Visual China (000681): Business model continues to optimize, core business resumes positive growth
Event 1: Vision China released the 2019 third quarter report, and the company achieved revenue in the first three quarters of 5.86 ‰, a decrease of 16 per year.50%; net profit attributable to mother 2.15 ‰, a decrease of 2 per year.40%; non-net profit attributable to mother 2.1.3 billion, a decrease of one year.88%.Among them, Q3 single-quarter revenue fell by 16 each year.51%, net profit attributable to mothers decreases by 1 each year.26%. Event 2: The company ‘s core business “visual content and services” achieved a revenue of US $ 18.4 billion in a single quarter, a year-on-year increase of 4%.85%; the first three quarters gradually realized revenue5.83 ppm, an increase of ten years.55%. The 411 incident was under control as a whole, and the main business revenue resumed positive growth.After the 411 incident, the company actively responded and adjusted, optimized its business model, strengthened risk control and auditing, and improved user services and experience. The core business “visual content and services” Q3 resumed positive long-term growth and achieved revenue of US $ 18.4 billion in a single quarter.Increases by 4 per year.85%. We believe that the growth of core core business revenue is expected to gradually accelerate in the future. Affected by the 411 incident and the divestiture of assets, the company’s revenue and profit changes in the first three quarters.Vision China achieved revenue in the first three quarters of 20195.86 ‰, a decrease of 16 per year.50%; net profit attributable to mother 2.15 ‰, a decrease of 2 per year.40%; revenue in Q3 was 1.8.3 billion, down 16 a year.51%; net profit attributable to mother is 0.82 ppm, a decrease of 1 per year.26%.It is mainly affected by the following two factors: (1) The company focuses on its core business and divested its Eunsun asset group at the end of 2018. At the same time, it sold its outstanding equity in Shanghai Q1 in 2019.Contributions and profits from non-main business decrease every year. (2) On April 11, 2019, Tianjin Internet Information Office conducted a case investigation on Hanhua Yimei, and the company took the initiative to temporarily shut down the website for rectification. On April 26, the company’s website was opened to some customers for testing; on May 12,With the consent of the relevant departments, the company’s website fully restored services to all customers.The main business was affected to some extent. Net margin has improved significantly.The company’s gross profit margin for the first three quarters was 64.77%, an increase of 1 every year in the same period last year.04 points.Net margin increased significantly, and it is estimated to increase by 5 in the same period last year.30pct to 36.68.This is related to the company’s divestiture of assets and the increase in the proportion of core business with high profit margins.The period expense ratio is as follows: sales expense ratio 10.72, down 1.13 points; management costs 11.41%, an increase of 2.29pct; R & D expense ratio 4.67, increase by 0.15pct; financial expense ratio 2.12%, a decrease of 1.77pct. The number of contracted customers maintained rapid growth, and in-depth cooperation was promoted. In the future, intervention in marketing will be strengthened. In the first three quarters, the number of cooperating customers directly contracted with the company achieved a substantial objective growth. The company has signed strategic cooperation agreements with large customers such as AVIC, fully reviewed and further strengthened comprehensive and in-depth cooperation with party and government agencies and mainstream media, and established an independent department. Consolidate cooperation with various Internet platforms.Through 武汉夜生活网 the connection and empowerment with the Internet platform, the depth and breadth of high-quality genuine content reaching customers has been enhanced, and the company’s ability as an “infrastructure” of the content ecosystem to extend and fully cover the market has been continuously enhanced.At present, the company has respectively accepted: search engines (Baidu, Sogou, 360), self-media platforms (Tencent, Baidu, Alibaba, Yidian, 360, Weibo Cloud Shear), online advertising platforms (Baidu, Ali, Tencent), creativeDesign platform (Cavans, Yi Qixiu) and other application scenarios. The company will strengthen its investment in marketing, open up key industries in a targeted manner, focus on large customers, focus on Internet platforms, and obtain business growth through quality services of “content + technology”. “Quality Content” + “Smart Services” two-wheel drive. Conform to market development trends and integrate premium content.The company has improved the content review system and process, established an independent content security review team, and established cooperation with People’s Daily, which has improved the company’s content quality and compliance service capabilities as a whole.Relying on the 500px photography community, expand the number and quality of contracted suppliers; maintain close cooperation with 240 well-known content organizations or brands around the world, and continue to increase the occupation of design materials, videos, music, and fonts Excellent technical development, the technical department was reorganized into an independent system.The data background aggregates a large amount of three types of data: content data, user behavior data, and content usage scenario data.Including: 1) more than 2 billion pictures, videos, music content data, 2.2 million structured tag library and knowledge map, content application tags more than 6 billion; 2) more than 20 million users (content contributors and users)70 million daily search, upload, download, collection, share and other user behavior data; 3) 30 million users / year of usage scene data.Lay the foundation for serving our customers in all products and all scenes. Earnings forecast and investment advice: We predict that Visual China will achieve 8 revenues in 2019-2021.6.9 billion, 10.6.5 billion, 12.59 trillion, a growth of -12 in ten years.02%, 22.50%, 18.30%; achieve net profit attributable to mother 3.4.2 billion, 4.1.3 billion, 4.86 ppm, a ten-year increase6.54%, 20.77%, 17.57%, the corresponding EPS is 0.49 yuan, 0.59 yuan and 0.69 yuan. Risk warning: policy and legal risks; C-side business development is less than expected; piracy risks; market risk appetite is down.