3Q23 achieved revenue of 2.308 billion yuan (year-on-year + 2.06%), net profit of 214 million yuan (year-on-year + 5.53%), and net profit margin of 9.3% (year-on-year + 0.3pct). The company is a regional key cultural enterprise, the core main business develops steadily, digitalization accelerates the formation of a new industrial pattern, and we are optimistic that the company's market share will maintain its leading edge. Maintain the "overweight" rating.
Revenue and profit maintained steady growth. The company achieved a net profit of 214 million yuan (+ 5.53% compared with the same period last year) and a net profit margin of 9.3% (year-on-year + 0.3pct). The increase in homing net profit over the same period last year was mainly due to an increase in gross profit margin and a decrease in credit impairment. By the end of 3Q23, the company had 4.304 billion yuan in cash on paper and abundant cash on paper.
Steadily promote the core business, adhere to the publication of high-quality content. According to the company's 2023 mid-term report, in terms of theme publishing, the Central Plains Media's "the Power of China's intellectual property Rights" a total of 37 projects were selected into the "14th five-year Plan" national key publication plan. In terms of the publication of ancient books, the formation of the matrix of the "Chinese context" series has been accelerated, eight books such as "Xia Ji: the earliest Archaeology of Erlitou" have been added, and key projects such as "complete works of Xuanzang" and "Integration of Henan Tibetan oracle bones" have been firmly promoted.
The pace of business innovation has been accelerated and the formation of a new industrial pattern has been accelerated. In terms of physical bookstores, the company promotes the transformation of traditional bookstores through the upgrading of formats, scenes and services, and Kaifeng Book City has won the title of "most beautiful bookstore of the year". In the aspect of educational informatization, the construction of "Henan Primary and Middle School Wisdom Education platform" has been launched in an all-round way, and the ecological matrix of research curriculum has been gradually improved around the three major product systems of after-class delay service, research practice and labor education. In terms of integrated publishing, the "Picture Book China" project and the Central Radio and Television Station Cloud listening audio client jointly created a series of radio dramas, and the Central Plains Digital Publishing Industry Park project completed investment. In terms of cultural creativity, the "Central Plains Digital Creative Valley" cultural industry innovation consortium has reached a cooperation intention with 58 external cooperative units. The joint development of multi-faceted innovative formats has accelerated the formation of a new industrial pattern of "four horizontal, seven vertical and multi-ecological".
Risk factors: the risk of industrial, tax and industry policy adjustment; the risk of large fluctuations in raw material prices; the risk that the integration of traditional publishing and emerging publishing is not up to expectations; the risk of stringent environmental policies; and the risk of intensified market competition.
Investment advice: the company is a regional key cultural enterprise, distribution and publishing as the core of the main business development is steady, supporting medium-and long-term growth; at the same time, the acceleration of digital business transformation is expected to contribute new momentum to performance growth. We maintain the company's revenue forecast of 100.84 / 104.93 billion yuan for 2023-2025 and the net profit forecast of 1.109 billion yuan for 2023-2025. The current share price of the company corresponds to the valuation level of comparable companies Phoenix Media, Zhongnan Media, Zhejiang Edition Media, Xinhua Wenxuan and Chinese Media (the average is about 12 times PE,Wind consensus expectation in 2023), giving the company 12 times PE in 2023, corresponding to the target price of 13 yuan per share. Maintain the "overweight" rating.