The Zhitong Finance App learned that Everbright Securities released a research report saying that listed media publishing companies are mainly state-owned enterprises and state-owned enterprises. Local publishing companies have stable fundamentals, strong resilience to risks, and attractive dividend rates and dividend rates. Recommended attention: 1) High dividends/high dividends: Phoenix Media (601928.SH), etc.; 2) willing to buy back: Anhui New Media (601801.SH), etc.; 3) M&A space: Zhongnan Media (601098.SH), etc.

Incidents:

According to the Financial Federation, in 2024, the State Council's State-owned Assets Administration Commission will fully implement the “one enterprise, one policy” assessment of central enterprises. Furthermore, on the basis of early pilot exploration and experience, market value management assessments of listed companies have been comprehensively implemented, adhering to equal emphasis on process and results, equal incentives and restrictions, quantitatively evaluating the market performance of listed companies controlled by central enterprises, objectively evaluating the market value management initiatives and results of enterprises, and strengthening punishment for irregularities that cross the red line and the bottom line, guiding enterprises to pay more attention to the intrinsic value and market performance of listed companies, conveying confidence and stable expectations to better return investors.

Comment:

“Comprehensive implementation of market value management assessments for listed companies” and “quantitative evaluation of the market performance of listed companies controlled by central enterprises” are expected to further improve the efficiency of enterprise operations, have a positive incentive effect on the market value performance of listed companies of central state-owned enterprises, and stabilize investor confidence. Central state-owned enterprises listed in various second-level industries of SW Media were sorted out, involving a total of 9 central state-owned enterprises and 44 local state-owned enterprises; among them, the SW Publishing section includes 3 central state-owned enterprises and 18 local state-owned enterprises. Combined with stable publishing fundamentals, abundant cash flow, and strong interest in dividends, it is expected to form a strong sector logic.

▍ The main views of Everbright Securities are as follows:

Publishing companies are generally willing to pay dividends, have attractive dividend rates, and have safe-haven value.

According to the dividend rate for the past 12 months calculated at the closing market value on January 29, '24, the dividend rate of 5% or more were Xinmedia Co., Ltd., Zhongnan Media, Phoenix Media, and Chinese Media. The last 3 companies were publishing companies.

1) Most SW Publishing companies have a 22-year dividend rate of about 2-5%, and the cash dividend ratio is in the 30-50% range. In '22, a total of 7 local state-owned publishing companies had a dividend rate of over 50%, and CITIC Publishing, a central enterprise background publishing company, had a dividend rate of 53.1%. A total of 5 local state-owned publishing companies had dividends of more than 5% in '22. The top three were Chinese Media, Zhongnan Media, and Changjiang Publishing. The dividend rates were 7.1%, 6.5%, and 6.5%, respectively.

2) The overall performance of the publishing sector is relatively steady. The main business is the publication and distribution of textbooks, textbooks, and general books. Revenue is mainly dependent on the number of local school-age population and the level of development of basic education. The compound growth rate of state-owned publishing companies' revenue and net profit in 17-22 was mostly in the 5%-10% range, and the 23H1 net profit recovery was remarkable; however, starting in '24, the income tax benefits for the transformation policy of operating cultural institutions expired, and publishing companies generally no longer enjoyed income tax policy benefits at the national level, which in turn risked a decline in performance. There is still room for further improvement in cash dividends for some publishing companies to ensure investor returns.

Listed companies of central state-owned enterprises have abundant cash flow and are expected to support share buybacks.

As of the mid-year report in '23, Chinese Media (14.7 billion yuan), Mango Supermedia (10.75 billion), Zhejiang Media (10.23 billion), and Anhui New Media (10.1 billion yuan), respectively, had monetary capital of 10 billion yuan or more. Among them, as of December 31, 23, Anhui New Media had repurchased a total of 6,786,100 shares through centralized bidding transactions, accounting for 0.34% of the company's total share capital; Chinese media announced in January that they intend to repurchase some of the company's public shares through centralized bidding transactions.

Listed central state-owned enterprises are expected to increase their asset integration efforts to avoid competition in the industry.

Publishing companies accelerate the integration of high-quality resources within the industry and achieve the preservation and appreciation of state-owned assets through market-based methods such as mergers and restructuring. Southern Media completed the acquisition of 100% of Guangdong Lingnan News Agency and Guangdong Map Press in May 23; on December 8, the controlling shareholders of Zhongnan Media promised to inject Hunan Education Newspaper Group, Hunan Education Audio and Video Electronic Publishing House, and Hunan Map Press into the company within 2 years by legal means and at a fair price;

Chinese Media announced on December 20 that it is planning to purchase 100% of Jiang Jiao Media's shares and 51% of Jiangxi University Press's shares from its controlling shareholders by issuing shares and paying cash; Anhui New Media announced changes to the fund-raising project in January '24, of which the unspecified fund-raising capital reached 1.28 billion yuan. It is expected that high-quality investment and mergers will be carried out in the future.

Risk analysis:

Policies fell short of expectations, performance growth fell short of expectations, and industry competition intensified.