The company is an established marketing leading company, fully benefiting from the growth wave of the Internet era, customer resources + media resources + R & D strength to help the company transform to brand operation. According to the company's history of more than 20 years, the development process of the company is divided into four stages: 1) 1994-2001: focus on local marketing, sharpen the strength of the company; 2) 2002-2009: transform Internet advertising and accumulate media resources; 3) 2010-2020:
Investment and acquisition of upstream and downstream companies, integration of regional resources, layout of overseas markets, accumulation of domestic and foreign brand resources; 4) 2019-so far: transformation of brand operation services, and layout to achieve virtual human business, duty-free business landing. Most of the company's customers are well-known leaders in the industry, with a stable structure and high loyalty. The proportion of sales of the five major customers before 2018, 2019, and 2020 is 34.06%, 47.20%, 48.55%, respectively, which has a great advantage in the field of automobile and cosmetics. Starting from 2020, the company officially took brand operation as the core business of the company and began to develop vigorously, transforming from simply providing advertising marketing to supporting back-end diversified and refined operation services, and carrying out a number of new businesses such as live broadcast and delivery. In 2020, the company's brand operating income accounted for 6.4%.
New technologies continue to break through, and virtual images help the development of marketing companies. According to the head Leopard Research Institute, the size of China's virtual idol market increased from 310 million yuan to 1.48 billion yuan from 2016 to 2020, and is expected to grow to 4.16 billion yuan in 2025. From the realization scenario, 30% of virtual idol revenue in 2020 comes from advertising endorsements. Compared with the real person, the virtual digital image is not limited by space and time, the marketing efficiency is high, and the brand display effect is good. With the rapid development of metacosmos industry and technological progress, the development potential of virtual human industry is huge.
What to see in the future: actively carry out duty-free, new retail and other businesses, virtual human business income is expected to grow rapidly, cultural and cultural projects are worth looking forward to. Tax exemption: the company sets up a joint venture with Sea Travel Investment and Laox to lay out duty-free business, build online and offline tax-free business from the end of the supply chain, and create offline physical stores. At the end of December 2021, Hainan's first LAOX SELECT store opened in Sanya Sea Travel Duty Free City, and the company's online live broadcast of duty-free goods has also been successfully landed. Virtual human: Qianhong Culture, a subsidiary of the company, launched the virtual image "Aimee" in 2020
In 2021, the virtual image of Zhongjingtian of the DIOR show, the virtual image of Angelababy and the virtual image of Luo Tianyi have been realized, and it is expected to cooperate with more brands to achieve rapid revenue growth in the future. Wenbo: the company has signed strategic cooperation with Qin Huang Mausoleum and the Imperial Palace. Mini Program of Qin Huang Mausoleum and App of "Imperial Palace Cloud course" have been launched successively. The company attaches importance to cultural recovery, cultural heritage, and layout of related cultural industries. In the future, it is expected to cooperate with virtual business to improve the display effect.
Profit forecast: we expect the company's operating income from 2021 to 2023 to be RMB 104.77, 12.29 billion, an increase of 1.63%, 12.74%, 17.31%, and a year-on-year increase of 10.3%, 39.5%, 34.4%, respectively. Considering the growth of the company as a leading marketing company, virtual human, and the continuous promotion and landing of tax-free business, the reasonable market value of the company is expected to be 9.7 billion yuan in 2022, corresponding to PE 30X in 2022, covering for the first time and giving a "buy" rating.
Risk hints: the development of virtual human technology is not as expected, the promotion of duty-free business is not as expected, and the competitive pattern of brand marketing is changing.
