Zhongnan Media (601098) 2018 Annual Report Review: Q4 Growth Comes Back to Main Business Steady Publication Leading Position Firm

Zhongnan Media (601098) 2018 Annual Report Review: Q4 Growth Comes Back to Main Business Steady Publication Leading Position Firm

Incident Description The company recently released its 2018 annual report, reporting that the two companies achieved operating income of 95%.

76 ‰, a decrease of 7 per year.

57%; Net profit attributable to shareholders of listed companies12.

38 ‰, a decrease of 18 per year.


The company plans to distribute cash dividends to all shareholders for every 10 shares6.

1 yuan (including tax).

Incident Review Q4 performance growth has picked up, gross profit margin and dividends have remained stable.

1) Company Q4 achieved revenue of 34.

6.6 billion, an increase of 77 from the previous month.

95%, an annual increase of 18.

87%; net profit attributable to mother 3.

6.8 billion, an increase of 57.

69%, stabilized and rebounded in one year9.


Q4 Net cash flow from operating activities.

9.9 billion, an increase of 50 in ten years.


2) The report caused the company’s comprehensive gross profit margin to remain stable at 38.

72% (0% YoY).

24%), and the sales / management / financial expense ratios are 12 respectively.

67% / 12.

48% /-1.

13%, change 0 every year.

49% / 0.

79% /-0.


3) Report the net cash flow from a series of company operating activities to 12.

6.9 billion, affected by the increase in demolition funds and cash expenditures of the same industry decreased by 35 each year.

62%; cash and equivalent surplus at the end of the year 116.

4.2 billion.

The company has continued a stable dividend policy in the past three years, with dividend payment rates of 49.

75% / 71.

21% / 88.

50% (to be implemented).

The textbooks are waiting to be warmed up, and general books show head advantages.

1) The company’s main business is strong, and the report combined publishing and distribution business realized revenue24.

36 billion / 69.9.3 billion (YOY-14.

77% /-10.

82%), with revenue accounting for 25% / 73%.

Among them, the textbook teaching auxiliary publishing and distribution business realized income.

3.1 billion / 41.

18 ‰, a decrease of 19 per year.

70% / 19.


Since the fall of Hunan Province in the 17th year, the company’s teaching and auxiliary books sales have been affected, and the market has gradually been standardized. The teaching and auxiliary business is expected to return to the operating rhythm.

2) Report the general book publishing and distribution business of major companies to realize income 5.

10 billion / 18.

63 ppm, an increase of 16 in ten years.

14% / 10.


As a publishing group, the company has a market share of 3 in the retail market.

10% ranked second, and ranked among the top three in the literature, biography, music and other market segments; the company’s Hunan Literature and Art Club ranked ninth in the publishing house, and Zhongnan Boji Tianjuan 四川耍耍网 ranked first in the publishing company.

“You Bad” sold over 1.2 million copies in the top 10 non-fiction best-selling year list, “There is a canteen in the cloud”, “Cai Kangyong’s EQ Course”, “A Brief History of Time (Illustrated Book)” and so on.

In terms of general book distribution, in addition to the new Xinhua Bookstore sales outlets being newly built and upgraded, the company actively explored online sales channels and achieved sales revenue through brand e-commerce and Taobao Tmall flagship stores1.

9.7 billion and 1.

10,000 yuan, accounting for nearly 16% of general book sales revenue; category focus on early childhood education and timely management books and other fast-growing markets, forming a new revenue growth point.

Innovative formats continue to be optimized to promote integrated industrial 西安耍耍网 development.

1) The company adjusts its digital publishing business, compresses hardware businesses such as low-margin system integration, and focuses on software application businesses such as ECO cloud platform, AiClass cloud classroom, AiSchool smart campus, AiCloud education cloud, and digital education products.18 million teachers and students in the school; deepen the company’s deep reading of digital reading and audio products business, establish companies such as quick digital media, bathtub and new media, launch a variety of audio and video publishing products, and continue to explore the existing IP operation transformation.

Report the revenue of digital publishing business of first-tier companies2.

86 ppm, gross margin increased by almost 3% to 20.


2) The internal finance company achieved revenue in the reporting period4.

18 billion (year-on-year) 22.

35%), net profit 3.

140,000 yuan (51.

45%), the Perfome Fund completed about 1 of 7 projects.

700 million investment scale.

3) In terms of foreign cooperation, the company has established a joint venture with Pearson and integrated the strategic cooperation agreement with Thalia Group. It is expected to carry out exchanges and cooperation in copyright transfer and sales in the future.

Investment recommendations are expected to be 0 for the company’s 2019-2021 EPS.



82, corresponding to the closing price of 12 on April 24.

The 70 yuan PE is 17/16/15, maintaining the overweight level.

Continue to be optimistic about the leading level of the company’s booksellers, focus on the main business, and promote the steady development of the new business format.

Risk Warning: Risk of policy changes; intellectual property rights are violated by piracy; increased competition leads to rising copyright prices.

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