Fanzhong will work with Meituan to promote elevator video media operation cooperation in low-tier cities, combining the advantages of both parties to provide more comprehensive and high-quality services to small and medium-sized enterprises in the sinking market. Currently, Meituan plans to recruit elevator media advertising franchisees (video elevator media) in the sinking city. The Meituan side will provide equipment and business support; the franchisee side will be responsible for matters such as equipment installation, sales, and advertising production. Currently, the penetration rate of small and medium-sized lifestyle service businesses is relatively low, and cooperation with Meituan is expected to accelerate business expansion in low-tier cities.
Q1 The off-season passed smoothly, and the recovery of the Olympics and real estate economy is expected to help the fundamentals continue to recover. The company achieved revenue of 2.73 billion yuan in 24Q1, +6.02% year-on-year. Due to a decrease in deposit interest rates, the company's interest income decreased by 0.016 billion yuan. In summary, the company achieved net profit of 1.04 billion yuan in the first quarter, +10.50% year-on-year, after deducting non-return net profit of 0.945 billion yuan, or +18.17% year-on-year. Q1 There is a rich advertising season after the off-season. 618, the New Year Festival, the Olympic season, the Mid-Autumn Festival in September-October, and the National Day season supported a steady increase in advertising demand.
Furthermore, we expect the company to benefit from increased investment in the daily chemical beverage industry. According to CTR data, from January to April 2024, the FMCG industry such as beverages, cosmetics/bathroom supplies, and food will continue to be the main force of outdoor advertising. Investments in the cosmetics, bathroom supplies, clothing and other industries increased by more than 50%.
The advertiser structure was further optimized, and points resumed rapid expansion. Building media and others in '23, according to advertisers' advertising categories, consumer goods for daily use increased by 1.345 billion yuan year on year, accounting for 52.80%, a slight increase over the previous year, with revenue contribution +35.36%; the Internet grew 0.326 billion yuan year over year, accounting for 11.53% in revenue, contributing +31.13% year over year; entertainment and leisure revenue contributed +30.43% year over year; it is worth noting that transportation revenue contributed +34.60% year over year and communication revenue contributed +178.57% year over year. As of March 31, 2024, the company's elevator TV media self-operated equipment was about 1.051 million units, +28.48% compared with the end of 2022 (including about 0.154 million units of media equipment from overseas subsidiaries, +36.28% over the same period), achieving rapid expansion at home and abroad.
Cash is plentiful, and dividends continue to be generous. As of the 2024 quarterly report, the total amount of the company's monetary capital and transactional financial assets was $9.197 billion, and there was plenty of cash on the books. The company continues to pay generous dividends. Following the announcement of the 2024-2026 shareholder dividend return plan, it was announced that it plans to distribute a cash dividend of 4.766 billion yuan in 2023, accounting for 98.7% of net profit attributable to mother for the year.
Maintain a “Highly Recommended” investment rating. The company is a leading outdoor advertising media and is expected to benefit from the increase in advertisers' budgets as the economy recovers. We maintained the company's net profit from 24-26 to 5.49/5.94/6.69 billion yuan.
Risk warning: Overseas expansion falls short of expectations, competitive risk, and risk of advertiser delivery falling short of expectations.