01351.HK is a mobile notification company that provides one-stop customized notification service for Chinese customers. The service generally includes publicity and planning, announcement and release, and post-launch monitoring. In the first half of 2021, the total income method and the total income method earned about 220 million yuan and 570 million yuan respectively, with an increase of 42.3% and 61.1% respectively in the same period in 2020. However, dragged down by the rising cost of traffic reported by large media, the net income earned by collectors from purchasing services increased by only 18.4% year-on-year, while the overall gross profit margin decreased by 5.7% to 24.0%.

Launch of SaaS solution: SaaS solution is the latest service launched by 01351.HK, which generally includes data monitoring, CRM, content creation and announcement launch. According to the latest announcement from 01351.HK, the SaaS solution will be officially launched by the end of 2021, and its test version has been given to customers to try it out and have reached a preliminary intention to cooperate with other customers. The SaaS solution will help to expand a new customer base and provide a source of margin inflows and income for the clients.

Recent policy actions are relatively low: 01351.HK has established a customer group that can help it counteract recent policy actions. At present, the largest sources of revenue are mobile Internet services (such as audio applications, email and sharing applications and new applications), mobile tools industry (including mobile applications, cleaning applications and anti-virus devices, etc.), while the total revenue of e-commerce, mobile, and education industry accounts for less than 20% of the total revenue.

Improve the production capacity of the market: the announcement is very important in the Chinese market, mainly due to the fact that the launch of short-term financing has led the owners to invest more resources in the financial market. According to the research conducted by iResearch, the short-term report in 2020 accounted for about 17.4% of the total market share in China, making it the second largest form of complaint in the industry. 01351.HK will provide one-stop short-term advertising service from April 2018. At the same time, it can see through the large-scale production model of the short-term base of Wushu, which was put into operation in April 2021.

Valuation

In the first half of 2020 and the first half of 2021, 01351.HK achieved 190 million yuan and 260 million yuan in total income, respectively. However, the increase in traffic flow dragged down its gross profit margin from 29.7 percent in the first half of 2020 to 24.0 percent in the first half of 2021. It is estimated that the profit rate after listing in 2020 and the deferred allowance in the first half of 2021 is similar to that in the same period last year, but after adjustment, the profit rate will be reduced to about 16.0%. Tomorrow (01351.HK) is trading at a historic price-to-earnings ratio of about 3.7x (an average of 7.6x in 2021) and is close to the lowest level since listing.

Negative factor

Tell me that the increase in the cost of traffic weakens the profit level of 01351.HK.

The government has strongly blocked the development of the exhibition in the Chinese region.

The progress of the SaaS solution is expected to be slow.

Collection of other industry policies weakens demand for complaints