Core ideas:
China South Media disclosed its results for the three quarters of 2023: (1) 23Q1-Q3, the company realized revenue of 9.207 billion yuan, up 5.93% over the same period last year; the net profit of returning to the mother was 1.236 billion yuan, up 15.38% over the same period last year, of which 23Q1-Q3/22Q1-Q3 confirmed that the net income of fair value changes was 0.31 million yuan; the net profit of non-return was 1.194 billion yuan, an increase of 5.11% over the same period last year. (2) 23Q3, the company achieved revenue of 2.437 billion yuan, an increase of 0.02% over the same period last year, a net profit of 265 million yuan, an increase of 11.34%, and a net profit of 263 million yuan, an increase of 1.76% over the same period last year.
Steady growth of the main business to create digital industrial clusters. 23Q1-Q3, the revenue of the general book publishing business reached 473 million yuan, an increase of 3.90 percent over the same period last year; the gross profit margin was 46.03 percent, an increase of 0.09pp over the same period last year. The company plans to use its own capital of 2.449 billion yuan to invest in the construction of Central South Media Malanshan Park, and then use its own capital of 659 million yuan to decorate the park. Construction of the park began in January 2022 and is expected to be completed and accepted by the end of August 2024. The park is composed of office base, broadcast center, digital culture and arts center, exchange center, staff club, talent apartment, etc., and is positioned as Hunan Publishing DreamWorks, which integrates short video, media, digital education and other industries.
Have plenty of cash on hand and actively share out dividends. By the end of the 23Q3 period, the company has monetary funds of 9.525 billion yuan, transactional financial assets of 882 million yuan, and other current assets of 5.328 billion yuan. The company has distributed a high proportion of cash dividends to shareholders for many years in a row. The amount of cash dividends (including tax) in 2022 is 0.60 yuan per share, the dividend ratio is 77%, and the dividend rate calculated on the basis of the company's latest closing price of 11.71 yuan per share is 5.1%.
Profit forecast and investment advice. We estimate that the operating income of the company from 2023 to 2025 will be 131.61 billion yuan and 13846 million yuan, and the net profit will be 1.603 million yuan 17.63 billion yuan.
In the first three quarters of this year, the company's performance grew steadily, actively laid out AI and integration transformation, and ranked among the forefront of the industry in terms of hand capital and dividend rate. We value the company at 15 times PE in 2024, with a fair value of 14.73 yuan per share and maintain a "buy" rating.
Risk hint. There is a decrease in the number of students in K12; weak book consumption; changes in regulatory policies; switching of market themes; and the landing of AIGC technology is not as expected.