Event: new Classic released the three-quarter report of 2023, the company's operating income in the third quarter was 217 million yuan, down 15.77% from the same period last year, and the net profit was 41 million yuan, down 7% from the same period last year. In the first three quarters of 2023, the company achieved operating income of 657 million yuan, a decrease of 6.63% compared with the same period last year. The net profit of returning to the mother was 130 million yuan, an increase of 2.32% over the same period last year.
The industry is slow to repair and the company's book sales are lacklustre. The prosperity of the book industry has not yet recovered. according to the opening of books, the size of the book market fell 1.04% in the first three quarters of 23 compared with the same period last year, narrowing the decline compared with the first half of 23, but has not yet resumed growth. The company's classic books such as Yu Hua and Higuo series continued good sales performance in the third quarter, but due to the influence of the market environment, the company shrank the number of movable sales books, and the waist-tail books of literature and social sciences performed poorly in summer sales with fewer marketing festivals. Superimposed by the impact of a high base in the same period last year, the company's paper book sales fell 16% year on year to 423 million yuan in the third quarter of 2003. Revenue from paper books fell 13% year-on-year to 197 million yuan.
Price control advantage is solid, focus on the fourth quarter catalysis and overseas business progress. In the environment of weak demand for books, the company maintained a strong ability to control prices. in the first three quarters of 23, the gross profit margin of the company's paper book business was 48.16%, a slight decrease of 0.06 PCT compared with the same period last year. The fourth quarter ushered in the peak sales season, the company continues to improve the construction of the channel system, improve the efficiency of marketing activities, overall book sales may be expected to resume growth, in addition, Xu Xianyun's new book "Jingwei Huaxia" and Mai's reprint book "Life Sea (2023 Edition)" recently listed, overseas newly acquired subsidiary DAW Books gradually release science fiction book publishing capacity, is expected to contribute to revenue increment.
Profit forecast and investment advice: the company has a leading copyright advantage in books such as literature, children and humanities and social sciences. Domestic sales are expected to resume growth after the market environment picks up, while overseas business development will further increase the company's revenue. The company is expected to return to its parent net profit of 1.61 trillion yuan in 2023-24-25, an increase of 17%, 21%, 16% over the same period last year. Maintain a "buy" rating.
Risk hint: the recovery of the book industry is not as expected; the overseas business development is not as expected.