Core views:
Competitive landscape: How to establish a leading position in the crowd? In the early stages of the development of the industry, Fanzhou continued to increase its market share and consolidate its leading position in the industry through rapid expansion and mergers and acquisitions. Judging from the historical evolution of the industry and changes in the competitive landscape, it is more difficult for other ladders to have an impact on the audience, and the current competitive pattern of the industry is stable. As a pioneering medium leader, the number and quality of points are the main sources of competitive advantage. Fanzhou holds large-scale core high-quality points and continues to be a cryptographic site in high-tier cities; in the sinking market, Fanzou is supplementing its positions through franchising, outsourcing, and shareholding. While expanding the reach of high-tier consumers, point encryption in high-tier cities can also drive low-tier cities, and advertisers' advertising effects spill over to lower-tier cities to a certain extent.
With the steady increase in the number of points of interest, the competitive advantage is further strengthened, costs stabilized, and operating efficiency is expected to be further released.
Market space: How much room is left for growth in the ladder media market? We believe that Ladder Media is still a relatively more resilient type of brand advertising with room for growth. The advertising and marketing market has maintained steady and slow growth, and the share of the media is expected to increase. As a leading medium, Fanzhong has an absolute advantage in domestic market share. At the same time, it can replicate capabilities and business models in overseas markets, which is expected to contribute to growth.
Sinking market opportunities: Outsourcing and franchise forms add points to improve operating efficiency; cooperating with Meituan to lay out video media in low-tier cities is expected to increase publication rates in low-tier cities. We believe that:
In terms of segmentation, it has channel resources and location advantages; Meituan has more declining merchant resources. This cooperation is expected to expand the resources of small and medium-sized business advertisers in the sinking market, which will clearly help Fanshun's publication rate in low-tier cities and improve the efficiency of the use of media resources.
Profit forecasting and investment advice. The company's revenue for 24-25 is estimated to be 12.612 and 13.341 billion yuan, respectively, and net profit to mother is 5.317 and 5.749 billion yuan, respectively. With the macroeconomic economy and consumption recovery, FMCG is the most resilient advertiser, and there is a certain guarantee of growth and sustainability in subsequent marketing, and overseas business expansion is expected to bring growth. In terms of valuation, maintaining the reasonable value of the company at 8.34 yuan/share, corresponding to 24X PE, maintaining a “buy” rating.
Risk warning. The macroeconomy is sluggish; competition in the advertising market is intensifying; repayments fall short of expectations.