According to the Futubull Finance app, The Pacific Securities has released research reports stating that due to the increase in income tax expenses, the overall performance of publishing companies has declined by about -18% year-on-year. At the same time, China South Publishing & Media Group, Anhui Xinhua Media, and other companies have chosen to distribute mid-term cash dividends for stable annual cash dividend expectations. Currently, the median dividend yield of publishing companies is 3.91%, and the median cash dividend ratio is 43.60%. With the gradual impact of income tax expenses, companies have a clear intention to maintain dividend stability. At this stage, publishing companies valued based on dividend yield have the opportunity for right-side allocation. Suggested companies to pay attention to: China South Publishing & Media Group (601098.SH), Jiangsu Phoenix Publishing&Media Corporation (601928.SH), etc.

The main points of Pacific Securities are as follows:

The expiration of preferential income tax policies has put pressure on the net income of publishing companies.

In the first half of 2024, among the 31 publishing companies classified by CITIC Industry, 16 companies achieved year-on-year revenue growth. Among them, Shandong Publishing & Media ranked first with a growth rate of 13.77%, mainly due to the increase in income from textbooks and teaching aids. However, due to the expiration of preferential income tax policies for operational cultural institutions, publishing companies have seen a significant increase in income tax expenses. As a result, only 10 companies achieved year-on-year growth in net income attributable to the parent.

Overall, in the first half of 2024, affected by factors such as negative growth in the book sales market, platform e-commerce, and physical store channels, as well as the increase in income tax expenses, the overall performance of publishing companies was lower than the same period in 2023. The number of companies achieving year-on-year revenue growth decreased by 8 compared to H1 2023, and the number of companies with losses increased from 3 to 5. The number of companies achieving year-on-year growth in net income attributable to the parent decreased by 13 compared to H1 2023.

Anhui Xinhua Media and many other publishing companies plan to carry out interim dividends to stabilize the annual dividend expectation.

In the first half of 2024, China South Publishing & Media Group, Xinhua Winshare, Anhui Xinhua Media, and Zhejiang Daily Digital Culture Group carried out mid-term cash dividends, with total dividends of 1.80/0.234/0.196/0.114 billion yuan, and cash dividend ratios of 23.21%/32.75%/33.84%/77.36%, respectively. In addition, Anhui Xinhua Media has formulated a three-year (2024-2026) shareholder dividend return plan. In the year of profit and positive accumulated undistributed profits, and with cash flow meeting the company's normal operation and long-term development conditions, the company will distribute profits at least once per year.

Anhui Xinhua Media and other 4 companies have chosen mid-term cash dividends for the first time, stabilizing expectations for annual cash dividends. Based on the cumulative dividends in 2023, the median dividend yield and cash dividend ratio of publishing companies are 3.91% and 43.60%, respectively. Companies with stable performance, high dividend yield, and low cash dividend ratios still have room for improvement, such as Jiangsu Phoenix Publishing&Media Corporation, Central China Land Media, etc.

Risk warning

Risks include industry growth falling short of expectations, risks of industry and tax policy changes, and risks of a decrease in the size of the school-age population.