Investment Rating - The report initiates coverage with a "Buy" rating for the company, targeting a market capitalization of 15.7 billion yuan [7]. Core Views - The company, Southern Media, is a stable player in the publishing and distribution sector in Guangdong, focusing on educational materials and general books. It has a strong market position due to high entry barriers in the textbook sector and benefits from the demographic advantages of Guangdong province [6][39]. - The company is actively expanding into new business areas, particularly in AI-driven educational products, which are expected to enhance its growth prospects [9][53]. Financial Data and Profit Forecast - The company is projected to achieve total revenue of 98.06 billion yuan, 104.95 billion yuan, and 112.42 billion yuan for the years 2025 to 2027, representing year-on-year growth rates of 7% [5][7]. - The expected net profit attributable to the parent company for the same period is 11.30 billion yuan, 12.15 billion yuan, and 13.08 billion yuan, with growth rates of 39%, 8%, and 8% respectively [5][7]. - The company's price-to-earnings ratio (PE) for 2025-2027 is estimated to be 11x, 10x, and 10x, which is below the average PE of 13.9x for comparable publishing companies [7]. Company Overview - Southern Media, established in 2009, is a state-owned enterprise in Guangdong, primarily engaged in the publishing and distribution of textbooks and general literature. It has a significant market share in the educational publishing sector due to its exclusive rights to distribute textbooks in the province [6][13]. - The company has a stable financial condition, with a solid cash reserve that supports consistent dividend payments. It has a history of share buybacks to enhance shareholder returns [30][35]. Educational Materials Sector - The educational materials sector is characterized by high entry barriers and stable market dynamics, with Southern Media being the only legal entity for K-12 textbook distribution in Guangdong [6][39]. - The company benefits from the growing student population in Guangdong, which supports the demand for educational materials. The province has maintained a high birth rate, contributing to a stable market environment for the company's core business [45][46]. AI Product Development - Southern Media is actively developing AI-enabled educational products, including digital textbook platforms and AI-driven teaching solutions, which are expected to drive future growth [53]. - The company has partnered with major tech firms to enhance its digital offerings, positioning itself well in the evolving educational landscape [53].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [6][7]. Core Views - The company is well-positioned in Guangdong, with a solid main business and active expansion into new sectors, particularly in AI and digital education [6][9]. - The company is expected to achieve stable revenue growth driven by its core educational materials business, supported by the demographic advantages of Guangdong province [6][9]. - The target market capitalization is set at 15.7 billion, with projected revenue and net profit growth over the next few years [6][7]. Financial Data and Profit Forecast - Total revenue is projected to reach 98.06 billion, 104.95 billion, and 112.42 billion for 2025, 2026, and 2027 respectively, with year-on-year growth rates of 7% [5][7]. - The net profit attributable to shareholders is expected to be 11.30 billion, 12.15 billion, and 13.08 billion for the same years, with growth rates of 39%, 8%, and 8% respectively [5][7]. - The earnings per share are forecasted to be 1.28, 1.38, and 1.48 for 2025, 2026, and 2027 [5][7]. Company Overview - The company, established in 2009, is a key player in the publishing and distribution sector in Guangdong, inheriting assets from the Guangdong Publishing Group [6][14]. - It is a state-owned enterprise with a stable management team and a significant market share in educational materials [6][16][19]. Educational Materials Business - The educational materials sector is characterized by high entry barriers and stable market dynamics, with the company being the only legal entity for K-12 textbook distribution in Guangdong [6][41]. - The company benefits from a growing student population in Guangdong, which supports the demand for educational materials [6][47]. AI and Digital Education Initiatives - The company is actively developing AI-driven educational products and digital platforms, enhancing its service capabilities in the education sector [6][57]. - Notable projects include the "Yuejiao Xiangyun" digital textbook platform and various AI educational tools in collaboration with major tech firms [6][57]. Shareholder Returns - The company has a history of stable dividends and plans to enhance shareholder returns through share buybacks and consistent profit distribution [6][37].