Main points of investment:
Event: the company released the 2018 annual report: in 2018, the company achieved revenue of 10.363 billion yuan, a decrease of 7.74% over the same period last year, and a net profit of 733 million yuan, an increase of 19.45% over the same period last year. Non-return net profit was 599 million yuan, an increase of 21.57% over the same period last year.
Actively adjust the revenue structure to achieve high-quality development.
In 2018, the company achieved operating income of 10.363 billion yuan, a decrease of 7.74% over the same period last year, mainly due to the reduction of the scale of bulk trade business. Excluding this factor, the revenue of the main business of publishing and distribution increased by 11.45% over the same period last year. The specific business revenue of each segment of the company is as follows:
1) the revenue of the publishing business was 1.943 billion yuan, an increase of 12.53% over the same period last year; 2) the revenue of the distribution business was 3.021 billion yuan, an increase of 10.76% over the same period last year; 3) the revenue of the printing business was 234 million yuan, an increase of 8.93% over the same period last year; 4) the income of the material trade business was 6.169 billion yuan, a decrease of 19.41% over the same period last year.
Book publishing has strong market competitiveness, and the general book business has a high growth rate.
The company's book publishing has strong market competitiveness. In 2018, according to the open-book monitoring data, Changjiang Media books ranked sixth with a share of 2.79% in physical bookstores, 2.20% in online stores, and 2.32% in the comprehensive retail market. In the field of professional segmentation, the company ranks first in art books, fourth in children's books, sixth in biography books, and seventh in literature and education books.
In 2018, the company's main business achieved rapid growth, mainly due to the good market demand for children's books and subject books. 2019 is the 70th anniversary of the founding of New China, the company plans to launch a number of boutique theme publications, we believe that this will still have a significant impact on the company's general book revenue growth in 2019. In 2018, the company publishes and distributes the operating data of the main business sectors as follows:
1) Publishing business in 2018: the income from teaching materials and teaching aids was 729 million yuan, up 3.95% from the same period last year, and that from general books was 1.067 billion yuan, up 20.57% from the same period last year.
2) 2018 distribution business: the income of teaching materials and teaching aids was 2.37 billion yuan, an increase of 12.93% over the same period last year, and that of general books was 780 million yuan, an increase of 34.81% over the same period last year.
The gross profit margin of the main business is stable and the cost control is good.
1) the gross profit margin of the main publishing and distribution industry is stable. In 2018, the gross profit margin of the company's publishing business was 34.02%, down 0.84% from the same period last year, while the gross profit margin of the distribution business was 31.38%, an increase of 1.58%.
2) cost control is good. In 2018, sales expenses were 543 million yuan, up 7.72 percent from the same period last year; management expenses were 647 million yuan, up 4.18 percent from the same period last year; R & D expenses were 93 million yuan, and financial expenses were 4 million yuan.
Make use of investment channels to improve the layout of the industrial chain.
In 2018, the company added seven new equity investments, with an investment amount of 159 million yuan, mainly around the main business and service business, of which 5 were investments in the main publishing industry and 2 were equity investment funds or fund companies. The company makes use of investment channels to increase investment in industrial projects, which is conducive to extending the industrial layout of "publishing +" and "culture +".
Increase the proportion of dividends.
According to the company's annual report, the company plans to distribute a cash dividend of 1.50 yuan (including tax) for every 10 shares to all shareholders on the basis of 1.214 billion shares of total share capital on December 31, 2018, accounting for 24.85% of the company's net profit, which is much higher than in 2017.
Profit forecast and investment rating:
We estimate that the company's net profit from 2019 to 2021 is 842 million yuan, 925 million yuan and 1.028 billion yuan, the corresponding EPS is 0.69,0.76 yuan and 0.85 yuan respectively, and the corresponding PE is 10.2x, 9.3x and 8.4x respectively. We give the company 12 times PE in 2019, corresponding to the target price of 8.28 yuan, with a "recommended" rating.
Risk hints: 1, the risk of changes in teaching materials and auxiliary policies; 2, the risk of rising paper costs.