The company released its 2024 semi-annual report. 2024H1's operating income was 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; it is planned to distribute a cash dividend of 1.00 yuan for every 10 shares.
Q2 revenue was 3.238 billion yuan, up 10.05% year on year, 18.62% month on month, net profit to mother was 1.453 billion yuan, up 12.65% year on year and 39.74% month on month; net profit after deduction was 1.252 billion yuan, up 6.82% year on year and 32.47% month on month.
Key points of investment:
The number of points expanded moderately, and the structure was slightly adjusted. As of July 31, 2024, the number of the company's domestic media points was 2.958 million, and the number of overseas media points was 0.175 million, an increase of 3.32% and 15.13%, respectively, compared with the end of 2023. Among them, the total number of elevator TV media points was 1.181 million, an increase of 11.7%, and the total number of elevator poster media points was 1.952 million, a decrease of 0.3%. Judging from the changes in media distribution, the number of elevator TV media in third-tier cities and below, overseas, and affiliated elevator TV media grew rapidly, increasing by 45.3%, 14.7%, and 64.7% respectively; first-tier cities, second-tier cities, and third-tier cities all saw varying degrees of reduction of self-operated elevator poster media, which decreased by 0.7%, 0.9%, and 3.5%, respectively. In addition, the company's cinema media cooperated with 1,835 cinemas, an increase of 4 over the previous year, covering 0.013 million cinemas.
There was a slight increase in gross margin, and new points were added for effective publication. 2024H1's overall gross profit margin was 65.13%, up 1.19pct year-on-year. Among them, cinema media revenue was 0.454 billion yuan, up 20.75% year on year, revenue accounting for 7.61%, and gross profit margin was 76.40%, up about 13.61 pct year on year; building media revenue was 5.505 billion yuan, up 7.25% year on year, accounting for 92.26% of revenue, and gross profit margin of 64.31%, up about 0.34 pct year on year. Considering that the number of the company's media sites is still increasing compared to the same period in 2023. With operating costs increasing 4.58% year over year, operating income increased 8.17% year over year, the increase was higher than the increase in operating costs. The increase in gross margin reflects that the company's overall cost control is more effective, and the new sites have maintained a good publication rate.
Consumer goods customers continue to maintain sales demand. Looking at the company's customer structure, revenue from consumer goods, real estate, communications and other industries increased by 14.23%, 28.67%, and 48.10% year-on-year respectively. Investment demand performance was good, and revenue from the transportation industry increased 2.13%. However, customer investment in the Internet, entertainment and leisure, business, and service industries has shrunk to varying degrees. Consumer goods customers continued to maintain a stable marketing trend. As demand for sales increased, the revenue share of consumer goods customers increased to 63.93%, an increase of 3.39 pct over the previous year, reaching the highest level in history.
Overseas expansion continues. Judging from the company's point growth, overseas locations have maintained relatively rapid growth. Currently, the total number of overseas locations exceeds 0.17 million, covering about 100 major cities in South Korea, Thailand, Singapore, Indonesia, Malaysia and other countries. According to the company's announcement, 2024Q2 has begun to deploy in the Middle East market. The 2024 semi-annual report shows that the company has set up an elevator TV media advertising business in the UAE, and subsequent alternative layouts include Brazil, Mexico and other regions.
Actively cooperate with Meituan to explore low-tier urban spaces. Currently, the company and Meituan are actively exploring to increase their respective penetration rates in low-tier cities, open up online and offline marketing channels, and provide better services to small and medium-sized enterprises in low-tier cities. Currently, some cities have been selected as pilot projects, and further cooperation models and promotion coverage will be adjusted or confirmed in the future depending on the pilot situation.
It is expected that the dividend ratio will continue to be high throughout the year. The company plans to pay semi-annual dividends, totaling about 1.444 billion yuan, accounting for 57.92% of net profit returned to mother in the first half of the year, accounting for 65.73% of net profit not returned to mother. According to the “Company Shareholders' Dividend Return Plan (2024-2026)” issued by the company, the company will pay cash dividends every year at no less than 80% of the net profit not deducted from the mother for the current year. It is expected that the company will maintain a high level of dividends throughout the year. The company's dividend ratios for 2021-2023 were 80.51%, 217.41%, and 98.73%, respectively. Based on the market value on April 30 of the following year, the dividend rates were 5.80%, 6.52%, and 5.08%, respectively, with high dividend rate levels.
Profit forecast and investment rating: The company's EPS is expected to be 0.38 yuan, 0.41 yuan, and 0.45 yuan in 2024-2026. Based on the closing price of 5.78 yuan on August 9, the corresponding PE is 15.38 times, 14.05 times, and 12.89 times. Considering the steady growth in the company's performance and stable profit from the main business, the current valuation level is in the historically low range, the dividend ratio is high, and the “buy” investment rating is maintained.
Risk warning: macroeconomics affects advertisers' demand; industry competition intensifies; accounts receivable risk; overseas expansion falls short of expectations