[Incident] The company disclosed its 24-year report: 24H1 achieved operating income of 5.967 billion yuan (yoy +8.17%), net profit of 2.493 billion yuan (yoy +11.74%), net profit not attributable to mother of 2.197 billion yuan (yoy +11.43%); of these, 24Q2 revenue was 3.238 billion yuan (yoy +10.05%), net profit of 1.453 billion yuan (yoy +12.65%), net profit due to mother Net profit 1.252 billion yuan (yoy +6.82%).
The main business is growing steadily, and is still resilient under macroeconomic disturbances. 24H1 revenue increased 8.17% year over year. By business, the 24H1 building/theater line's revenue was 5.505/0.454 billion yuan (yoy +7.25%/+20.75%).
24H1 domestic GDP increased 5% year on year, Social Zero increased 3.7% year on year, and the advertising market grew 2.7% year on year. Compared with general market performance, the company maintained steady growth amid macroeconomic fluctuations. On the gross margin side, 24H1 Building Media's gross margin also increased by 0.3ppt to 64.31%, and the comprehensive gross margin increased by 1.2ppt to 65.13%. The sales expense ratio decreased slightly by 0.12ppt to 18.5% year on year, the management expense ratio remained flat year on year, and overall cost control was better.
The consumer industry's advertising revenue also increased 14%, focusing on the Q3 Olympics launch and long holiday performance. The year-on-year change in 24H1 consumer goods/internet/real estate/home/entertainment and leisure/transportation/commerce and services/communications was +14.23%/-28.67%/-12.28%/+2.13%/-9.69%/+48.10%, accounting for 63.93%/8.72%/4.63%/4.67%/8.02%/3.48%/3.35%. Olympic sales in the third quarter and the effects of the Mid-Autumn Festival and National Day are expected to drive Q3 performance growth.
Low-level and overseas point resources are growing steadily. As of July '24, the number of points increased by 3.9% compared to the end of '23. Among them, the elevator TV media/elevator poster media had self-operated equipment of 1.097/1.549 million units, a change of 9.0%/-1.0% compared to the end of '23. Elevator TV media grew strongly at the third-tier level, up 45.3% from the end of 23; the number of media equipment in overseas subsidiaries was about 0.175 million units, up 15.1% from the end of 23. Subsequent expansion is expected to better meet customer needs, achieve higher publication rates at new locations, and drive revenue growth.
High dividends give back to shareholders and value shareholder returns. The company announced a mid-year dividend plan. It plans to distribute a cash dividend of 1 yuan (tax included) for every 10 shares, for a total cash dividend of 1.444 billion yuan, accounting for 57.92% of 24H1's net profit to mother.
Considering the relative weakness of the macroeconomy, there is uncertainty about advertisers' intentions, but the company's media have a stable mentality on the user side and are optimistic about the company's performance resilience. We forecast net profit to be 5.255/5.699/6.086 billion for 24-26 (6.211/6.992 billion before 24/25). Referring to comparable company valuation levels, we give 24 times the PE 21 times, target price 7.69 yuan/share, and maintain the “buy” rating.
Risk Warning: AI applications fall short of expectations; consumer goods advertisers are less willing to launch