Focus Media (002027) 2018 Annual Report, 2019 First Quarterly Report Review: Performance Meets Expectations High-speed Expansion Costs Under Pressure
Event: Focus Media released its 2018 annual report and achieved operating income of 145.
51 ppm, an increase of 21 per year.
12%, net profit attributable to mother 58.
22 ppm, 10-year average3.
03%, net profit after deduction is 50.
26 ppm, an increase of 3 per year.
58%, the company received a total of government subsidies in 20188.
At the same time, the company released the first quarter report of 2019, and achieved operating income of 26 in Q1 of 2019.
11 ‰, a ten-year average of 11.
78%, net profit attributable to mothers3.
40 ‰, 71 years average.
81%, net profit after deduction to mother 1.
16 ‰, 89 years before.
17%, the company received government subsidies in the first quarter2.
In addition, the company expects net profit attributable to mothers in the first half of 20197.
00 ppm, 67-year average.
Focus Media’s expense ratio increased in the first quarter of 2019, the gross margin of sales, and the rate of change in net profit margin.
The company’s annual gross sales margin for the company in Q1 2019 is 36.
54% compared to epoxy 20.
71 averages, net sales margin 12.
68% compared to epoxy 14.
The company’s high-speed expansion management costs have increased significantly, the expense ratio has increased, and the proportion of three fees has increased4.
Including selling expenses 4.
8.6 billion yuan, accounting for 18% of operating income.
61%, up 1 every year.
36 units, administrative expenses1.
310,000 yuan, accounting for operating income5.
02%, up 2 every year.
57 per share, financial expenses-720,000 yuan, of which interest income increased by at least 97%.
The company’s R & D expenses are 48 million yuan, an increase of 41 each year.42%, which is mainly used for R & D promotion of new equipment and salary increase for R & D personnel.
We believe that the performance growth of Focus Group in early 2018 and Q1 in 2019 is mainly due to the following two reasons: (1) Media resources are affected by high-speed expansion costs and competition pressure.
Focus Media has expanded and expanded the media resources of elevator buildings since Q2 of 2018. As of Q1 of 2019, the media resources of elevators have exceeded 275.
50,000, media rents, equipment depreciation and labor costs have increased significantly, but new points have a relatively high lag.
At the same time, competition pressure from peers has also affected rental costs to a certain extent.
(2) Advertisers may be affected by the accelerating growth of social consumer goods retail integration and the decline of Internet investment enthusiasm.
In 2018, Focus Advertiser’s industry was dominated by consumer goods and the Internet, of 北京桑拿洗浴保健 which the proportion reached 43.
In the first quarter of 2019, total retail sales of consumer goods grew at the fastest rate8.
3%, the growth rate since September 2018, the poor consumer goods industry is bound to have a size that will affect advertisers ‘projections.
At the same time, the investment and financing scale of the Internet industry began in the second half of last year, and the investment budget of some Internet companies may be reduced.
We believe that the current market ‘s expectations for Focus are mainly divided into the following three points: (1) The macro economy has expected differences.
Social financing scale supplement in March 20192.
86 trillion yuan, the scale of social financing in the first quarter supplemented 8.
20 trillion, an increase of 2 every year last year.
34 北京夜网 trillion.
At the same time, M2 increased 8 ahead of schedule in March.
60%, an increase of 0 from February.
60 averages, M1 in March increased by 4 per second.
60%, an increase of 2 from February.
Overall, the current wide credit policy continues to increase.
The advertising marketing industry is affected by macroeconomic expectations, and the expected improvement is expected to benefit first, leading to increased sector risks and expected repair expectations.
(2) The prosperity of some industries of advertisers bottomed out.
The top three advertisers of Focus Media are consumer goods, Internet and transportation.
Total domestic retail sales of consumer goods in March 3.
17 trillion yuan, an increase of 8 in ten years.
7%, the growth rate is still lower than the same period last year, but increased by 0 compared with the previous 2 months.
In March, there were 2.02 million domestic passenger car sales, with 6 replacements each time.
88%, a decrease of 10 from the previous two months.
We believe that the data of the consumer and transportation industries are in a pick-up situation. At the same time, the industry boom is low and high. At the same time, the rapid development of the 5G industry in the Internet industry is also expected to usher in a new round of technological revolution.The main investment budgets are in a steady growth trend.
(3) The attributes of the media are continuously strengthened.
As of the end of March 2019, the total number of media media resource points reached 275.
50,000, although high-speed expansion brings short-term cost pressure, but in the long run, it will help the company to consolidate the leading surface and maintain its competitive advantage.
Cooperate with Alibaba for online and offline global marketing.
At the beginning of 2019, Alibaba and Focus Media jointly announced the promotion of the “U Public Plan”. We believe that the “U Public Plan” is a new start for Ali and Focus to enable brand marketing with productization strategies and strategies to achieve full online and offline connectivity., Marketing visualization can be quantified and optimized.
At present, through digital transformation, the company has integrated brand global marketing and enhanced the core platform of brand consumer assets, which can help brands to accurately target, interact with screens and end traffic, and help brands increase sales conversion rates in the digital age.
We continue to recommend Focus Media, a leading building advertising company.(1) The macro economy has poor expectations. The expected improvement will bring increased risks to the sector and estimated recovery expectations. The company’s top three advertisers’ business climate will pick up; (2) The total number of media media resource points at the end of March 2019 will reach 275.
50,000 media attributes are constantly strengthened, which is conducive to consolidating the leading category and competitive advantage; (3) in cooperation with Alibaba, digital marketing with interactive screen-side traffic interaction, assisting brand global marketing, and improving marketing conversion rate.
We expect the company to return net profit to its parent in 2019-2021.
2.4 billion, currently corresponding to 32 times PE in 19 years.
Risk reminders: risks of changes in the macro environment, policy risks in the advertising industry, and competition risks in building advertising