It has been 15 years since its establishment to build a full-service marketing chain, and short video marketing has made great achievements this year. Gravitational Media was founded in 2005 and has gone through the development stages of brand marketing, content marketing, digital marketing and digital commerce. Transition from traditional marketing to digital integrated marketing. The company rapidly expanded its business boundary through mergers and acquisitions, acquired Zhuhai Shitong in 2017, acquired Shanghai Zhiqu in 2018, and cut into the effect marketing and short video market in 2019 to improve the scale and competitive advantage of the company's digital marketing business. In October 2020, the second headquarters of Gravitation Media MCN officially settled in Hangzhou Future Science and Technology City, starting a new journey of Gravitation Media live e-commerce. At present, short video marketing has achieved preliminary results. In the first three quarters of 2020, the company's short video advertising and content e-commerce business revenue reached 885 million yuan, and it is expected to maintain rapid growth for the whole year. This year, new technology giants such as Ant Group and XIAOMI have been added. Continue to develop head customers to maintain wolf nature.
Goodwill impairment affects 19-year performance, 20-year short video marketing business is strong, and the profit inflection point has reached 3 billion yuan in 2019. After excluding the impact of goodwill impairment, the net profit is 110 million yuan, an increase of 87.02% over the same period last year. Q1-Q3 2020, the company achieved revenue of 3.51 billion yuan, an increase of 72.59% over the same period last year. The development of short video business has achieved results. In Q1-Q3 in 2020, the company achieved a net profit of 72.3062 million yuan, an increase of 18.18% over the same period last year, of which Q3 revenue was 1.541 billion yuan, an increase of 67.6% over the same period last year, an increase of 29.4% over the previous year, and a net profit of 44.87 million yuan, an increase of 33.5% over the same period last year, an increase of 140% over the previous year. Company Q4 and the media to confirm the annual rebate ratio, superimposed e-commerce with goods and other high gross profit margin business, we predict that Q4 revenue and profit is expected to continue to maintain significant year-on-year growth.
Pay close attention to Douyin Kuaishou Technology short video head media dividend, people and goods yard competitive advantage to help the company expand MCN upstream customers, the company has accumulated a large number of brand resources, serving more than 500 brand enterprises. In the process of business development, the company gradually transformed the accumulated customer resource advantage into supply chain resource advantage, and carried out exclusive supply chain cooperation with domestic fast consumer, health, 3C, beauty and other well-known brand companies on Douyin, Kuaishou Technology and Xiaohongshu platforms to enhance market expansion ability. In terms of cooperative online celebrities, the company has incubated celebrity accounts such as "honest person Xiao Hei" and signed contracts with star online celebrities such as Chen Zhipeng and Deng Sha. The quarterly report reveals that the company has about 150 million followers, and the number of followers in the account matrix of "Magnetic Technology" of Douyin MCN has exceeded 100 million, and the follow-up growth is worth looking forward to. In terms of scene and traffic control, the company has cooperated with more than 300 media for a long time, and won many awards such as Mango "Best Agent partner" and Tencent "Outstanding performance Award". The company actively develops new short video media and cooperates with Douyin and Kuaishou Technology. In the first three quarters of 2020, the company's short video marketing and content e-commerce team has nearly 200 people, completing the service capacity building of the whole industry chain of new media and content e-commerce.
Investment suggestion: short video overlay MCN business development, 2020 will be the inflection point of the company's profits, and 2021 will continue to release growth momentum. We expect Gravitation's operating income in 20-22 years to be 5.1 billion / 7.8 billion / 10.37 billion yuan respectively, and its parent net profit 130 million / 250 million / 400 million yuan, corresponding to the company's 2021/2022PE17/10 times, using the comparable company 21E 30X average PE to value Gravity Media's market capitalization of 7.5 billion yuan. The target price is 27.60 yuan, with a "buy" rating.
Risk tips: policy risk, market competition risk, short video business promotion is not as good as expected risk.
