[Matters]

Recently, the 8th meeting of the fourth board of directors held by the company passed the “Proposal on Proposed Change of the Company's Full Name and Stock Short Name” to change the company's stock abbreviation to “Lisheng Sports”. The matter still needs to be submitted to the shareholders' meeting for consideration.

[Comment]

The name change clarifies the company's business priorities and enhances market awareness. The company's business capabilities have continued to improve in recent years. In addition to its original racing business, the company has further participated in Yuedong World and cooperated with the “Yuedong Circle” app to set up a national fitness business. In the case of the gradual development of new business, the company's original full name and stock abbreviation cannot effectively reflect the company's business. The updated name can clarify the company's business priorities, which will help expand new business and enhance market awareness.

Traditional businesses have picked up, and performance has been outstanding. Recently, the company released its 2021 annual report, achieving revenue of 281 million yuan (yoy +40.4%) and net profit of 3.1383 million yuan in 2021. Previously, the company's tournament management, stadium management and other businesses were greatly affected by the epidemic prevention and control and could not be fully carried out. The recovery from the pandemic in 2021 boosted the company's traditional business and turned a loss into a profit, but it did not fully return to pre-pandemic levels. We believe that with the normalization of epidemic prevention and control, the company's traditional business is expected to pick up further.

Take advantage of the policy trend and promote national fitness. The sports industry is a key support direction for China, and is supported by many policies such as the “National Fitness Plan (2021-2025)” and the “14th Five-Year Plan” for sports development. Sports Bank has made certain breakthroughs on both the B/G side and the C side, promoting national fitness through diversified business models. We believe that the new national fitness business is the company's further exploration in the sports industry. The recovery of the sports industry will drive the accelerated development of the company's new and old businesses, forming a two-wheel drive system.

[Investment advice]

We believe that the company's traditional racing business is expected to return to its original level with the normalization of epidemic prevention and control. We are optimistic about the rapid growth of the national fitness business and maintain the company's previous profit forecasts.

We forecast the company's revenue of 421/6.15/707 million yuan in 2022-24, net profit of 0.33/0.65/078 million yuan, EPS 0.20/0.41/0.49 yuan/per share, PE corresponding to 58/29/24 times, maintaining the “increase in holdings” rating.

[Risk Reminder]

The epidemic has repeatedly affected the normal development of traditional businesses

New business performance falls short of expectations