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PostsFocus Media: Repairment remains solid
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Last night, Focus Media.CN released its earnings forecast for the third quarter of this year: the net profit attributable to shareholders is expected to be between 1.28 billion and 1.38 billion, a year-on-year increase of 76% to 90%, exceeding Dolphin Research's expectations (+73% YoY).
In terms of revenue, we expect a year-on-year growth of about 25% in the third quarter. How should we interpret this growth rate? Let's analyze it dialectically:
1）Although Shanghai was reopened during the same period last year, the traffic and customer demand of Focus Media at that time recovered slowly, and the base was relatively low. In addition, the offline consumption scene has clearly rebounded more in the third quarter, so this year's high rebound is mostly within expectations.
2）In terms of the absolute value of revenue, there has been improvement in the quarter-on-quarter comparison, but there is still a gap compared to the level of 2021 and the normal period before the epidemic. Overall, it shows a "slow" recovery.
3）However, we also know that the third quarter is mainly hot in the cultural and tourism industry, while other areas such as alcohol, food, and clothing have much weaker consumer demand than expected. These happen to be the key customer areas of Focus Media. Therefore, the overall revenue growth rate of 25% (the growth rate of the LCD industry in the elevator media is also 20% to 25%) actually reflects that Focus Media and even the entire elevator media industry still have a relatively stable flow advantage in offline scenes.
Therefore, compared with other offline platforms, the impact on Focus Media will be relatively smaller when the industry is under pressure.
Overall, Dolphin Research believes that Focus Media's performance is basically in line with expectations and is not bad in itself. It's just that under the influence of disturbing factors such as the market's pessimistic expectations for the economy (weakening of online social retail MoM, conservative guidance from Maotai, etc.) and liquidity concerns due to high US bond yields, Focus Media's third-quarter report did not receive positive feedback on today's stock price.
Although the enthusiasm for cultural and tourism consumption may cool down in the fourth quarter, it is the peak season for e-commerce consumption. Taking into account the impact of price increases, the market's expectations for Focus Media's performance are gradually improving based on the outlook for the past three months. Due to cautious expectations for consumption, Dolphin Research has moderately lowered the revenue growth rate for the fourth quarter, but the estimated net profit attributable to shareholders for the whole year is still maintained in the range of 4.8-4.9 billion. Currently, the valuation is not high and is slightly on the lower side of neutral.
As for the actual situation, the expectations and preparations of merchants for Double 11, as well as whether the e-commerce season can leverage the improvement of consumption expectations, can be observed in the company's performance outlook during the earnings report.
Historical articles from Dolphin Research on "Focus Media":
Earnings Season
August 10, 2023 conference call: "Focus Media aims to be the water carrier of the AI wave (1H23 earnings conference call summary)"
August 9, 2023 earnings review: "Challenging environment, Focus Media is crazily 'cultivating internal strength'"
May 12, 2023 conference call: "Progressive recovery does not mean no recovery, optimistic about Q2 expectations (Focus Media 2022 earnings communication conference call summary)"
April 29, 2023 earnings review: "Focus Media: Disappointing beyond expectations? Wave goodbye to the past and look to the future"
October 31, 2022 earnings review: "Focus Media: Walking through the darkest times, but unable to escape the fate of the cycle"
August 17, 2022 conference call: "Resilience in consumer goods, cost control in anticipation of real recovery (Focus Media 1H22 conference call summary)"
August 16, 2022 Earnings Report Review: "Internet Collapse, Focus Media in a State of Ruin"
July 14, 2022 Earnings Report Review: "Second Quarter Profits Plummet 70%, Focus Media's Performance Falls into a 'Pit'"
April 29, 2022 Conference Call: "March Revenue Drops 45%, Focus Media Faces Difficulties (Conference Call Summary)"
April 29, 2022 Earnings Report Review: "Focus Media: 'Bloodbath' or a Chance for Rebirth?"
November 4, 2021 Earnings Report Review: "Starting with Focus Media: Lowering Expectations for Internet Advertising"
August 26, 2021 Conference Call: "Shrinking, Disappearing, Standardizing: Business in the Second Half of the Year is Not Easy (Focus Media Summary)"
August 25, 2021 Earnings Report Review: "Focus Media: Looks Good? Actually a 'Thunderstorm'"
April 23, 2021 Conference Call: "An Incomplete Summary of the Focus Media Conference Call"
In-depth Analysis
December 21, 2023: "Is Consumer Spending Warming Up or Cooling Down? Can't Stop the Spring of Advertising"
August 2, 2022: "Falling into the Gold Pit Again? Is Focus Media a 'Gold Mine' or a 'Pit'?"
July 12, 2022: "Focus Media: The 'Desperate Fighter' Going Against the Current and Changing Its Fate"
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