Incident: Audience Media released its 2024 Interim Report. The company achieved total revenue of 5.967 billion yuan in the first half of the year, up 8.17% year on year; net profit to mother was 2.493 billion yuan, up 11.74% year on year. In addition, the company announced the 2024 semi-annual profit distribution plan. It plans to distribute cash of 1.00 yuan for every 10 shares to all shareholders, and is expected to distribute a cash dividend of 1.444 billion yuan, accounting for 57.92% of net profit attributable to mother during the reporting period.
Comment:
The overall performance is steady, and the scale of the Ladder Media business continues to expand. The company achieved revenue of 5.967 billion yuan in the first half of the year, up 8.17% year on year; net profit to mother was 2.493 billion yuan, up 11.74% year on year. Looking at a single quarter, 24Q2's revenue was 3.238 billion yuan, up 10.05% year on year; net profit to mother was 1.453 billion yuan, up 12.65% year on year. Among them, the building media business revenue reached 5.505 billion yuan, up 7.25% year on year, accounting for 92.26% of revenue. The steady growth in the company's performance is on the one hand, benefiting from the boom in elevator LCD and elevator poster channels. 24H1 publication costs increased by 22.9% and 16.8%, respectively, over the same period last year; on the other hand, it is mainly due to an increase in gross margin of the two main businesses and an increase in net return on investment.
Domestic layout: Accelerate the penetration rate of the sinking market. As of the end of July '24, the company's elevator TV self-operated locations in third-tier cities were 0.093 million units, an increase of 0.029 million over the end of 2023, a change of 45.3%. In addition, the company recently reached a cooperation with Meituan to set up more than 500 video elevator media points in each single city in low-tier cities to jointly promote elevator media coverage. As the number of locations continues to be encrypted and the coverage of cities continues to expand, the company's competitiveness and market share in the media market are expected to continue to increase.
Overseas layout: Increase overseas marketing efforts. As of the end of July '24, the company had 0.156/0.019 million elevator TV/elevator poster sites overseas, respectively. The number of locations increased by double digits compared to the end of 2023, covering about 100 major cities in South Korea, Thailand, Singapore and Japan. At the same time, the company began entering the Middle East market in 24Q2, and used countries such as Brazil and Mexico as subsequent alternative layout markets, and is committed to building a global company to help national brands go overseas and the globalization process.
Mid-term dividend plan to increase investor confidence. The company announced a semi-annual dividend plan. It plans to distribute a cash dividend of 1.00 yuan for every 10 shares to all shareholders. It is expected to distribute a cash dividend of 1.444 billion yuan, accounting for 57.92% of net profit returned to mother during the reporting period. The company has adopted multiple dividend strategies aimed at increasing the frequency of dividends, safeguarding the interests of all shareholders and enhancing investors' confidence in the company's long-term development.
Investment advice: Audience Media's performance is growing steadily, and actively expanding the coverage of high-quality resource points at home and abroad. Competitiveness and market share are expected to increase. Furthermore, the company maintains a high dividend plan to boost investor confidence and highlight the company's investment value. We expect EPS to be 0.37 and 0.40 yuan respectively in 2024-2025, and the corresponding PE will be 15 and 14 times, respectively, maintaining a “buy” rating.
Risk warning: advertising market demand falls short of expected risk; overseas business falls short of expected risk; market competition increases risk.