[Matters]

The 8th meeting of the fourth board of directors of the company held on April 15 and the 2021 Annual General Meeting of Shareholders held on April 28 passed the “Proposal on Proposed Changes to the Company's Full Name and Stock Short Title”

The bill. The Shenzhen Stock Exchange has approved the company to change the stock abbreviation from “Lisheng Racing” to “Lisheng Sports” with effect from June 13.

[Comment]

The national fitness business was launched, and the name was changed to raise market awareness. The company joined Yuedong World in December 2021 and used the app “Yuedong Circle” as the carrier to develop a national fitness business. The national fitness business is now gradually being implemented with activities such as online games. The company's name change can highlight its business focus, help enhance market awareness, and further expand business.

With the normalization of epidemic prevention and control, traditional business is expected to recover. Starting June 1, Shanghai will fully restore normal life and production order throughout the city, and offline consumption will gradually return to normal. The 2022Q1 company achieved revenue of 53.982 million yuan, a year-on-year decrease of 5.7%, mainly due to the impact of the pandemic on performance in the short term. The company's traditional racing business, such as racing business and stadium management business, could not be fully carried out due to the epidemic. The full resumption of work in Shanghai this time indicates a gradual recovery in the company's traditional business.

Policies comprehensively empower new and old businesses. The country has introduced a number of policies in recent years, such as the “National Fitness Plan (2021-2025)” and the “14th Five-Year Plan” to promote the development of the sports industry.

At the end of 2021, the company signed a “Strategic Cooperation Framework Agreement” with China Sports Federation and China Sports Newspaper Corporation in Beijing, and jointly hosted the first national AI online games at the end of April 2022.

The company's national fitness business has expanded and covered the online scene. It is expected to be empowered in both directions with the traditional offline racing business, which is more conducive to the company taking advantage of policy developments and enjoying the industry's recovery dividends.

[Investment advice]

We believe that the normalization of epidemic prevention and control in Shanghai sends a favorable signal to the resumption of the company's traditional business. The company's traditional business and national fitness business are expected to benefit from various industry policy support, and we are optimistic about the company's subsequent business development.

We forecast that in 2022-24, the company will generate revenue of 421/6.15/707 million yuan, achieve net profit of 0.33/0.65/078 million yuan, EPS of 0.2/0.41/0.49 yuan/share, corresponding to PE54/27/23 times, and maintain the “increase in holdings” rating.

[Risk Reminder]

The risk of recurrent outbreaks

New business performance falls short of expectations