Incident: The company announced its annual report for the year 2010 and the quarterly report for 2024. In 2023, the company achieved revenue of 597 million yuan, YoY +3.56%, net profit to mother of 134 million yuan, YoY -30.75%, net profit after deducting non-return to mother of 126 million yuan, YoY -32.30%. 2023Q4, the company achieved revenue of 164 million yuan, YoY +3.66%, net profit attributable to mother of 0.14 million yuan, YoY -78.45%, net profit without return to mother of 0.13 million yuan, YoY -76.01%. With 2024Q1, the company achieved revenue of 177 million yuan, YoY +17.45%, net profit to mother of 38 million yuan, YoY -38.96%, net profit after deducting non-return to mother of 0.32 million yuan, YoY -48.46%.
High-speed rail business: High-speed rail resources continue to be consolidated, which is expected to gradually recover as passenger flow recovers. In 2023, high-speed rail media revenue was 541 million yuan, YoY -4.38%. Advertisers are less willing to advertise, mainly affected by the external environment. At the gross margin level, the gross margin in 2023 was 41.95%, YOY-10.12pct. The main reason is that the company actively explores media positions. Since the second half of last year, the company has signed 561 railway passenger terminals and opened 482 railway passenger terminals (including 466 high-speed rail stations), added media resources for 39 stations, optimized the media resources of 39 stations, and continued to consolidate its leading position in the high-speed rail media field. Looking ahead, as the construction of the national high-speed rail network continues to advance, the number of high-speed rail travelers is increasing, and the company's high-speed rail media business is expected to gradually recover.
Large outdoor screen: Revenue has increased rapidly, losses have narrowed, and operating leverage is being released. In 2023, outdoor large-screen media achieved revenue of 57 million yuan, YoY +402.49%. The loss was significantly reduced compared to 2022. In terms of location, on April 29, the company's Shenzhen Luohu Wanxiang City Baofeng Building screen entered trial operation, and the outdoor large screen resource site layout was completed. Seven screens have already been put into operation. With subsequent advertisers publishing, it is expected that the operating leverage for outdoor large screens will gradually be released. In terms of creativity and technology, AI systems have been applied to outdoor naked eye 3D production processes, including original picture design, scene construction, etc., to further enhance the digital operation advantages of naked eye 3D production technology through visual optimization in production processes such as models, materials, animation, special effects, lighting rendering, and synthesis.
At present, the company has produced many naked-eye 3D works such as “Theory of Evolution,” “Take a Breath,” “Landing,” “Mirage,” and “Cats, Cats, and Bugs.”
Investment advice: In 2024-2026, we expect the company to achieve revenue of 708/8.31/963 million yuan, +18.57%/+17.41%/+15.85%, net profit to mother of 1.73/2.09/249 million yuan, +28.85%/+20.89%/19.22% year-on-year, corresponding PE of 23.06X/19.08X/16.00X, maintaining a “buy” rating.
Risk warning: macroeconomic downside risks, the construction of large outdoor screens falls short of expectations