The results for the year 22 were in line with expectations. In 1Q23, the company's revenue was 12.465 billion yuan, up 10.0% from the same period; net profit was 1.40 billion yuan, down 7.7%; net profit after deducting non-return to the mother was 1.47 billion yuan (express report: 1.44 billion yuan), an increase of 12.0%. The deduction of non-profits was basically in line with the express report. 1Q23 The company's revenue was 2.66 billion yuan, an increase of 11.0%; net profit returned to the mother was 350 million yuan, an increase of 28.7%; after deducting net profit of non-return to the mother was 330 million yuan, an increase of 7.4%. The company plans to distribute cash dividends of 1,078 million yuan in '22, accounting for 77% of net profit to the mother in that year, with a dividend rate of 4.7%. We expect the company's net profit to the mother in 23-25 to be 1,634/1791/1,934 billion (original value for 23-24:15.34/1,657 billion yuan). Comparable company Wind in '23 unanimously expected an average PE value of 14X. Considering the company's leading effect, we gave the company 17X in '23, with a corresponding target price of 15.47 yuan (original value: 11.90 yuan), maintaining the “buy” rating.
The main business of the publishing and distribution business is growing steadily, and the book retail market is firmly in first place. According to Beijing, in '22, Shiyang's share of the company's comprehensive book retail market was 3.16%, and Shiyang's share of the online book retail market was 3.31%. They all ranked fourth in the country, ranking first in the country. The revenue from the publishing business in '22 was 3.44 billion yuan, an increase of 5.0% over the same period. In terms of distribution business, the company deepened its transformation and upgrading. In '22, the key current affairs program reached 442 million yuan, an increase of about 30% over the previous year, and the “Four-Dimensional Reading” series of products was worth nearly 440 million yuan. Overall, the distribution business revenue was 9.84 billion yuan, an increase of 13.5% over the same period. 1Q23's general book publishing revenue was 114 million yuan, an increase of 12.1% over the same period.
Gross margin fluctuated due to fluctuations in accounting policies and revenue structures, and the expense ratio continued to decline. The company's gross profit margin continued to decline by 42.3% in '22, -1.9 pct year on year; 1Q23 gross profit margin was 41.9%, -4.0 pct year on year, mainly due to changes in accounting policies and structural changes in revenue. Along with a steady increase in revenue, the company's expenses continue to be diluted. The company's sales/management/R&D/finance expense ratio in '22 was 15.5%/12.5% /1.2/ -1.0%, respectively -1.6/-0.9/+0.6/-0.1pct, respectively, and the cost rate for the period was 28.2%, year-on-year -1.9 pct; 1Q23, the company's sales/management/R&D/finance expense ratio was 14.2%/12.1%/1.0%/-0.6%, respectively -1.5/-0.4/-0.05/+0.4pct, year-on-year rate of -1.5/-0.4/-0.05/+0.4pct for the period, year over year- 1.6 pct.
Develop digital business, long-term growth can be expected
The company's main publishing and distribution business is developing steadily while accelerating digital exploration. During the reporting period, the construction of the Malanshan Park project progressed steadily. According to financial reports, in 2022, Tianwen Digital Media's digital product ECO Cloud Open Platform aggregated 11.95 million users and data; the number of registered users of Shell Network reached 9.21 million, an increase of 3.34 million; and the number of registered users of Zhongnan Zhixun Mobile reached 5.51 million, an increase of 370,000.
Risk warning: The publishing and distribution business fell short of expectations, and the development of the digital business fell short of expectations.