Core viewpoints
Xinhua Wenxuan is a leading cultural enterprise in the southwest region, and its profitability continues to improve. Xinhua Wenxuan is the first publishing and distribution group listed on the dual board of "Aspirh" in China. The company's retail outlets cover the whole province, Shang Chao outlets throughout the country. The company's revenue has risen steadily, and the growth rate of net profit deducted from non-return has been increasing.
From 2016 to 2019H1, the company's revenue growth rate was higher than 11% of the company's revenue reached 8.187 billion yuan in 2018. Benefiting from the increasing efficiency of the company's main businesses such as mass publishing, reading services and educational services, the net profit deducted from 2019H1 has increased by 35.23% compared with the same period last year.
Demographic dividend continues to drive demand, while digital transformation boosts income. 1) Xinhua Wenxuan, as the only distributor of teaching materials in Sichuan Province, is greatly affected by the local birth population. After the country opened the policy of "only one child and two children", the newborn population increased and extended the population dividend; 2) the tax exemption policy at the national level was extended, and the support for publishing enterprises in Sichuan Province was maintained; 3) the regional barriers to the business of teaching and auxiliary teaching materials were obvious. however, the cross-regional competition in the general book market is fierce, the scale of the head publishing company is the same, and the industry structure still needs to be integrated. 4) Digital reading is being favored by more and more readers, and the market scale of digital reading is constantly expanding.
Steady progress in distribution channels, integration of resources to ensure quality
The main results are as follows: 1) Xinhua Wenxuan teaching assistant subscription market channel is stable, and the "integration of three-subject teaching materials" brings new increments. The company actively expand the Internet market, set up "Wenxuan Network", "September Network", the industry has a first-mover advantage. At the same time, Xinhua continues to expand the scale of logistics to support the expansion of Internet sales channels. To ensure the continuous expansion of Internet channel business; 2) the company uses its own brand to attract high-quality resources, continues to develop product publishing capacity, and the market share of bestsellers continues to increase.
Coverage for the first time, giving the company an "overweight" rating
We estimate that the operating income of the company from 2019 to 2021 is 90.01,97.96 and 10.643 billion yuan respectively; the net profit attributable to the shareholders of the parent company is 11.28,12.80,1.431 billion yuan respectively; the corresponding EPS is 0.91,1.04,1.16 yuan per share respectively from 2019 to 2021, and the PE before the corresponding period is 13.05,11.50,10.29 times respectively. Considering that the demographic dividend continues to drive the rising demand for teaching materials, the company attracts high-quality resources to continuously improve the quality of its products, giving it an "overweight" rating for the first time.
Risk tips: tighter policy supervision, teaching auxiliary market channels to maintain risk; cost continues to rise; digital publishing competition intensifies.
