Tiger TV Media (01163.HK) achieved a total income of 350 million yuan in 2021, an increase of 67.3 percent in the same period last year.
The increase in income was mainly due to I) changes in revenue recognition, ii) overseas accounting, and iii) China regional accounting. In addition, thanks to the commercialization of advertising and the introduction of AdTensor into advertising, the gross profit margin of the centralized CPA model increased by 3.2 percentage points to 8.4% compared with the same period last year, while the increase in the proportion of total tax entry led to a slight decrease in overall gross profit margin to 18.7%. However, the high expenditure ratio has resulted in a reduction of about 268% to 1152.7 million yuan in annual operating profit for the same period last year.
China's region is still slow, but overseas regions remain strong: passenger spending in China accounts for less than 10% of the total customer expenditure of Tiger TV Media (01163.HK) in the whole year. We believe that China's regional measures on education and online education, as well as the impact of the ii) epidemic, have hindered the development of regional services in China, but we do not think that the external environment can twist in the short term, thus creating a sustainable impact on the collection. Fortunately, the overseas operations of 01163.HK maintained a strong performance in the second half of 2021, and customer expenditure maintained an annual growth rate of more than 30%, which was a sign of outstanding performance in overseas regions in the second half of the year.
High R & D expenditure ratio weakens the profit level of 01163.HK: Tiger Media (01163.HK) recorded over $10 million in R & D expenditure and consulting services in 2021, of which R & D expenditure and consulting services are mainly invested in I) online shopping and logistics management systems, ii) SaaS services, iii) AdTensor and iv) new service development. In addition, the labor cost of Tiger TV Media (01163.HK) rose to about 3502.2 million yuan in 2021, mainly due to I) the increase in the share of sales staff and the increase in the number of people invested in service development and application development.
Looking forward to more positive signals to maintain the "entry" level: Tiger TV Media (01163.HK) handed over a reasonable quota last year, and the strong overseas regions offset the slow progress in China. We believe that the market will take longer than expected to demand the Chinese market, especially the service model in the Chinese region has not yet taken shape, and the market is actively trying out more new service models in the weak and strong market. As a result, our revenue forecast is about 6.6%-10.3% to reflect the change in revenue recognition, but the profit forecast is reduced by about 55.5%-61.8%. At the same time, we cut our target to HK $1.01 per share, which is equivalent to the 24.8x/18.7x/16.8x forward price-to-earnings ratio of 2022 / 2023 / 2024.