Overview of events
The company released the third quarter report of 2023. The company's 2023Q1-Q3 realized operating income of 963 million yuan, + 355.75% compared with the same period last year, realized net profit of 242 million yuan and turned losses into profits, and deducted non-return net profit of 162 million yuan, + 650% of the same period last year. Single Q3 company realized operating income of 398 million yuan, year-on-year + 307%, net profit of 49.46 million yuan, + 57% year-on-year, non-return net profit of 51.89 million yuan, + 65% of the same period last year.
Analysis and judgment:
The main business recovers in an all-round way, and the exhibition business contributes mainly to Q3 profits.
In 2023, the company's convention and exhibition business ushered in a full recovery, and held a number of large-scale conference activities from January to September, including 15 exhibitions (5 in the third quarter), with a total size of more than 1.05 million square meters; held 6 road running events (2 in the third quarter), with a total number of more than 38000 participants; the Shanghai Expo Pavilion operated by the company held 69 exhibitions and activities, with a total rental area of more than 7.511 million square meters. Under the recovery of the main business, the company achieved operating income of 963 million yuan in the first three quarters, + 356% year-on-year, and single Q3 company achieved operating income of 398 million yuan, + 307% year-on-year. Q3 realized the net profit of 49.46 million yuan, of which the investment income + fair value change income totaled 2.01 million, which decreased significantly from the previous month (Q2 was 100 million yuan). It is expected that the net profit of Q3 will be mainly contributed by the main industry.
The profitability of Q3 exceeds the same period of 21 years, and the expense rate continues to optimize large-scale exhibitions such as 23Q3 Industrial Expo, World Congress of artificial Intelligence, China Fair and Shanghai International Advertising Festival. 2023Q3 gross profit margin is 27%, which is higher than that of Q3 in 2021 (22Q3 business is greatly affected by the epidemic, and gross profit margin is not referential). The sales expense rate of 23Q3 company is 3.1%, which is 1.7 pct lower than that of the same period in 21 years; the management expense rate is 10.5%, which is 0.7 pct lower than that of the same period of 21 years; and the financial expense rate is 1.1%, which is lower than that of the same period of 21 years by 0.7pct, and the cost side is continuously optimized.
IP has outstanding advantages in resources and pays close attention to the strategy of cultivation and internationalization of new exhibitions. On June 21, 2023, the Shanghai Municipal Commerce Commission issued a three-year action plan for Shanghai to promote the high-quality development of exhibition economy into an international exhibition capital (2023-2025) (Shanghai Merchants Exhibition (2023) 160). The plan proposes that by 2025, the ability of Shanghai Convention and Exhibition to allocate global resources will be further enhanced, the global influence and international competitiveness of Shanghai Convention and Exhibition will be further enhanced, the market mechanism will be more mature, the exhibition enterprises will be more dynamic, and the brand exhibition will be more concentrated. The international exhibition capital has been built in an all-round way. As an enterprise directly under the Shanghai State-owned assets Supervision and Administration Commission, the company focuses on the main business of convention and exhibition, grasps the core IP such as Industrial Expo, Guangzhou Printing Exhibition and World Internet Congress, and is expected to gradually open the "going out" strategy. Recently, the company announced that it intends to acquire a 41% stake in Shanghai Tabos Exhibition Company by means of fixed increase and equity transfer, lay out the pet exhibition market, and promote the extension strategy again. At the same time, according to the record table of the company's customs activities in June, the company has independently incubated new exhibitions in the fields of high-end equipment and artificial intelligence, which is expected to contribute to long-term growth.
Investment suggestion
We maintain our previous profit forecast and estimate that the company's 23-25 realized income will be 170,200,200,000,000 yuan respectively, the net profit returned to the mother will be 30,000,000 yuan, respectively, and the EPS will be 0.57pm 0.580.66 yuan. Refer to the closing price of 9.61 yuan per share on October 27, 2023, corresponding to the latest PE of 17x/17x/15x, maintaining the company's "buy" rating.
Risk hint
(1) the influence of the company's core exhibition IP is declining; (2) the cultivation of the company's new IP is not as expected; (3) the epitaxial M & An is not as expected.