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Phoenix Media (601928): Steady revenue growth and higher gross margin

Phoenix Media (601928): Steady revenue growth and higher gross margin

Phoenix Media announced the third quarter report of 2019, achieving operating income of 86.

6 billion, an increase of 10 in ten years.

23%, net profit attributable to shareholders of listed companies.

USD 3.8 billion, an annual increase of 3.

14%.

Net profit attributable to shareholders of listed companies10.

5.5 billion yuan, an annual increase of 16.

69%.

  Investment highlights: Steady growth in publishing and distribution business, and higher gross margin.

  The company’s publishing business in the third quarter sales code foreign 55.

690,000 yuan, an annual increase of 12.

74%, operating income 27.

8.2 billion, an annual increase of 15.

18% in the third quarter of the issuance business.

80ppm, an increase of 13 per year.

22%, operating income 66.

USD 3.8 billion, an annual increase of 11.

78%.

At the same time, the gross profit margins 青岛夜网 of publishing business and distribution business both increased in the third quarter compared with the same period last year, and the gross profit margin of publishing business in the third quarter was 33.

14%, an increase of 3.
.

33 fines and 29 gross profit margins for issuing business.

80%, an increase of 1 over the same period last year.

48 averages.

We believe that the improvement in gross profit margin is mainly due to the increase in the price of textbooks and the pressure on paper costs.

During the period, the company’s expense ratio decreased, and its ability to control expenses improved.

  The company’s sales expense ratio for the first three quarters of 2019 was 12.

79%, a decrease of 0 compared with the same period last year.

39 amounts, with an administrative expense ratio of 11.

40%, a decrease of 0 compared with the same period last year.

51 budgets and 0 R & D expense ratio.

20%, a decrease of 0 compared with the same period last year.

48 single, meanwhile, due to the increase in interest income, the financial expense ratio is -2.

29%, a decrease of 0 compared with the same period last year.

74 averages.

The company’s expense ratio declined on average, showing an improvement in expense management and control capabilities.

The number of procurement contract targets in the company’s compulsory education phase increased.

  The company recently merged the Jiangsu Provincial Government Procurement Contract with the Jiangsu Provincial Department of Education. The Jiangsu Provincial Department of Education purchased the company’s textbooks, primary school students ‘dictionaries, and primary school students’ compulsory education from the fall semester of 2019 to the spring semester of 2022 in a single source.Student workbooks, of which about 8.83 million sets of textbooks per year, and about 1.05 million sets of primary school dictionary.
The contract value of the dictionary for elementary school students is approximately 14.67 million yuan per year, and the contract value for student assignments is approximately 479 million yuan for three years.
In the ten-year procurement contract between the company and the Education Department of Jiangsu Province in 2016, the subject of the contract was the replacement of textbooks and elementary school students’ dictionaries for fall 2016 to spring 2019 for compulsory education in primary and secondary schools in Jiangsu province, of which approximately 6.9 million sets of textbooks are annually, About 900,000 sets of elementary school students dictionary every year.

The volume of textbooks and pupils’ dictionaries increased by 28% and 17%, respectively.

Earnings forecast and estimation: It is predicted that the company’s net profit attributable to its mother in 2019-2021 will be 15 respectively.

4.8 billion, 17.

6.7 billion and 19.

8.8 billion, with EPS of 0.

61 yuan, 0.

69 yuan and 0.

78 yuan, the corresponding PE is 12 respectively.

28x, 10.

76x and 9.

56 times. Considering that the company ranks among the lowest indicators in the publishing industry, the price increase of textbooks and the resumption of K12 students have promoted steady growth in performance, high-quality assets, excellent cash flow, substitution, and a high dividend rate.

Risk warning: the risk of major changes in industry policies; the risk of a significant increase in paper costs.