The Zhitong Finance App learned that Dongwu Securities released a research report saying that the first Inke (03700) “bought” rating and was optimistic about its product development and commercialization capabilities. The adjusted EPS is expected to be 0.24/0.27/0.3 yuan in 2022-24. Referring to the average valuation of overseas companies in the live streaming industry and social networking industry, the target price is 10 times PE in 2022, with a target price of HK$2.91. The current price is cost-effective.
Incidents:The company achieved revenue of 9.2 billion yuan in 2021, an increase of 85% over the previous year. Among them, social networking products and blind date products achieved revenue of 57.6 billion yuan respectively, an increase of 276%/48% over the previous year, contributing the main increase, and adjusted net profit of 450 million yuan to the mother.
The main points are as follows:
The expansion of the live streaming field and the strong China and Taiwan jointly support the company's new strategic development.
On the one hand, Inke Live is a live streaming platform with leading technology and strong user stickiness in the industry, and its stable cash flow supports the company's exploration in new fields. On the other hand, the “Kaihai” Central Taiwan System established by the company in 2020 provides technical support for the company's multi-product, multi-track, and multi-market strategy by improving the company's product development efficiency and enhancing product monetization capabilities. Furthermore, the company's internal horse racing, partnership system, and mechanism design that emphasizes project profit cycle assessment are also conducive to product innovation.
Stranger social networking, cloud blind dates, and overseas markets will continue to contribute incrementally
(1) Socializing with strangers:The industry is generally stable, but there are still opportunities for segmentation. The bank is optimistic about the long-term development of value-added service models represented by Soul, Cumulus, etc. The company achieved a breakthrough through a multi-product strategy, fully verifying the company's ability to commercialize under the strong Taiwan mechanism.
(2) Cloud blind date:Driven by demand and catalyzed by the epidemic, there is still room for growth in the domestic online dating and dating market. The relationship is based on Inke's live streaming technology and commercialization experience. The pace of growth and commercialization is good. There are opportunities for commercialization of future online and offline activities. The new product “Super Like” closes the loop of online and offline blind date scenarios, improves the problem of the weak authenticity of online blind dates, and is expected to contribute more to the company's blind date business.
(3) Going out to sea:Competition in overseas social markets is fierce, but there are still opportunities for segmented tracks and emerging markets. For example, in the paid social interactive reading market, according to iResearch, China's online literature overseas market is expected to reach 3.1 billion yuan in 2021, an increase of 172% over the previous year. The bank is optimistic about the reuse of the company's existing experience and resources in overseas markets, further increasing its market share in 2022 if the 2021 model initially runs through, and effectively drives performance growth.
Benchmarking Match and Akako City, the company's prospects are promising.Match is a giant in the European and American online dating industry, and Chazicheng Technology is a major domestic social networking product company that goes overseas. The two are not only the main competitors of the company's social networking products going overseas, but they can also provide many lessons for the company's development.
(1) Development path comparison:All three have expanded their social product matrices through acquisitions/self-development to drive revenue growth. Among them, Match invested more in acquisitions, and its product matrix covered many leading targets.
(2) User asset comparison:There is still a gap in the number of users compared to Match, but its virtual gift-based charging model allows users to pay more.
(3) Financial comparison:Business model restrictions make Inke's profitability weaker than Match's, but there is still room for optimization of gross margin and cost ratios in the long run.
Risk warning:The entry of new tracks fell short of expectations, competition on social tracks in overseas markets was fierce, and changes in regulations or policies in overseas markets fell short of expectations.