Event: Ed Weixuan issued an annual performance announcement, with an annual income of 904 million yuan in 2021, + 97.4% year on year, and a net profit of 92.48 million yuan, + 294.86% over the same period last year. Among them, 2021H2 realized income of 519 million yuan, + 34.35% of the same period last year, and net profit of 56.989 million yuan, + 33.5% of the same period last year.
Experience marketing recovers strongly, and digital marketing continues to make breakthroughs. Revenue: in 2021, the company's revenue from experiential marketing, digital new marketing and IP business expansion was 686 million yuan / 202 million yuan / 16.345 million yuan respectively, which was + 120.24%, 51.36% and 23.27% respectively compared with the same period last year, accounting for 75.9%, 22.3% and 1.8% of operating income, respectively. Among them: 1) experience marketing business: as the market leader of experience marketing of high-end brands, the company benefits from the high growth of the domestic luxury industry, superimposed on the low base under the influence of the epidemic in 2020 and the overall convergence of the epidemic in 2021, the recovery of offline marketing activities, the company completed more than 200 offline activities in 2021, and experienced the rapid growth of marketing revenue. 2) Digital marketing business: the company provides daily maintenance of public relations for many brands and launches a number of digital marketing activities for brands such as LEGO; and the new business live e-commerce achieves GMV4.74 billion yuan throughout the year, driving the growth of the digital marketing sector. 3) IP expands business:
The company will host a Tour de France and a La Liga club night in 2021. In terms of profitability: the company's gross profit margin is from + 0.82pct to 29.6%, the sales expense rate is from-3.84pct to 9.50%, and the management expense rate is from-4.36pct to 4.72%. Overall, the company's net profit margin is from + 5.12pct to 10.23%.
Diversified business development, based on advantages to develop more blossoms. Starting from 2021, the company will increase its layout in digitalization and innovation based on its existing advantages. 1) in 2021, set up a joint venture with Vision Entertainment to expand live streaming e-commerce business; establish a pan-fashion MCN business brand Avant Plus, focusing on the business brokerage and social platform operations of star talent; 2) cooperate with Hong Kong Land and Fosun Fashion; and 3) in 2022, the company's layout of metasonic business and the establishment of a joint venture company with Kuaiwei Technology is expected to enable commercial closed loops. 4) in 2022, the company reached a strategic partnership with Shanghai Design week to fully participate in the brand promotion and operation of Shanghai Design week in the new decade, and the new IP is expected to increase profits by 10 million magnitude in 2022. In the long run, the company's business takes data interactive marketing as the core, continues to speed up the comprehensive marketing layout of digital capabilities, and provides customers with an one-stop omni-directional marketing service solution of "offline + online + meta-universe". To "content + marketing + technology" as the guide, to create the world's leading pan-fashion data interactive marketing group.
Investment suggestion: as a leading pan-fashion data interactive marketing company in China, the company has rich team experience, solid customer base, online and offline fully integrated advantages; its extravagant experiential marketing business has advantages over its peers, and with the accumulation of original brands and personnel, it conforms to the trend of online and diversified marketing, all-channel integration and continuous increase, and the performance is expected to grow steadily. And continue to explore meta-universe, new IP and other new business growth points, is expected to empower the commercial closed loop. We expect the company to achieve a net profit of 127 million yuan / 163 million yuan / 205 million yuan in 2022, 2023 and 2024 respectively, which is + 36.8%, 28.9% and 25.5% respectively compared with the same period last year. Maintain the target price of HK $2.8 and maintain the "buy" rating.
Risk tips: 1) customer loss due to irresistible factors; 2) repeated epidemic situation, hindering offline activities; 3) intensified competition in the industry.