Introduction to this report:
The company's publishing and distribution business is developing steadily, actively developing the culture+publishing ecosystem layout, and the online education and digital publishing business are progressing smoothly. It is expected to become the company's new profit growth point in the future.
Key points of investment:
1. First coverage, target price of 7.67 yuan, increased holdings and ratings. The company has an industrial chain covering “editing, printing, distribution and supply”, and has gradually expanded into fields such as digital reading, online education, animation, film and television, cultural creativity, health industry, investment finance, etc., forming a cross-field, multi-media, and full-chain development pattern. The estimated EPS for 2019-21 was 0.69/0.82/0.88 yuan, giving comparable companies 11.1 times the average PE valuation in 2019, corresponding to the target price of 7.67 yuan. The first coverage gave a rating for increasing holdings.
2. Various aspects such as publishing, distribution, and printing have obvious advantages in regional operations. According to statistics from Beijing Kaiyuan Company, 2019H1 ranked 4th for the company's art products and 5th for children's products in the comprehensive retail market. Among similar local publishing houses, its Chong Book Bureau ranked 2nd, Changjiang Children's Club ranked 3rd, and Changjiang Art Club and Hubei Fine Arts Club both ranked 4th.
3. Accelerate industrial expansion and strive to build a “Publishing +” and “Culture +” industrial ecosystem. The company's publishing houses take product line construction as a starting point to further highlight brand characteristics and market competitiveness. Hubei Xinhua Bookstore Group has built 15 new physical bookstores of various types in the province, and the construction of 35 bookstores is progressing in an orderly manner; a diverse business pattern of “bookstore+coffee+cultural and creative life+cultural salon+elements of life” has formed. The smart bookstore project progressed smoothly. An online marketing platform, a cultural and creative business platform, and a membership service platform were basically built, and marketing methods such as audio reading, Douyin, and live streaming were actively tested. The momentum of social marketing increased markedly. E-commerce sales reached 101 million yuan in half a year, an increase of 41.3% over the previous year. Accelerate industrial expansion and strive to build a “Publishing +” and “Culture +” industrial ecosystem. “Culture +” industrial projects such as educational equipment, education informatization, research tours, culture and creativity, and preschool education have initially taken shape.
4. Catalyst: The publishing business is growing steadily, and the layout of education sectors such as preschool education continues to advance
5. Risk warning: changes in market competition pattern, policy risk, risk of insufficient project reserves