Event: the company released the 2022 interim results report, 2022H1, the company realized revenue of 173 million yuan,-55.15% year on year. The net loss was 8.496 million yuan, and the net profit was 35.499 million yuan in the same period last year.

Income and profitability are under pressure under the disturbance of the epidemic. Revenue: the experience marketing section achieved 108 million yuan, accounting for 62.29%, while digital marketing and promotion services generated 65.145 million yuan, accounting for-33.99%, accounting for 37.71% of the total revenue for Tech IP expansion, compared with 10.088 million yuan for the same period last year. Among them: 1) experiential marketing business: the company's experiential marketing offline activities are mainly held in high-line cities. From March to May 2022, Shenzhen and Shanghai were successively disturbed by the epidemic, and public offline activities decreased. High-end and luxury brand activities are often delayed, resulting in a decline in revenue in the experiential marketing sector. 2) Digital marketing business: the epidemic accelerated the online process of domestic business. During the reporting period, the company successfully launched a number of online activities such as 2021 Remy Martin XO online social activities, but the suspension of offline commercial activities also disturbed the online digital marketing sector, and the live e-commerce business sector had a middle end due to the epidemic in Shanghai. 3) IP business expansion: the activities of La Liga clubs and Tour de France were delayed under the epidemic.

In terms of profitability: the company's gross profit margin is from + 2.99pct to 30.50% compared with the same period last year, mainly due to the implementation of cost control measures and the increase in the proportion of the digital marketing section with high gross margin. The sales expense rate is from + 12.74pct to 21.19% compared with the same period last year, mainly due to the relative rigidity of labor costs under income pressure and the increase in the base of social security contributions. The management expense rate is from + 10.97pct to 15.77% compared with the same period last year, in which the company generates a fee of 7 million yuan for share incentive to the two executive directors. After deducting the equity incentive fee, the management expense rate is year-on-year + 6.92pct. Overall, the company's 2022H1 achieved a net loss of 8.496 million yuan, compared with a profit of 35.499 million yuan in the same period last year. After deducting share incentives, the company's adjusted loss was about 1.5 million yuan, and the profit was under pressure.

In the second half of the year, under the convergence of epidemic disturbance, the business recovery trend is upward, and multi-business leads the development. In the second half of the year, the epidemic situation in high-line cities has been effectively controlled, and the business sectors of the company have returned to the upward trend. 2022H2, experiential marketing section, the company has been serving Van Cleef, "Ice Cream Museum" and other exhibitions; business activities in the digital marketing section have resumed one after another, live e-commerce business is operating normally and newly signed stars are expected to contribute more. The layout of digitization and innovation will be increased, and multiple growth points are expected to develop in the second half of the year. 1) the company's layout of meta-universe business in 2022, and the establishment of a joint venture company for Fast Technology, is expected to enable multi-dimensional commercial closed-loop. 2) in June 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 IP business is expected to contribute to the increase in the second half of the year.

Investment advice: in the long run, the domestic market and domestic brands of top international brands are emerging as a long-term trend, and the company will benefit as a pan-fashion data interactive marketing group that establishes a long-term cooperative relationship with top brands. The company's experienced team, solid customer base, online and offline full integration advantages are highlighted; its extravagant experience marketing business has advantages over peers, and with the accumulation of original brands and personnel, it conforms to the trend of online marketing and diversification, all-channel integration, continuous increase, performance is expected to grow steadily; and continue to explore meta-universe, new IP and other business growth points, is expected to enable business closed loop. The epidemic disturbance is under pressure in 2022. We expect the company to achieve a net profit of 67 million yuan / 153 million yuan / 190 million yuan in 2022, 2023 and 2024, respectively, compared with the same period last year. 27.7% Universe 128.0% / + 24.8%. Maintain the target price of HK $2.8 and maintain the "buy" rating.

Risk tips: customer loss due to irresistible factors; repeated epidemic situation, hindering the development of offline activities; industry competition intensified.