Hua'an Securities Co., Ltd. Jin Rong recently conducted a research on Focus Media and released a research report "Short-term pressure due to the disturbance of the epidemic, waiting for the recovery of consumption after the epidemic to recover". This report gave a buy rating for Focus Media, with the current stock price of 6.34 yuan.
Focus Media (002027)
Event
Company released its 2022 semi-annual performance forecast, and it is expected that the company will achieve a net profit attributable to shareholders of 1.37-1.45 billion yuan in 22H1, a year-on-year decrease of 50.1%-52.8%; the company will achieve a net profit attributable to shareholders of 440-520 million yuan in 22Q2, a year-on-year decrease of 66.1%-71.3%, and a month-on-month decrease of 44.0%-52.6%.
Repeated epidemic has led to weak demand in the advertising market, and the company's performance has been under short-term pressure from March to May 2022. The epidemic has repeated in Shanghai, Beijing, Shenzhen and other places, which has greatly affected the company's business activities:
1) Building advertising business: CTR data shows that the overall spending of the advertising market changed year-on-year from March to May 2022 -12.6%/-19.5%/-24.1%. The repeated epidemic has not only caused weak demand in the advertising market, but also restricted advertising releases in some key cities of the company;
2) Cinema advertising business: The repeated epidemic has caused cinemas to stop operating, which has had a negative impact on the company's cinema advertising business. Maoyan data shows that the number of cinemas nationwide has dropped from more than 10,000 in early March 2022 to about 5,000 in April, and recovered to about 8,000 in May.
The epidemic is stable + consumption recovery will release advertising demand. The company's performance in the second half of the year is expected to be repaired. Since June 22, with the improvement of the national epidemic prevention and control situation, advertising demand has recovered, and the company's various operating indicators are also recovering and improving in an orderly manner. CTR data shows that the overall spending of the advertising market changed month-on-month from March to May 2022 -1.7%/-9.4%/+9.5%, and the positive growth in May resumed month-on-month; at the same time, Maoyan data shows that in mid-June, the number of cinemas nationwide recovered to about 10,000. As of July 17, the number of cinemas nationwide reached 10,071, with a operating rate of 82.82%. It can be seen that with the improvement of the national epidemic prevention and control situation, advertising demand continues to recover and advertising placement gradually recovers, and the company's performance is expected to recover in the second half of the year.
Short-term factors do not change the company's fundamentals, and the optimization of advertiser structure improves the company's performance resilience
CTR data shows that from January to May 2022, the alcoholic beverage, food and personal products industries showed significant growth in multiple advertising channels, and the fast-moving consumer goods industry is the most important industry in the company's advertising business structure. In 21 years, the fast-moving consumer goods industry contributed 42.76% of the company's operating income. The strong advertising demand in the fast-moving consumer goods industry has enhanced the certainty of the company's performance recovery.
Investment advice
Combined with the current epidemic prevention and control policies, we expect that the recovery of offline traffic and advertising demand will still take a certain amount of time, so the company's 22E-24E operating income was reduced to 12.21/15.97 billion yuan, and the net profit attributable to shareholders was reduced to 4.41/6.14/7.22 billion yuan. The company's valuation center in the past five years has been 22xPE, which is comparable to the company's 23-year PEwind's unanimous expectation is 16x. Combined with the high certainty of the company's performance recovery, the company was given 18.5xPE in 23 years, corresponding to a reasonable market value of 113.57 billion yuan/a reasonable stock price of 7.86 yuan, maintaining a "buy" rating.
risk warning
macroeconomics continue to be under pressure; the epidemic has repeated; advertising demand recovery is lower than expected; the industry competition pattern has deteriorated
Securities Star Data Center calculated based on the research report data released in the past three years, the research team of Nie Yuxiao of Changjiang Securities has conducted in-depth research on the stock, with the average prediction accuracy in the past three years as high as 96.33%. It predicts that the attributable net profit in 2022 will be 4.075 billion yuan, and the predicted PE based on the current price conversion is 22.61.
latest profit forecast details are as follows:
A total of 25 institutions in the stock have given ratings in the past 90 days, 19 buy ratings and 6 increase ratings; the average target price of institutions in the past 90 days was 7.85. According to the financial report data in the past five years, Securities Star valuation analysis tool shows that Focus Media (002027) has good competitiveness in the industry, average profitability, and good revenue growth. Financial health is relatively healthy, and financial indicators that need to be paid attention to include: inventory/revenue rate growth. The stock has a good company index of 3.5 stars, a good price index of 3 stars, and a comprehensive index of 3 stars. (Indicators are for reference only, indicator range: 0 ~ 5 stars, maximum 5 stars)
or above is compiled by Securities Star based on public information. If you have any questions, please contact us.
