Incidents:

The company achieved operating income of 1.31 billion yuan from January to September 2022, an increase of 12.16% over the previous year; net profit attributable to shareholders of listed companies - 27.1051 million yuan; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss - 32.332 million yuan; basic earnings per share - 0.0163 yuan.

Comment:

Revenue continued to grow, and net profit declined

The company's revenue has maintained an upward trend in the current period, but operating costs have increased year-on-year, mainly due to the company's increased investment in new businesses related to digital traffic such as virtual people, and the sharp increase in costs; the reason for the decline in net profit is that the company's business continued the state of business restructuring in the third quarter. Considering the company's continued investment in the virtual person business this year and further processing of some businesses with weak profitability, we believe that the company's overall business structure will become more and more reasonable, which will greatly benefit the stability of subsequent operations.

Investment Ratings and Profit Forecasts

The company is currently focusing on core business development. The layout of the virtual person business has entered a stage of rapid development, and there is plenty of room for expansion for the further development of the company's marketing service business. In summary, we continue to give the company an “increase in holdings” investment rating. It is estimated that the 2022-24 EPS will be 0.01, 0.02, and 0.04 yuan/share, respectively.

Risk warning

The company's new business development falls short of expectations, product operation falls short of expectations, game industry policy risks, data traffic ecosystem policies and operating risks, etc., and risk of loss of value such as goodwill and long-term investment.