Overview of events
The company released its annual report in 2019. In 2019, the company realized revenue of 10.507 billion yuan, down 2.24% from the same period last year; realized net profit of 192 million yuan, down 16.54% from the same period last year; basic earnings per share was 0.85 yuan; and paid cash dividends of 2.5 yuan (including tax) to all shareholders for every 10 shares. The decline in revenue is mainly due to the impact of the macro environment that makes advertisers in most industries reduce their advertising marketing budgets.
Innovative business model, brand operation business off to a smooth start.
In 2019, the company's brand agent business achieved business income of 305.6 million yuan, down 33.11% from the same period last year, mainly due to the reduction of the original buyout sales agency business. The new business is in good condition, and the company cooperates with the brand to create an online sales channel. The company provides marketing services such as brand creative planning, packaging design, marketing planning, new channel sales and brand agent operation, while the brand provides warehousing, logistics and after-sales services. At the same time, combined with online celebrity marketing, content marketing and other marketing hot spots, quickly enhance the scale of the business.
The customer structure is optimized, and the brand marketing business is rising steadily.
In 2019, the company's brand marketing business achieved revenue of 10.157 billion yuan, an increase of 0.47% over the same period last year, mainly due to the increase in the scale of cooperation among brand customers such as Beauty Cosmetics, Daily Chemical and 3C Digital. At the same time, the company optimizes the customer structure by actively adjusting the cooperation scale of low-margin customers, at the same time, strengthen the collection of accounts receivable to ensure that operating cash flow continues to be positive and effectively reduce financial risks. In December of the same year, the company officially became the exclusive provider of official communication services for the Beijing 2022 Winter Olympic Games and Paralympic Games.
Q1 performance is under pressure caused by the epidemic, and brand operation performance can be expected.
The epidemic has accelerated the "online" process of China's economy. For advertisers, the online time has increased significantly during the epidemic, and changes in consumers' consumption habits and purchasing behavior have prompted advertisers to increase the proportion of online marketing. For marketing service companies, the epidemic has accelerated the digitization and intelligence of marketing. In the future, advertising companies that have the ability to help brand owners accurately reach consumer groups and can effectively manage data to achieve re-marketing will gain more market space. The company is expected to get more opportunities in the accurate marketing business of combining online customer data. In addition, the company accelerates the speed of brand agent operation business, and the annual performance is expected.
Investment suggestion
From 2020 to 2022, we expect the company to achieve revenue of 10.697 billion yuan, 12.529 billion yuan and 15.059 billion yuan respectively, an increase of 1.8%, 17.1% and 20.2% respectively, and the net profit of returning home will be 266 million yuan, 342 million yuan and 453 million yuan respectively, up 38.6%, 28.4% and 32.5% respectively. The corresponding EPS is 1.15,1.48,1.96 yuan respectively, and the corresponding PE is 20.85X\ 16.24X\ 12.25X respectively. Considering the company's innovative business model to achieve a good start, while optimizing the customer structure to offset the impact of cyclical changes in the industry, it is possible to release financial risks, cover for the first time, and give an "overweight" rating.
Risk hint
Macroeconomic downside risk, brand operation business is less than expected risk, market competition aggravates the risk.
