Borui spreads e-commerce into new highlights

Buri Communication (600800) recently announced its 2011 interim results. During the reporting period, the company achieved operating income of 648 million yuan, a year-on-year increase of 18.82%, and a net profit of 198 million yuan, a year-on-year increase of 26%. Analysts in the industry believe that the traditional business of the company has grown steadily, with outdoor advertising and external printing services being the bright spots in the first half of the year. The second half of the issuance business is expected to become a new highlight. During the reporting period, the issuance and delivery business income was 68,282,200 yuan, an increase of 8.81% over the same period of last year.

It is worth noting that the company stated in its mid-year report that during the reporting period, the company had invested 10 million yuan to set up an e-commerce logistics company, and it expected to realize a revenue of over 100 million yuan in 3-5 years. Boli Communication Director Zhang Yueming told the China Securities Journal that: "At present, the company occupies the market and cost advantages of the issuance terminal and cultivates new areas through professional teams. It is expected that the operating income will be about 9 million yuan by the end of this year."

The growth of traditional businesses was stable During the reporting period, the company’s advertising business revenue and total profit increased by 32% and 50% respectively over the same period of last year, which was the only business that was higher than the overall growth rate of the company. The main reason is the growth of new advertising services such as outdoor advertising and DM orders. In particular, outdoor advertising revenue and total profit realized 67.18 million yuan and 15.98 million yuan, respectively, an increase of 56% and 168% respectively. Analysts at Huachuang Securities said that this was due to the surge in revenue from outdoor billboards such as highways and airports that the company invested in Chengdu and Wuhan.

The outdoor advertising business also boosted the gross profit of the overall advertising business. In the first half of the year, the overall gross profit margin of the advertising business was approximately 71.69%, an increase of 2.74 percentage points year-on-year. Analysts expect that the advertising business will continue to be the most important support point for the company's second half performance.

In addition, the company also pointed out in the mid-year report that during the reporting period, the company focused on commercial printing, and the external printing business continued to grow. In the first half of 2011, the company's printing business revenue increased by 13% year-on-year, of which external printing business revenue increased by approximately 40% year-on-year, and external business gross profit margin increased by 2.06 percentage points year-on-year.

The company stated that the traditional media business operations take integrated marketing as the breakthrough point, and resource expansion as the growth point. The emerging media business gradually evolves from the point of merger and acquisition to the product line architecture and integrates as quickly as possible the formation of a “face” layout for new media.

E-commerce has become a new bright spot. Insiders believe that the troika that drive the company's performance growth in the next 2-3 years will be "Chengdu Tong" outdoor advertising, agent newspaper publishing and settlement rate increase, and future e-commerce transformation. China Securities Journal reporter learned from the company that the company is actively involved in e-commerce business upgrades, will be cultivated within the next two years into a mature business, a new growth point for the company.

The company mentioned in its mid-year report that after investigation, it is expected that the top 10 e-commerce companies in the country will have more than 70,000 to 80,000 daily transactions. The company relies on the distribution channel network to structure a mesh distribution structure in Sichuan. The company will be supported by e-commerce logistics and gradually extended into an independent e-commerce platform.

The company's new media business has experienced a long period of groping. The business covers different modes such as online games and network application software, but the business is still in an incubation period as a whole. In the first half of the year, although the overall gross profit rate of the company's online game business was as high as 83.01%, it was down by 4.87 percentage points year-on-year. Online entertainment revenue of the major transformation project Chengdu DreamWorks increased by 12.72% year-on-year. During the reporting period, online game revenue was 51,691,100 yuan, an increase of 12.72% over the same period of last year, ending the declining trend since last year, but the growth rate was still lower than market expectations. Chang Jun Securities analyst Liu Jun believes that the current online game industry is fiercely competitive, and the company’s online game business may not be able to achieve high growth in 2011.

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