教材教辅业务：依托地域优势，发展稳健向好。教辅教材业务是公司营收的主体，保持稳定。2019-2023 年，教材教辅业务占公司营收比例从71.95%上升至88.66%，2023 年的毛利率为25.61%。我们认为，教辅教材的需求偏刚性，未来发展主要取决于人口因素。广东省常住人口出生数和常住人口增加数全国领先：从2020 年至2023 年，广东省是唯一一个五年中人口出生规模超百万的地区；2018 到2023 年，广东省常住人口增加358 万人，为各省市最高。我们认为，主营业务的创收能力为公司业绩提供基本盘，且依托广东省地域优势，未来可持续性强。Key points of investment:
The Guangdong provincial government actually controls it, and the concentration of equity is stable. Southern Media was founded in 2009 by a partnership between Guangpan Group and Nanfang Newspaper. The main sponsor is Guangpan Group. In 2016, the company was listed on the Shanghai Stock Exchange. Since its listing, the company's shares have been steadily concentrated in Guangfan. As of the end of 2023, Guangfan Company held 61.59% of the shares of Southern Media. The actual controller and largest shareholder of Guangfan Company is the Guangdong Provincial People's Government. It is a local state-owned enterprise with a stable credit rating of AA+.
Net revenue and profit grew steadily, and dividends continued to give back to investors. The company's operating income and net profit to mother have maintained a steady upward trend in the past five years. In 2023, the company achieved operating income of 9.365 billion yuan, a year-on-year increase of 3.35%, and achieved net profit of 1,284 billion yuan to mother, an increase of 34.39% over the previous year. Among them, the textbook teaching aid business contributed the most, accounting for 88.66% of total revenue. In addition, the company continues to pay dividends. Since its listing, it has accumulated 10 cash dividends, with a cumulative dividend of 2,305 billion yuan. At the closing price on June 25, the company's 2023 dividend rate was 4.59%.
Textbook teaching aid business: Relying on regional advantages, the development is steady and positive. The textbook business is the main source of the company's revenue and remains stable. In 2019-2023, the textbook teaching aid business increased from 71.95% to 88.66% of the company's revenue, and the gross margin in 2023 was 25.61%. We believe that demand for teaching aids is rigid, and future development will mainly depend on demographic factors. Guangdong Province leads the country in the number of births and the increase in the resident population: from 2020 to 2023, Guangdong Province was the only region where the number of births exceeded one million in five years; from 2018 to 2023, the resident population of Guangdong Province increased by 3.58 million, the highest among all provinces and cities. We believe that the revenue generating capacity of the main business provides a basic market for the company's performance, and is highly sustainable in the future, based on Guangdong's geographical advantages.
After-school service: It is expected to open up new opportunities for performance growth. The company has obvious channel advantages in the field of after-school services. Its distribution group has a distribution network throughout Guangdong Province. By the end of 2023, the company's distribution group had 146 central stores, 95 campus bookstores, and 118 township bookstores. In addition, in 2023, it invested in the establishment of Guangdong Nanchuan Technology Co., Ltd., which specializes in off-campus care services for primary and secondary school students and out-of-kindergarten care services. We believe that with the implementation of the “double reduction” policy in education, the reading and study habits of primary and secondary school students have changed to a certain extent. The company can use its channel advantages to promote the continuous expansion of the education publishing industry chain and explore new growth points for business development through after-school hosting and quality education.
The results of resource integration are outstanding. In 2023, the company purchased 100% of the shares of Guangdong Lingnan News and Guangdong Map News held by Guangdong Publishing Group Co., Ltd. at a total price of 212 million yuan. After the acquisition was completed, Guangdong Lingnan News Agency and Guangdong Map News became wholly-owned subsidiaries of the company and included in the scope of the company's consolidated financial statements. The competition issues in the industry caused by the free transfer of state-owned shares of Guangdong Lingnan News Agency and Guangdong Map News were properly resolved.
Profit forecasting is based on valuation analysis. We believe that the company's textbook teaching aid business is operating steadily. The after-school service business has already generated considerable revenue, and is expected to generate new profit increases in the future. The active layout in the fields of digital education and AI+ education will also help the company develop in multiple dimensions. We expect the company's 2024-2026 EPS to be 1.09 yuan/share, 1.18 yuan/share, and 1.28 yuan/share, respectively. Referring to comparable companies, we gave the company a PE valuation of 15-18 times in 2024, with a corresponding reasonable value range of 16.35-19.62 yuan/share. For the first time, coverage gave the company a “superior to market” rating.
Risk warning. Risk of changes in industry policies; increased risk of market competition; risk of student growth falling short of expectations; risk of changes in tax policies; risk of AI application implementation falling short of expectations.
