Company overview

Duiba is a SaaS supplier for online business users in China and a leading operator of interactive effect advertising platform. According to iResearch, the company ranks first in the following areas: (1) Chinese users operate the SaaS market (according to the number of registered mobile App with more than 1 million daily active users as of December 31, 2018); (2) China Mobile Limited interactive performance advertising market (based on 2018 revenue, market share is more than 50%).

The company's main business is divided into: (a) users operating SaaS platform business (1.2% of 2018 revenue) and (b) interactive performance advertising business (97.6% of 2018 revenue). Interactive effect advertising is a kind of native advertising, which is based on reward interactive content, can be better integrated with online media main mobile App content interface, and can extract more existing user traffic value without affecting customer experience. Recently, the company has also expanded its business to offline enterprises with strong potential demand for user operation solutions.

From 2016 to 2018, the company's revenue was 51.1 million yuan, 645.8 million yuan and 1137.0 million yuan respectively, and the gross profit margin was 78.3%, 37.5% and 37.7% respectively. The adjusted net profit was RMB-2.9 million yuan, 118.7 million yuan and 205.2 million yuan, respectively, and the adjusted net interest rate was 18.4% and 18.0% respectively.

Industry status and prospects

Mobile App increasingly relies on users to operate SaaS to achieve user acquisition, retention and contact in a more cost-effective way. According to iResearch, the market size of SaaS operated by Chinese users increased from RMB 200 million in 2013 to RMB 4.4 billion in 2018 from CAGR of 78.1% in 2018, and is expected to grow rapidly from 56.8% of CAGR in 2018 to RMB 41.9 billion in 2023, as leading market participants began to charge fees and expand to the market for offline companies.

Thanks to the improvement of mobile Internet technology, the optimization of mobile content and the increase of mobile traffic, China's overall mobile advertising market is developing rapidly. According to iResearch, the size of China Mobile Limited's advertising market by revenue increased from 13.4 billion yuan in 2013 to 366.3 billion yuan in 2018 and is expected to reach 1.1996 trillion yuan in 2023. The market size of China Mobile Limited's interactive advertising is 2.1 billion yuan in 2018 and is expected to increase to 13.5 billion yuan in 2023, with a CAGR of 44.5 percent.

Advantages and opportunities

Forerunners and leaders of SaaS and interactive effect advertising operated by Chinese users

Diversified channels reach a large number of users.

Weakness and risk

Limited operating history

The industry is highly competitive.

Investment valuation

Based on the IPO price (HK $6.0-HK $8.1), the company's 2018 price-to-sales ratio Pmax S is 4.3x-5.8x and P-B is 4.58x-5.36x, of which Pmax S is valued at only half of that of 2013.HK.

Considering that the company is the double leader of Chinese users operating SaaS and interactive effect advertising, with strong liquidity and cheap valuation, we give it a special rating of "8" to IPO.