Description of the event
The company announced its 2024 semi-annual report: the company achieved operating income of 5.967 billion yuan in 2024H1, up 8.17% year on year; net profit attributable to shareholders of listed companies was 2.493 billion yuan, up 11.74% year on year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 2.197 billion yuan, up 11.43% year on year. Among them, 2024Q2 achieved revenue of 3.238 billion yuan, a year-on-year increase of 10.05%, and realized net profit attributable to shareholders of listed companies of 1.453 billion yuan, an increase of 12.65% over the previous year. The company announced the 2024 semi-annual distribution plan. It plans to distribute cash of 1.00 yuan (tax included) for every 10 shares to all shareholders. The estimated cash payment amount is 1.444 billion yuan, accounting for 57.92% of the net profit to mother.
Incident comments
Ladder media continues to be repaired. 24H1 Building Media achieved revenue of 5.505 billion yuan, an increase of 7.25% over the previous year; Huituo Motion Cinema Media quickly recovered during the key schedule, and cinema media achieved revenue of 0.454 billion yuan, an increase of 20.75% over the previous year. CTR showed a 2.7% year-on-year increase in publication fees in the 24H1 advertising industry. Among them, elevator LCD and elevator posters 24H1 increased 22.9% and 16.8%, respectively. As the country continues to advance a series of policies to expand domestic demand and promote consumption, and advertising demand is released, the company's performance is expected to be further consolidated.
Gross margin continues to rise, and investment income etc. drive performance growth. Cost side: The operating cost growth rate of Ladder Media 24H1, which accounts for a relatively large share, is lower than the revenue growth rate, driving the business's gross margin up 0.34pct to 64.31% year over year. Expense side: In the first half of the year, in the case of revenue growth, sales and R&D expenses decreased by 0.12 pct/0.12 pct, respectively, and the management expense ratio remained flat year on year. Due to a decrease in deposit interest rates compared to the same period last year, the financial expenses ratio increased by 0.65 pct. At the same time, the company's 24H1 investment income was 0.344 billion yuan, a year-on-year increase of 54.6%, driving performance growth.
Focusing on the core points of the first and second tier, and cooperating with Meituan to increase coverage of the sinking market, the share of consumer advertisers continues to rise. By the end of July 2024, the company's elevator LCD self-operated locations in Tier 1 and 2 cities increased by 5.9% and 4.9% respectively from the end of 2023, and 19.1% and 17.9%, respectively, from the end of July 2023, further focusing on core high-quality locations. At the same time, Fanzhong has reached an agreement with Meituan to develop and operate elevator video media in downline cities, including third- and fourth-tier cities. By the end of July 2024, the company's LCD self-operated locations in third-tier cities and below increased by 45.3% compared to the end of 2023, and an increase of 69.1% over the end of July 2023. Of the revenue share of Chinese media advertisers, the share of consumer goods for daily use increased from 57%/53% at the end of 2023H1/23 to 59% in 2024H1. Furthermore, the housing, transportation and communications categories of real estate increased by more than double digits over the same period last year.
Profit forecast: We continue to be optimistic about the investment value of the building media circuit. We expect the company to achieve a net profit of 5.3/5.9 billion to the mother in 2024-2025, corresponding to the current valuation of 16/14X, and maintain a “buy” rating.
Risk warning
1. Economic recovery and advertising recovery fall short of expectations;
2. Competition in the media market intensifies.