Southern Media (601900): Shouzheng Innovates Channel Integration in the 南京夜网 Province to Bring Wider Coverage
The investment logic of the key points of recommendation: 1) Guangdong Province has a natural advantage in terms of population, economy, education, and publication of teaching aids; 2) Policy barriers + three disciplines + free transfer of state-owned equity, the company’s market shareIt is expected to improve; 3) New executives took office and the company’s integration speed exceeded expectations.
Guangdong, which is a major province in terms of population, economy and education, has natural advantages.
Wind data show that at the end of 2018, Guangdong’s resident population1.
100 million people, ranking first in the country, and the size of the resident population is continuing to grow steadily.
And the plan is expected to reach 1 in 2030.
About 2.5 billion people.
At least, in 2017, the province’s total local education budget expenditure was US $ 386.1 billion, an increase of 15% over that of the national average.
Two averages, accounting for 9 of total national education budget expenditures.
The high base and continuous transmission of the resident population, as well as the continued high expenditure of the education budget, provide sustainable development momentum for the company’s main business.
Textbook teaching auxiliary business: policy barriers + three subjects unified compilation + annual equity transfer free of charge, the company’s market share promoted.
1) Multi-version textbook products are used for training of primary and middle school students in Guangdong Province. In the fall semester of 2017, subjects such as Chinese, history, and syllables for entry-level grades in primary and secondary schools must use human-educated textbooks.The exclusive qualification for textbook distribution is expected to introduce policy barriers and increase the company’s product market share.
In 2018, the company’s market share of teaching materials in compulsory education increased to 61.
6%, followed by an increase of 11%, and then gradually increased; 2) In February 2019, the company announced that Guangdong Education Bookstore will be transferred to the company’s controlling shareholder for free (36 months), and Guangdong Education Bookstore is responsible for teaching materials in Guangdong ProvinceHe Jiaosu’s book distribution business had a net profit of 1 in 2018.
700 million, the company is expected to continue to integrate the distribution of teaching materials in the province.
Invest in innovation, increase digital teaching materials, and explore new growth directions.
The company has successfully invested in projects such as Guangzhou Bank (to be listed on the Shenzhen Stock Exchange), Great Wall Securities (listed), and Dragon Media, and has further promoted the strategic cooperation implementation plan after its participation in Dragon Media, to achieve both financial and business benefits.
In terms of digital teaching materials, the company belongs to Guangdong Publishing Group. Digital publishing company will be exclusive in Guangdong Province, and comprehensively represent digital teaching materials and digital teaching auxiliary products developed by Renjiaoshe.
Earnings forecasts and investment advice.
The company’s EPS for 2019-2021 is expected to be 0.
79 yuan, 0.
85 yuan, 0.
92 yuan, corresponding to PE is 13 times, 12 times, 11 times.
Give the company 15 times PE in 2019 with a target price of 11.
85 yuan, the first coverage, given a “buy” rating.
Risk warning: the risk of rising raw material paper prices, the performance of new business development may not be as expected, and the channel integration may not meet the expected risks.