan, respectively, an increase of 10.05%, 9.63% and 11.70% over the same period last year; the net profit will be 379 million yuan, 419 million yuan and 475 million yuan respectively, up 9.01%, 10.34% and 13.46% over the same period last year; and the corresponding EPS will be 0.54,0.60,0.68 yuan respectively. Maintain the buy rating.
Risk tips: the publishing industry is depressed; performance is not up to expectations; transformation and upgrading is not up to expectations; systemic risk.
