Event: New Classic 2024H1 achieved revenue of 0.453 billion yuan, a year-on-year increase of 3.03%, and net profit to mother of 0.091 billion yuan, an increase of 3.80% year-on-year.

The main domestic book industry performed better than the industry. In the first half of 2024, due to factors such as insufficient consumer demand and industry channel transformation, unpublished data showed a 6.2% year-on-year decline in the domestic book retail market. During the reporting period, the company launched 82 new books, an increase of 20 over the same period. Among them, “See You in August”, “Letter to Earth”, “Mask Game”, and “Xu San Guan's Blood Chronicles (2024 Edition)” all entered the TOP30 list of new fictional books in the first half of the year. Driven by new books, 2024H1's domestic book planning and distribution business revenue was 0.377 billion yuan, up 1.99% year on year, gross profit margin was 47.65%, down 1.96 pct year on year.

Explore content marketing and communication on multiple platforms. Changes in domestic book sales channels continued, and short video e-commerce became the only channel to achieve growth in the first half of the year, with a year-on-year increase of 18.34%. The company fully explored content-based short video e-commerce marketing and achieved breakthroughs. Yu Hua's work “We Live in a Huge Gap” topped the non-fiction shelf e-commerce list and overall sales ranking in the first half of the year, contributing to the company's performance growth while also creating a new marketing paradigm.

Overseas business gradually entered a normal operating rhythm, and losses narrowed drastically. With 2024H1, the company's overseas business achieved revenue of 0.063 billion yuan, a year-on-year increase of 18.24%; gross margin was 46.42 percent, a year-on-year decrease of 1.51 pct. Net loss attributable to shareholders of listed companies was 0.007 billion yuan, a year-on-year narrowing of 47.50%. The company continued to optimize the selection of topics, and launched 103 new products in the first half of the year, and works such as “Pretty Ugly” and “Dragon Fall” received good reviews; the promotion of outstanding domestic works such as “I Delivered Express Delivery in Beijing” and “The Shepherd Boy's Fantastic Journey (comic version)” also made some progress on overseas platforms.

Profit forecast and investment advice: The company has leading copyright advantages in book categories such as literature, children, humanities and social science, and explores differentiated content marketing models through new channels. There is plenty of room to release the potential value of copyright resources. The company's net profit for 2024/25/26 is 0.179/0.199/0.215 billion yuan, an increase of 12%/11%/8% over the previous year. Maintain a “buy” rating.

Risk warning: The book industry's recovery fell short of expectations; overseas business development fell short of expectations.