Focus Media (002027): Income decline narrows and multiple indicators improve

Focus Media (002027): Income decline narrows and multiple indicators improve

Fundamental investment fundamentals are now at the bottom, and the decline in revenue has continued to narrow: in the first three quarters of 2019, the company achieved revenue of 89.

0.6 billion, down 18 previously.

12%, realizing net profit attributable to mother 13.

6 billion, down 71 every year.

72%.

Quarterly, the company achieved revenue of 31 in Q3.

8.9 billion, down 15 previously.

33%, net profit attributable to mother 5.

8.2 billion, 60 in the previous decade.

At 18%, the company ‘s revenue growth rate narrowed, and its net profit attributable to its mother was in the upper half of the performance forecast.

At present, whether it is the revenue, profit, net operating cash inflows, or the gross profit margin that reflects the company’s profitability, the net profit margin and other indicators are improving quarter-on-quarter.

  The impact of the macro environment on the company’s revenue began to weaken: the company’s revenue decline in the third quarter narrowed significantly.

Comparing the changes in the company’s revenue over the past three years, we find that due to the promotion of the second quarter, the company’s second-quarter revenue performance is usually better than the third quarter, and the third-quarter revenue is 4% -9% lower than the second quarter.

25%, but this year Q2 has 2 compared to Q2.

68% increase from the previous month. Basically, we believe that the company’s operating conditions have improved, the impact of the macro economy on the company’s revenue has weakened, and the period when the company’s revenue is most affected by the macro economy has passed.

  The cost expansion has been fully reflected, and the operating costs may decline: the company started screen expansion in the second quarter of last year, and the expansion strategy has stopped since this year. The impact of the increase in screen size on operating costs (including rents, depreciation, and personnel costs) has been fully reflectedIn the quarterly statements, the company’s operating costs have remained at 16 in the last three quarters.

At the level of 600 million, point optimization and single-point rent reduction can be carried out in the future. We may see the company’s operating costs decrease quarter by quarter.

  The repayment is not a drag on the company’s performance, but it is not necessary to be overly pessimistic about the accounting period: the asset impairment loss is accrued this quarter1.

Although 7.1 billion was reduced compared with the second quarter, the proportion of bad debt accrual is still at a relatively high level. It is expected that the aging structure and customer repayment will remain severe.

Considering that 75% of the company’s bad debts are accrued for more than 391 days, from the middle of last year to the present, the bad debts caused by the primary market financing settlement have basically been accrued (only 25% are left). Traditional customers in the accounts receivable structureThese customers account for the absolute majority. These customers have stable income, higher credit ratings, and correspondingly shorter credit terms. However, the risk of default is small,西安耍耍网 which leads to a reduction in the company’s account receivables.

  The value of building media in advertisers ‘budget expenditures continues to increase: Advertisers’ proportion of media budgets in Focus Building ‘s total budget has gradually increased from 1 in 2012.

09% increased to 1 in 2018.

51%, fully reflects the increase in the dielectric of buildings.

  Earnings forecast and investment grade: We expect the company’s revenue to increase by -15 in 2019/2020/2021, respectively.

73% / 13.

55% / 13.

10%, to 122.

63/139.

24/157.

49 trillion, net profit attributable to mothers was 19.

98/33.

16/42.

7.2 billion, an annual increase of -65.

69% / 65.

95% / 28.

84%, corresponding to 44 for PE.

45/26.

78/20.79 times.

According to the characteristics of the company’s high operating leverage, the company’s performance is flexible. At present, the company’s fundamentals have shown indicators of seasonal improvement. We maintain a “buy” rating and recommend a positive layout.

  Risk reminder: Macroeconomic volatility exceeds expectations, competition intensifies, and repayment is unfavorable