Central South Media (601098): Publishing Hunan Army Stable and Far

Central South Media (601098): Publishing Hunan Army Stable and Far

Opinion focus on maintaining outperforming industry investment recommendations. Central South Media is a domestic comprehensive publishing leader, mainly engaged in comprehensive media business such as publishing and media operations.

After experiencing the new policy of teaching aids, the company’s core business of teaching aids is back on the growth track. With a steady tone of progress, the company has 都市夜网 made progress in focusing on the teaching aids business, innovating and adapting to new ways of issuing models, and accelerating the development of the book business, Expected to continue to achieve solid growth, and continue to return to shareholders in the form of cash dividends.

Maintain Outperform industry rating and target price of 15.

5 yuan.

  The reason is that the publishing industry is growing steadily, the teaching aid market is huge, and general books are growing fast.

  In 2018, the proportion of textbook teaching aids to book retail sales was 63.

3%, the largest category.

Against the background of the growing number of school students and education budget expenditures, the replacement of teaching materials and supplementary markets has maintained a steady development trend.

The material of teaching aids has a weak cycle attribute, which benefits from the increase in enrollment at the compulsory education stage and increased attention to education. We expect to maintain a steady growth rate in the future.

  The company’s various business highlights are diverse: 1) Teaching aids are back to growth.

With the end of the Hunan Province ‘s education and assistance special rectification cycle, the risks have been fully released. The company has actively developed through channel reconstruction and product reorganization in the past two years.
3Q19 performance resumed growth.

In the medium and long term, the company, as the main body of publishing and distributing teaching materials in the province, is expected to continue to benefit from the demand for teaching materials.

2) General books steadily rank first.

In 2018, the company ranked second in the country’s book retail market in the country’s book retail market, and in the arts, science, and other segmented markets, it ranked first.

3) Digital education is the icing on the cake.

The company has created a digital education system with Tianwen Digital Media, Shell Network and Zhongnan Xunzhi as its core.

  We believe that with the popularization of online education, the digital education business is expected to grow rapidly.

  The asset quality is healthy, and high dividends bring stable returns.

The company has abundant book capital, no interest-bearing debt, and good cash flow.

Since the company’s listing, the company has always adopted a shareholder return policy that is in line with the company’s current situation. At present, it is mainly dividends. It adopts methods such as rights issue, stock distribution, and stock conversion. Since the listing, the absolute amount of dividends has continued to increase every year.

  Earnings forecasts and estimates In summary, we lower our 2019/20 earnings forecast5.

1% / 1.

4% to 12.

74/13.

8 billion yuan; new date 2021 profit forecast14.

1.5 billion.

It currently corresponds to 15 in 2020/21.

8/15.

4 times PE.

Comprehensive DCF and relative estimation method, maintain outperformed industry rating and 15.

5 yuan target price, corresponding to 20 in 2020.

1x PE, 27.

4% upside.

  Risks The number of primary and secondary school students in Hunan Province has grown less than expected, the growth of teaching aids has exceeded expectations, the dividend policy is not sustainable, and the digital education business is not operating well.