Focus Media (002027) Annual Report 2018 and 2019 First Quarterly Comment: Short-term results under high-speed expansion are awaiting signs of recovery

Focus Media (002027) Annual Report 2018 and 2019 First Quarterly Comment: Short-term results under high-speed expansion are awaiting signs of recovery

Event: Focus Media released the 2018 annual report and the 2019 first quarter report. Operating income growth has entered an adjustment period, the post-economic cycle effect is being realized, and the income industry structure is improving.

2018Q3-2019Q1 company’s revenue growth rate was 21 respectively.

94% / 11.

90% /-11.

78%, the impact of the macroeconomic growth rate is gradually integrated in the company’s revenue scale, and the consumer goods industry replaced the Internet to return to the first share.

2018H2 revenue is hindered by cinema media factors, combined with CTR data, it is expected that the company’s revenue will still be under pressure.

Resource points continue to grow rapidly, and cost pressures may continue to hang high.

Building media operating costs YoY + 65 in 2018.

24%, gross margin -6.

61pct to 70.

09%, mainly due to the rapid growth of resource points; theater media operating costs YoY + 23.

79%, gross profit margin changes -9.

02pct to 48.

60%, mainly due to the increase in single screen rental costs and the increase in the number of points.

Elevator TV and elevator poster media total average single point cost change -10.

13%, we judge that the rental cost of the framework is mainly reduced, and the expansion of low-tier cities has diluted the unit rental cost; the cost of cinema media unit point media resource rental increased by +14.

6%, so cost pressures will remain high.

The scale of accrual of bad debt losses has gradually increased due to the deterioration of the aging structure and active supplementary accruals.

The company accrued 3 in 2018.

$ 3 billion in bad debt provisions and losses.

2019Q1 Asset impairment loss 8408.

60,000 yuan, +212 year-on-year.

77%, mainly due to the deterioration of the aging structure and proactive risk accrual.

The company’s bad debt accrual policy is relatively aggressive.

Earnings forecast and rating: We believe that the continuous macro-scale counter-cyclical policies and tax cuts and consumption stimulus policies have gradually come into being. Advertising demand has gradually turned to pick up, waiting for a pick up signal.

We believe that the company’s transformation efforts such as cooperation with Ali in “U public plan”, intelligent transformation, vertical screen layout, and point sinking will help the company to gain more market share under the rebound of consumption. The company is still in a long-term cycle.Construction of the bottom.

We revise down the company’s profit forecast and expect the net profit attributable to mothers to be 33 in 2019-2021.

68/39.

38/49.

51 ppm, corresponding EPS is 0.

23/0.

27/0.

34 yuan, corresponding to the closing price of PE on April 25 were 28.

5/24.

4/19.

4 times, maintaining the company’s “prudent overweight” rating.

Risk reminders: industry competition risks; the recovery of the advertising industry is less than expected risks; the macro economy is less than expected risks; the risk of adjustment of advertising budgets of important advertisers; the risk of lifting the ban on 青岛夜网 shares