Key points of investment:
The company released its 2024 semi-annual report: In 2024, Focus Media achieved revenue of 5.967 billion yuan, up 8.17% year on year; net profit to mother was 2.493 billion yuan, up 11.74% year on year; net profit after deducting non-return to mother was 2.197 billion yuan, up 11.43% year on year.
Q2 2024 achieved revenue of 3.238 billion yuan, up 10.05% year on year; net profit to mother of 1.453 billion yuan, up 12.65% year on year; net profit after deducting non-return to mother of 1.252 billion yuan, up 6.82% year on year.
Consumer goods advertisers account for a record high in revenue, and consumer promotion policies are expected to further improve audience performance. In 2024, H1's consumer goods advertiser revenue was 3.815 billion yuan, an increase of 14.22% over the previous year. Consumer goods advertisers accounted for 63.93% of revenue, a record high, up 3.4 pcts from the previous high (H1 in '23).
As the country continues to advance a series of policies to expand domestic demand and promote consumption, consumer confidence and consumer demand will be boosted and released. As the core position for consumer goods brand communication, performance is expected to further improve.
Mid-term dividends enhance shareholder returns, and the 2024-2026 dividend is highly deterministic: According to the company's announcement on August 8:1) The company plans to distribute 0.10 yuan in cash (tax included) per share, for a total of 1.444 billion yuan, accounting for 57.92% of net profit attributable to mother. Based on the closing price on August 8, the current dividend rate is 1.68%. 2) According to the company's December 23 announcement, in 2024-2026, the company will pay a cash dividend of not less than 80% of net profit deducted from non-return to mother for the year. The company actively implements the development concept of “investor-oriented” and “double improvement in quality and return”, and the dividend for the next two years is highly certain.
Accelerate the “downward+outward” plan: 1) Divide and accelerate the sinking plan, reach cooperation intentions with Meituan, give full play to their respective advantages, cooperate to develop and operate ladder media in downstream cities such as the third and fourth tier, and provide high-quality services to more small and medium-sized customers. 2) According to the company's semi-annual report, the company established a new Focus FrameMiddle East Advertising Consultancies L.L.C to expand the elevator TV media advertising business in the UAE. As of July 31, the company had covered 10 countries and regions other than mainland China. The number of overseas elevator television/elevator poster media was 0.156/0.019 million, respectively, and the business development momentum is strong.
Profit forecast: Taking into account macroeconomic recovery and the company's operating efficiency, slightly adjust the company's revenue and net profit to mother. We expect the company's 2024-2026 revenue of 12.69/13.79/14.7 billion yuan (previous value of 12.87/14.01/14.94 billion yuan) and net profit to mother of 5.31/5.82/6.45 billion yuan (previous value 5.3/5.85/6.35 billion yuan). The current price corresponds to 24-26 PE16/15/13x, maintaining a “buy” rating.
Risk warning: macroeconomic downturn; competition in the advertising market intensifies; new customer expansion falls short of expectations.