Zhongyuan Securities: Gave Mango a buy rating to super media

2022-04-26Joyuan Securities Co., Ltd. Qiao Qi conducted a study on Mango Super Media and released a research report "Annual Report Review: Core Business Growth is Stable, Q2 Blockbuster Variety Shows Have Been Launched", this report gives a buy rating to Mango Super Media, and the current stock price is 30.45 yuan.

Mango Super Media (300413)

The Company publishes its 2021 Annual Report and its First Quarterly Report for 2022. In 2021, the operating income was 15.356 billion yuan, an increase of 9.64% year-on-year; the net profit attributable to the mother was 2.114 billion yuan, an increase of 6.66% year-on-year; and the net profit attributable to the mother after deducting non-deduction was 2.060 billion yuan, an increase of 11.57% year-on-year. In the first quarter of 2022, it achieved operating income of 3.124 billion yuan, down 22.08% year-on-year; net profit attributable to the mother was 507 million yuan, down 34.39% year-on-year; net profit attributable to the mother after deduction of non-profit was 474 million yuan, a year-on-year decrease of 38.49%.

Investment Points:

The core main business has grown steadily. The company's core main business, Mango TV Internet video business (advertising + membership + operator), maintained steady growth, with operating income of 11.261 billion yuan, an increase of 24.29% year-on-year. Among them, the advertising business has developed 118 new customers, and the total number of various advertising brands such as Mango TV soft and wide, hard and programmatic advertising has exceeded 1,000, with revenue reaching 5.45 billion yuan, an increase of 32% year-on-year, especially the investment amount of "Sister Riding the Wind and Waves" has created the highest in the industry; through the head variety shows such as "Sister Riding the Wind and Waves Season 2" and "Brother Who Cut Through Thorns" to continue to increase the conversion rate of members, member revenue in 2021 was 3.69 billion yuan, an increase of 13.3% year-on-year. The number of effective members was 50.4 million, an increase of 39.5% compared with the end of 2020, and the user ARPPU value declined due to promotional activities; the operator business carried out in-depth strategic cooperation with China Mobile's Migu Culture around the large-screen business and 5G innovation business, achieving revenue of 2.12 billion yuan, an increase of 27.17% year-on-year.

In addition, the company fully promotes the development of the new wave of domestic content e-commerce platform Xiaomang APP, through the creation of "Xiaomang Flower Night" and "Xiaomang New Year Festival" and other blockbuster evenings, to promote the peak of Xiaomang APP daily activities in 2021 to reach 1.26 million, content e-commerce business revenue of 2.157 billion yuan.

The advantages of content production are highlighted. Mango TV currently has 26 variety show production teams, 29 film and television production teams and 34 "New Mango Plan" strategic studios. In terms of variety shows, in 2021, Mango TV will launch more than 40 self-made variety shows, of which new original variety shows such as "Brother With Thorns", "Our Piping Hot Life", "Goodbye Lover" and other new original variety shows are well scheduled, and the comprehensive N-generation IP such as "Sister Riding the Wind and Waves", "The Great Escape room", and "The Great Detective" already has a strong market appeal and brand effect. In terms of film and television dramas, in 2021, Mango TV will launch 170 film and television dramas of various types, including 55 key film and television dramas and 84 micro-short dramas. The "Monsoon Theater" launched during the year screened 9 high-quality short dramas including "I Am Good in Other Places" and "Wolf Hunter", while continuing to explore the field of micro-short dramas and building a short and medium-length video cluster.

Actively explore new businesses. Relying on high-quality content such as "The Great Detective" and "The Great Escape room", the company extends IP from online to offline, creates a new brand M-CITY, is committed to building an offline live entertainment complex, and establishes industry benchmarks in the creation and copyright protection of script killing, DM training, offline entity operations and other aspects. In addition, the company has also explored and tried new technologies such as 5G+, digital collections, virtual people, VR/AR and so on.

The epidemic has affected the scheduling of the program, and Q2 is expected to improve. In Q1 2022, due to the repeated impact of the new crown epidemic on the progress of content production, the schedule of key Q1 variety shows was delayed, and the relatively high base of 2021Q1 led to different degrees of decline in operating income and net profit. However, key variety shows and film and television dramas such as Q2 "Endless Sound" and "Riding the Wind and Waves 3" will be launched one after another. According to bone duo film and television data, the cumulative playback of "Sound and Endless" has reached 250 million times in only one day, and the launch of "Sound and Endless" and "Riding the Wind and Waves 3" is expected to drive the company's Q2 performance to rebound.

Investment advice and profit forecast: At present, the domestic online video field has begun to enter the stage of cost reduction and efficiency increase, and the company has taken the lead in achieving stable profitability in the domestic mainstream video platform, and its business development is sustainable. In 2021, the company's original variety shows and comprehensive N-generation programs can create better broadcast results, driving advertising investment and the number of members to increase significantly. In the short term, although the promotion has led to a decline in member ARPPU, the company officially raised the member price from January 2, 2022, which is expected to pull the member ARPPU value to rise. In addition, as a state-owned media platform, the company takes into account the commercial and social effects of content, and maintains strong sensitivity and stricter content control while actively innovating content, and the impact of content policy risks may be smaller.

In terms of new business, the vertical content e-commerce platform Xiaomang E-commerce has reached a peak of 1.26 million DAU in continuous brand building, and is expected to provide positive profit contributions for the company in the future. The company is also actively exploring the landing and application of new technologies such as virtual hosts, 5G+, NFT, and VR.

Eps for 2022 and 2023 are expected to be $1.35 and $1.59, with a closing price of $28.92 on April 25, corresponding to a PE of 21.47 times and 18.22 times, and upgraded to a "Buy" rating.

Risk Warning: The epidemic has repeatedly affected the production and launch of programs; the loss of platform users; and the effect of advertising investment is less than expected

According to the research report data released in the past three years, the Research Report Data Center of Securities Star Data Center has studied the stock more deeply, and the average forecast accuracy in the past three years is as high as 88.58%, and its forecast for the net profit attributable to the 2021 year is 2.114 billion yuan, and the forecast PE calculated according to the current price is 26.95.

The latest profit forecast breakdown is as follows:

A total of 21 institutions have given ratings, 20 buy ratings and 1 overweight rating in the last 90 days; the average target price of institutions in the past 90 days has been 42.29. The Securities Star Valuation Analysis Tool shows that Mango Super Media (300413) has a good company rating of 4 stars, a good price rating of 3 stars, and a valuation comprehensive rating of 3.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)

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