New Classic (603096) 2019 Interim Report Review: Steady growth in performance
Core point of view The company announced its 2019 interim results. After undergoing previous policies, after product adjustments, the company’s revenue has re-entered a stable growth stage, and its own copyright book planning and distribution business performed solidly.
Taken together, we believe that the company’s market distribution in the field of best-selling book publishing, content and talent advantages are still leading, but at the same time the current estimates imply sufficient expectations, and we maintain a “Hold” rating.
2019H1 revenue net income grew steadily.
2019H1 company revenue 4.
7 trillion, a year ago + 7%, of which the revenue from the planning and distribution of proprietary books3.
7 ‰, + 9% a year, mainly due to the increase in the distribution and sales scale of literature and children’s own copyright books (literature revenue 2).
55 megabytes, one year + 5% / children’s revenue of 83.26 million yuan, + 22% each time / social science life and other categories of revenue (33.75 million yuan, each time + 16%); gross profit margin 52%,Times -1.
9pct, mainly due to the increase in the frequency and intensity of website channel promotion activities; selling expenses of 5,075 million, each + 16%, mainly due to the increase in the scale of own copyright books, related sales costs, logistics costs, etc .; attributable net profit
2 ‰, previously + 9%; non-net profit attributable to deduction 1.
100 million, ten years + 13%.
Better control of inventory receivables and increased advance payments.
① The company’s accounts receivable at the end of 2019H11.
52 ppm, no crack change at the end of the first quarter, and overall control is good; advance payment 2
30,000 yuan, an increase of 40.19 million yuan from the end of the previous quarter. We expect that the copyright expenditure will increase mainly;
1 ppm (3 at the end of the first quarter).
200 million), of which raw materials 1.
23 trillion, 0 in stock.
8.5 billion yuan, commissioned sales of goods1.
02 million. Considering the low impairment risk of paper and other raw materials in the inventory, and the company’s best-selling books are of high quality and sufficient accrual, we believe that the inventory risk is reduced.
③ The net operating cash flow was 45.34 million yuan, which was -1 in the same period last year.
74 trillion was mainly due to the poor return due to the tax exemption policy in the same period last year.
Industry: The book retail market in China grew steadily in the first half of the year, with online growth leading but discounts increasing.
According to the Beijing 无锡夜网 Open Book, the book retail market size in the first half of the year was +10.
① In terms of categories, children are still the largest in size, followed by social sciences and teaching aids.
② In terms of channels, each e-commerce channel has a sales code of +24.
2%, physical bookstore channel sales continued to decrease until -11.
7%, still leading offline, but the overall online competition and discounts continue to intensify. According to the Beijing Open Book, in the first half of 2019, e-commerce channels are excluded from full reductions. Discounts on activities such as buying gifts have been 40% off. Consider e-commerce channels.The information is transparent and the competition is fierce. It is expected that the gross profit margin of the industry will still be under pressure.
Competition: The company’s market advantage continues, plus copyright content + talent recruitment and reserves.
① In the first half of the year, the company’s main long-selling products continued to maintain its advantages. Nearly 30 types of literature, such as “One Hundred Years of Loneliness”, “Alive”, “Relieving the Grocery Store”, “A Maverick Pig”, “The Shepherd’s Children’s Fantasy Trip”Representative works sold more than 100,000 copies.
The company continues to strengthen the work copyright library construction. The company owns the works of Yu Hua, Mai Jia, Wang Xiaobo, Ge Fei, Zhou Guoping, Di An and other domestic authors. It reports that the company has 179 kinds of new books for sale.There are nearly 4,000 kinds of copyrights.
② The company continued to strengthen talent management, and the equity incentive plan was implemented.
By the end of 2018, the company’s book planning team has increased from 177 to 203 in the previous year, and the sales and distribution team has increased from 139 to 161 in the previous year. The senior editing team has been stable for more than ten years, and young editors have continued to join, and the core talent team has continued.grow.
In addition, the company has completed an equity incentive plan, granting equity-bound core talents to 90 employees to ensure the company’s long-term competitiveness.
Risk factors: Industry growth is slower than expected, increased online channel competition affects industry profitability, industry policy changes, piracy risks, loss of core editorial talent, old book advantages cannot be sustained for a long time, new business progress is less than expected, book copyright prices, paper pricesRisk of fluctuations, etc.
Profit forecast and investment advice: Taking into account the industry’s growth trends and the company’s recent operating conditions, we maintain the company’s 2019-2021 revenue forecast10.
50 billion / 12.
0 billion / 13.300 million, attributable net profit forecast 2.
7.4 billion / 3.
1.7 billion / 3.
6.1 billion yuan, corresponding to an EPS forecast of 2.
67 yuan, corresponding to PE is 28/24/21 times, maintain “Hold” rating.
Merger, we believe that the company’s market level, content and talent advantages in the field of bestseller publishing are still leading the industry, replacing it. The current bestseller industry is still fiercely competitive, and the proportion of online channels continues to increase. The profitability or pressure of online channels is also implied.Expectations are excessive and attention needs to be paid to the risk of worse-than-expected performance growth.