Article source: Digital News
In mid-to-late August, Focus Media (002027.SZ), the first domestic building media stock, disclosed its 2022 semi-annual financial report.
data shows that after both revenue and net profit hit a new low since 2020H1, its stock price also "falls continuously". Since its high of 12.74 yuan per share in February 2021, a "rolling Yangtze River flows eastward" market has staged. As of the day before its semi-annual report was released, Focus Media's latest stock price was only 5.83 yuan per share, a drop of 54.2% from its highest point, which has been cut in half.
As a well-deserved boss in domestic building media, what is the reason why both performance and stock price were "cut"? Worth paying attention.
01
's performance hit a low point. What's the reason?
According to its semi-annual report data, the revenue recorded in 2022H1 was 4.582 billion yuan, a year-on-year decline of 33.77%, and the net profit recorded was 1.431 billion yuan, a year-on-year decline of 50.92%; in terms of the quarterly breakdown, the revenue in Q1 was 2.939 billion yuan, a year-on-year decline of 18.19%, and the revenue in Q2 was 1.913 billion yuan, a year-on-year decline of 48.76%, and the revenue in Q2 fell by 34.9% month-on-month compared with Q1; the net profit in Q1 was 940 million yuan, a year-on-year decrease of 491 million yuan, and the net profit in Q2 was 47.7% month-on-month compared with Q1; it can be seen that revenue, net profit both showed a significant decline in year-on-year and month-on-month, and the decline was large, and there was obvious signs of decline in growth ability. In terms of profitability, the gross profit margin of 2022H1 was 58.96%, a year-on-year decrease of 6.92 percentage points, of which the gross profit margin of Q1 was 63.37% and the gross profit margin of Q2 was 52.18%. In addition to showing a continuous decline, the gross profit margin of Q2 was also falling below 60% for the first time since Q2 2020. Obviously, the main business has "no increase in revenue", but it has also ushered in "no increase in profit".
In terms of net profit margin affected by more factors, the net profit margin in 2022H1 was 29.49%, a year-on-year decrease of 10.3 percentage points, of which the net profit margin in Q1 was 31.99%, and the net profit margin in Q2 further fell to 29.49%. It can be seen that in addition to the main business, there are no "increasing points" projects in other businesses.
So, is there any other factors that disturb it in addition to the repeated impact of the epidemic in the first half of the year? Let's continue to look down.
First look at the revenue. If you look at the product, Focus Media's revenue can be divided into building media, theater media and others. Among them, building media accounts for more than 90% of its revenue (building media is further divided into two parts: TV and poster), and cinema media accounts for about 8%. The main revenue is in the building media.
From the perspective of its building media layout, it is mainly concentrated in large cities such as first- and second-tier cities. In addition to a small number of poster media layouts, it can be said that the coverage is not high.
Judging from the place where the epidemic occurred in the first half of this year, Beijing, Shanghai, Guangzhou and Shenzhen can be said to have all gone through it, especially in Shanghai, where almost all of them work from home in Q2. In this way, it is not surprising that its Q2 performance declined month-on-month Q1.
But don’t forget that the epidemic in the first half of the year mainly occurred in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. Second-tier cities are relatively limited in impact. Moreover, based on their media layout, whether it is TV or posters, the layout of second-tier cities accounts for the highest proportion. From the data, the number of points exceeds that of first-tier cities. So, as the revenue of first-tier cities is stagnant, has it not adjusted in time, so has the efforts to increase the efforts in second-tier cities?
may have made efforts, but the effect is not obvious. What is the reason? We may be able to find the answer from the analysis of customer structure.
Let’s look at the proportion of its revenue divided by industry, as shown in the figure below:
It can be seen that the three "funding fathers" in 2021H1 - the Internet, business and services, entertainment and leisure industries - have not "spent money" crazily this year. Especially in the Internet, its revenue contributed directly dropped from 2.25 billion yuan in 2021H1 to 660 million yuan, a shrinkage of more than 70%.Think about it carefully, which "teaching and training" institutions were left before? Thinking about how many talents the Internet giants have "transmitted" to society in the past year, we can understand why the revenue contribution of the Internet industry has shrunk so seriously.
For Focus Media, if there is no "hot" industry spending money to grab the market, relying solely on the marketing investment of traditional industries, it obviously cannot support its continued growth in performance scale. In terms of net profit, in addition to the decline in profit caused by the decline in gross profit margin, looking at its profit and loss statement, it is not difficult to find that the impairment losses of credit assets are also "reversing". The impairment loss of credit assets in 2022H1 was 302 million yuan, an increase of 205 million yuan compared with the same period in 2021. In terms of quarterly terms, the amount of this account was 124 million yuan, and further increased to 178 million yuan in Q2, a month-on-month increase of more than 43%.
The main reason for the significant increase in the amount of this account is that the large amount of bad debt reserves are set aside for accounts receivable , especially in the Internet industry, the proportion of bad debt reserves reserves is significantly higher than other industries. At the same time, due to the large base of receivables, the amount of bad debt reserves is significantly higher than that of other industries, becoming a "point reduction" item for net profit.
Therefore, in addition to the impact of the epidemic, the decline in performance has a single customer structure and excessive dependence on the Internet industry is also one of the factors that cannot be ignored.
02
main business loves to invest in
contains "scientific" amount and water are obviously stored
As a "light asset" company, Focus Media basically has no large fixed assets, and its business model can also be simply and roughly understood as the "second landlord" model, that is, signing an lease contract with the building operator , and then media laying and putting in.
So, when we look at its asset structure, it is not difficult to find that in addition to the large amount of revenue and accounts related to operations, the maximum amount is an asset related to "investment".
such as trading metal assets, long-term equity investment, other equity investment, other non-current financial assets, etc., the amount of these accounts accounts for 43% of its total assets at the end of the second quarter of 2022. If 4.016 billion yuan of monetary cash is added, the proportion is more than 58%. It can be said that more than 60% of them are investment businesses with low correlation with the main business.
This shows that Focus Media has strong ability to cash on the account and does not lack cash. It also shows that its business model is relatively simple and does not require a large amount of funds to invest in inventory, fixed assets, and projects under construction. In addition to maintaining daily operations, only financial management and investment are left.
Is Focus Media doing a very good job in investing? However, it is not ideal.
2022H1 Its fair value changes profit and loss (the business of this account can be simply understood as buying some stocks, funds and other financial assets ready to be sold at any time) is -82 million yuan, while this value in 2021 was 263 million yuan, which means that it lost 340 million yuan in half a year. In terms of quarterly perspective, it lost 103 million yuan in Q1 and earned 22 million yuan in Q2.
It can be seen that Focus Media's ability to trade stocks (funds) is not outstanding, but this does not hinder Focus Media's love for the stock market and funds. In the first half of this year alone, Focus Media purchased more than 8.2 billion yuan of stocks or funds, and sold 6.366 billion yuan. Adding to the 3.442 billion yuan at the beginning of the period, the balance of trading financial assets held at the end of the period also reached 5.312 billion yuan.
"buy, sell", not to mention that this transaction volume instantly kills a number of professional investors, just the stamp duty and commission contributed, tax authorities and institutions have to shout out the sentence, "Such a dozen companies like this."
It turns out that being rich is willful. It is not difficult to see that Focus Media's investment is very "full". As for the results, haha...
In addition to loving stock trading, as an information technology company and a high-tech enterprise, the level of "science" value will not be low. The latest reflection of this indicator is its R&D investment. Let’s look at Focus Media’s R&D expenses, which have dropped from 224 million yuan in 2017 to 89 million yuan in 2021, and their proportion of revenue will also be from 1.86% to 0.6%. The R&D expenses in 2022H1 further fell to 40 million yuan, a decrease of 16% from the same period last year. Obviously, the high-tech enterprise of Focus Media has a lot of water.
03
Internet finance profits plummeted. Will you still fall in love again?
When it comes to Focus Media, it has to mention Focus Media's financial business segment. As early as the rise of consumer finance in 2015, Focus Media spent over 100 million yuan to invest in "Shuhe Technology" and holds 70% of its shares. The company is also the operating entity of the financial credit product " Huanbei ".
According to the data disclosed by Focus Media, as of the end of June 2022, it still held 35.88% of the operating entity of "Huanbei", Shuhe Technology, which is its largest institutional shareholder. Looking at Shuhe's 2022 semi-annual performance, although its revenue of 2.325 billion yuan increased slightly by 1.31% year-on-year from 2.295 billion yuan in the same period last year, its net profit fell instead of rising from 621 million yuan last year to 274 million yuan this year, a decrease of 55.8%. Based on the semi-annual performance data of its listed platforms, Shuhe may also face the embarrassing dilemma of rising overdue data and eroding net profits. Considering the tightening of the Internet finance industry's customer rate pricing power, the transaction scale is far from the leading platforms, and the instability of risks under the epidemic, if it is not expanded as soon as possible, in the later "small profit", there is obviously a possibility of both revenue and net profit falling, so naturally, it is inevitable to ask Focus Media, the "dad" to drink milk.
For Focus Media, the investment in Shuhe has not only recovered its investment, but has also made a big profit. Even if the Internet finance industry ushers in more severe mergers and acquisitions, reshuffles, and exits in the later period, Focus Media can leave the market with a huge investment income with a wave of its sleeves. What's more, this investment still has the expectation of entering the capital market, and there is still a "stories" to tell before leaving. Where can capital have long-lasting love?
04
ending
Relying on the special scene of elevators, Focus Media has become one of the most beneficial companies in the past 20 years. It also takes advantage of Internet giants and upstarts to create a trend. Focus Media has also become a trend in the mouths of others. However, with the decline of this wave of the Internet, in the face of tightening marketing, Focus Media has to feel the curse of the cycle.
Perhaps, when the next vent comes back, Focus Media will become the pig flying in the sky again. For those who sell shovels, luck and opportunity are always more important.
