New Classics (603096): Recently, a number of blockbuster works were launched to adjust the organizational structure to stimulate team vitality

New Classics (603096): Recently, a number of blockbuster works were launched to adjust the organizational structure to stimulate team vitality

Investment Highlights The company disclosed three quarterly reports to maintain a stable posture.

Q3 achieved revenue 2.

19 ppm, a five-year average of 5.

38%, realized 0 profit attributable to listed companies.

81 ppm, a ten-year increase4.

29%.

In the first three quarters, a total of 6 operating income was achieved.

93 ppm, a ten-year increase2.

53%, net profit attributable to listed companies.

00 ppm, a ten-year increase of 7.

02%.

In the third quarter, the company successively completed the divestiture of its distribution and bookstore businesses. The impact on revenue was a single quarter revenue growth, and at the same time, the company’s sales expenses decreased, and management costs were basically flat.

We estimate that the core main business’s own copyright business income continues to maintain a stable and stable trend. Among them, children’s products have recently become more active in the best-selling list. It is expected that Q3 will continue the upward growth trend of the previous period, and the effect of the previous product and operation reform is obvious.

Considering the low gross margin distribution and bookstore business replacement, the company’s gross profit margin decreased by 2pc in the third quarter, and the gross profit margin of its own copyright business remained basically stable.

Channel differentiation drives optimization on the supply side of publishing.

In the first three quarters of 2019, China’s overall book retail market has experienced a 10-year increase in sales.

78%, maintained a positive growth, of which the online store channel maintained rapid growth, and a more significant sales peak appeared in July-September, driving the January-September growth rate to rise slightly again.

However, e-commerce channel discounts and promotions have further expanded, and the online store channel discounts for 2019H1 are 6.

0% off (excluding full discounts, full gifts, coupons and other activities), a series of high discounts on e-commerce channels has a conflicting impact on the market sales strategy and the copyright division model. The current industry has incorporated the horizontal structure optimization stage. Challenges andThe possibilities coexist.

In the third quarter, the head work was launched intensively, and the follow-up is worth looking forward to.

According to our tracking, the titles of Tono 杭州桑拿 Kyugo’s “Relieving the Grocery Store” and “White Night Walk” are still among the best-selling lists, but due to the base effect, traditionally best-selling books are currently difficult to regain high growth. In the third quarter, the new book “Life”Haihai” contributed the increase of major head products.

Recently, the newly published book “You should be like a bird inhabiting your mountain” has topped the “New York Times” best-selling list for more than 80 weeks, and domestic sales are expected in the future.

In addition, “What kind of life do you want to live” is currently on sale, but due to the late listing time, the third quarter is expected to contribute limited, but optimistic about the long-term vitality.

We are still optimistic about the company’s copyright reserves and new products in 2018/2019, and are expected to contribute new increments towards 2020/2021.

The organizational structure is adjusted, and we look forward to the release of talent and copyright value.

The company has actively and extensively expanded its editing and distribution teams in 2018 and 2019 to cope with the editing and maintenance of high-quality works. At the same time, it has basically completed the adjustment of the structure of the literary team in the first half of the year, and obtained more middle-level core business teamAutonomy and incentives.

Maintain “Buy” rating.

It is expected that the company’s net profit attributable to the parent in 2019/2020/2021 will be 2.

65/3.

13/3.

68 ppm, an increase of 9 in ten years.

9% / 18.

5% / 17.

5%, corresponding to PE is 30/25/21 times, maintain “Buy” rating.

Risk reminders: changes in the e-commerce landscape, management of internal control risks, product marketability risks, etc.