Yuanwang Technology announced the 2022 annual report and the first quarter of 2023: the company's total revenue in 2022 was 3.9 billion yuan (up 38.75% year on year), operating costs were 3.2 billion yuan (up 36.1% year on year), sales and management expenses were -25.8% and +20.3%, respectively, and the distribution of returned to the mother and non-profit after deducting non-profit was -265 million yuan and -319 million yuan; the company's total revenue for the first quarter of 2023 was 1.1 billion yuan (up 37.2% year on year); total revenue for the first quarter of 2023 was 1.1 billion yuan (up 37.2% year on year) The total operating cost was 1.14 billion yuan (up 59.5% from the previous year), and the return to mother and non-profit were -38 million yuan and -45 million yuan respectively.

Key points of investment

In 2022, the main business was pressured to implement stress tests, and the main business showed resilience. As the leading live streaming e-commerce agency, the main e-commerce business achieved a GMV of 15 billion yuan in the 2022 stress test (up 50% from the previous year, and is expected to continue to achieve double-digit growth in 2023). The company established a supply chain system where more than 25,000 domestic and foreign brands entered (the cumulative number of cooperative customers exceeded 30,000), while actively promoting talent introduction and organizational structure upgrading, relying on the self-developed full-process digital platform “Distant View Cloud” to standardize the live streaming process, analyze and scale the live streaming process and select products Intelligence also helps the main business develop resilience; in 2022, the company actively entered the non-standard apparel sector, laying a good foundation for a restart in 2023; in 2022, the Double Eleven (10.17-11.11) company achieved a total of 3.187 billion yuan of GMV (increase of 38.4% over the previous year), and the number of product SKUs reached 40,000 (up 45% year on year). The company's shoe warehouse business clean-up promotion will continue to be digested through live streaming and offline. In the future, only a small amount of inventory will be retained in the company's e-commerce and offline channels, and the impact of the footwear business on the company's performance in 2023 is expected to be drastically reduced. In 2022, the company also underwent a comprehensive strategic upgrade to create the four core business segments of live e-commerce, supply chain, full-case marketing and the digital world, which will help guide the company's restart in 2023.

Seizing platform promotion dividends and continues to stabilize the leading position in the industry, non-standard is expected to boost the second growth curve of live streaming

On the media side, the company continued to follow industry trends and lay out potential platforms in a forward-looking manner. In 2022, the company completed initial trials of live e-commerce on platforms such as Duoduo Live, JD Live, WeChat Video Account, Bilibili, etc., and used the successful replication experience of multiple platforms to seize platform promotion dividends. Looking at the main business on the supply side, the company built core competitiveness in the field of standard products, further consolidated the supply chain through investment, joint ventures, strategic cooperation, etc., completed the apparel supply chain infrastructure based on the “Distant View Cloud” system in the field of non-standard clothing, prepared the “Fuyao” project to carry out preliminary e-commerce distribution of live streaming of clothing, signed contracts with leading experts in the apparel industry, and the non-standard apparel business is expected to boost the second growth curve of live streaming.

Buybacks and incentives demonstrate confidence in development

In order to improve the corporate governance structure of the company and establish and improve a long-term incentive mechanism, the company launched the 2023 40 million stock option incentive plan (draft) on April 11, 2023, with an exercise price of 14.33 yuan/share; as of May 4, 2023, the plan to repurchase the company's shares has been implemented (a total repurchase of 85675 million shares, totaling 151 million yuan, and 5% of the company's shareholders also reduced their holdings by 2.52 million shares during the repurchase period. Buybacks and incentives help to mobilize their enthusiasm and creativity, enhance the cohesiveness of the core team and the core competitiveness of the enterprise, and enhance confidence in development.

Profit forecasting

First coverage, giving a buying rating. It is predicted that the company's revenue in 2023-2025 will be 50.7\ 57.0\ 6.29 billion yuan respectively, the net profit will be 65,85.01.2 billion yuan respectively, and the EPS will be 0.71\ 0.94\ 1.12 yuan respectively. The current stock price corresponds to PE 30.1\ 22.9\ 19.1 times respectively. The stress test was implemented in 2022. Looking at buybacks and incentives to increase confidence in the short term, the company's main business is expected to be repaired and restarted in 2023. In the medium term, the company's R&D investment in various fields such as digital asset libraries, generative AI, and digital virtual people is expected. By incubating internal and external entrepreneurial teams, new momentum is cultivated for the company's business development, medium- to long-term competitiveness is enhanced, and a “buy” investment rating is given based on both restoration and addition of the company's main business.

Risk warning

The risk of loss of Internet technicians, the risk of loss of goodwill, the risk of media traffic suppliers being concentrated, the risk of tax policy, the risk that new business will not advance as expected, the risk of increased market competition, and the risk of macroeconomic fluctuations.