[Investment points]
The company published its 2022 annual report and 2023 quarterly report.
In 2022, the company achieved operating income of 14.737 billion yuan, an increase of 3.10% over the previous year; achieved net profit of 81 million yuan, a decrease of 72.55% over the previous year; and achieved net profit of 70 million yuan after deducting non-return to the mother, a decrease of 71.75% over the previous year, including credit impairment of 126 million yuan. Among them, the fourth quarter achieved operating income of 3,366 million yuan, a year-on-year decrease of 4.09% and a decrease of 7.26%; realized net profit of -45 million yuan, an increase of 153.06% over the previous year and a decrease of 172.92% over the previous quarter; and realized net profit of -43 million yuan, a decrease of 146.95% from the previous year and a decrease of 189.10% from the previous quarter.
In the first quarter of 2023, the company achieved operating income of 2,796 million yuan, a year-on-year decrease of 31.51% and a decrease of 16.92%; achieved net profit of 38 million yuan, an increase of 8.42% over the previous year, an increase of 186.11% over the previous year; and achieved net profit of 38 million yuan after deducting non-return to the mother, an increase of 5.51% over the previous year, an increase of 187.37% over the previous year.
The customer structure was optimized and recovered month-on-month in the first quarter of 2023. In 2022, the company's brand marketing achieved revenue of 2,643 million dollars, continued its leading edge in the automotive industry segment, continuously optimized its customer structure, cooperated with new energy vehicle customers such as BYD and Xiaopeng Motor, and achieved breakthroughs in finance, FMCG, etc., to achieve revenue growth against the trend. At the same time, the company continued to maintain close cooperation with leading media such as Headline, Tencent, and Kuaishou to consolidate its resource advantages, and achieved revenue of 12.046 billion dollars from effective marketing. In the first quarter of 2023, the company's net profit recovered month-on-month, and net cash flow from operating activities was 601 million yuan, a significant improvement over the previous year.
Actively lay out digital culture, and technology empowers digital marketing. The company continues to strengthen the layout of innovation tracks such as digital people and the AIGC creator community to empower various aspects such as data and content in the digital marketing business. During the reporting period, the company completed a number of projects, including the virtual person “Can Be Sweet” customized for Dongfeng Scenery Mini, and connected to Baidu Wenxin's one-word model in February 2023. Meanwhile, Zhejiang Wenmita, a subsidiary of the company, has assisted creations in the field of AI painting, with 470,000 registered users by the end of 2022.
Profit margins have declined, and expense ratios have steadily declined. In terms of profit margin, in 2022, the company's gross margin was 4.33%, down 1.45 pct from the previous year; the net interest rate was 0.52%, down 1.61 pct from the previous year. In terms of cost rate, the company's expenses rate for the period decreased by 0.68pct to 3.42% year on year; among them, the company's sales/management/finance/R&D expenses ratio was 1.22%/2.07%/0.13%/0.37%, respectively, and the year-on-year changes were -0.23pct/-0.39pct/-0.06pct/-0.24pct, respectively.
[Investment advice]
Based on the company's current operating situation, without considering the impact of fixed increases for the time being, we adjusted the company's 2023-2024 revenue and profit forecast and introduced the 2025 profit forecast. The company's revenue for 2023-2025 is estimated to be 132.04/143.82/15.446 billion yuan respectively, net profit attributable to the parent company is 301/3.47/401 million yuan respectively, EPS is 0.23/0.26/0.30 yuan respectively, and PE is 29/25/21 times respectively. We suggest paying attention to the recovery in the company's performance and new developments in the digital culture industry layout after improving the external environment, and maintaining the company's “increase in holdings” rating.
[Risk Reminder]
Macroeconomic downturn;
Policy risk.