It is a leading local publishing and distribution leader, and has been making steady progress over a long period of time. The company relies on the majority shareholder Guangpan Group and is deeply involved in the cultural industry in Guangdong Province, and has formed a development pattern spanning traditional publishing and distribution with innovative business formats such as digital publishing, smart education, and extracurricular education. Taking advantage of leading advantages, the company integrates high-quality assets to consolidate the basic market and invest in expanding new business formats in the industrial chain. From 2022 to 2023, the company successively acquired 100% of the shares of Guangdong Education Bookstore, Guangdong Lingnan News Agency, and Guangdong Map Club to integrate high-quality publishing and distribution assets in the province; invested in the establishment of XinDutch Media to develop short video e-commerce, and established a joint venture to enter the field of children's programming courses.
The foundation of the main business has been strengthened, and publishing and distribution have shown strong resilience. The company's publishing and distribution business can be divided into textbooks, teaching aids and general books according to the product. Textbook teaching aids: The logic of volume and price growth is smooth, and intensive reforms go hand in hand with channel construction. The company is backed by Guangdong's most populous province and a strong education province. The number of K12 students has been growing steadily. The unit price of textbook teaching aids and the number of textbook teaching aids per capita have all shown an upward trend. The sharp increase in volume and price has driven the medium- to long-term growth in textbook teaching aid revenue. In 2022, it acquired 100% of Guangdong Education Bookstore's shares to further strengthen channel construction and resolve the issue of peer competition between Xinhua Publishing Group and Education Bookstores. General books: Develop specialized brands and actively explore emerging sales channels such as short video e-commerce. The company targets first-class domestic publishing houses, focuses on cultivating original book brands, and creates differentiation according to social conditions. In 2023, it acquired 100% of the shares of Guangdong Lingnan Society and Guangdong Map Club, and expanded the general book category. The company actively embraces the trend of channel change. The Singaporean Media achieved remarkable results in the short video e-commerce circuit, which contributed to a 42.1% increase in general book sales in 2022.
Using the main business as an anchor, we are actively expanding new forms of AI+ education. Based on the advantages of content resources and state-owned assets in the main publishing and distribution business, the company actively promotes the construction of smart education platforms. The AI+ education product matrix, including Guangdong Education Xiang Yun, Nanfang E Classroom, and Huacheng Art Test, etc., continues to improve operations; at the same time, it actively explores after-school service needs, uses bookstore channels to establish Xinhua Leyu Academy, and establishes a joint venture with Programming Cat to enter children's programming courses. New business formats such as smart education and after-school services are expected to become an important supplement to the main publishing and distribution business and another profit growth point.
Investment advice: initial coverage, buy-A rating. The company is expected to have revenue of 95.38/107.81/11.726 billion yuan in 2023-2025; net profit to mother of 12.56/10.54/1,131 billion yuan in 2023-2025, an increase of 33.1%/-16.0%/7.2%. Give 15 times PE corresponding to 2024, and the corresponding target price is 17.7 yuan.
Risk warning: the risk of changes in preferential policies for state-owned cultural media companies, the risk that the development of digital publishing will rapidly impact the original competitive pattern, and the risk that new business expansion falls short of expectations.