Electro Acoustics Co., Ltd. is an integrated service provider of experience marketing, the company is committed to technology-driven experience marketing of new scenes. Experiential marketing means to fully stimulate and mobilize consumers' perceptual and rational factors such as senses, emotions, thinking, actions, associations and other perceptual and rational factors through a variety of interactive means in a pre-set scene. a marketing means to promote two-way communication between consumers and brands. In the first three quarters of 2019, the company's operating income was 2.063 billion yuan, + 21.17% compared with the same period last year, and the net profit was 149 million yuan, + 10.67% compared with the same period last year.
The main businesses of Diansheng shares are interactive display, retail terminal management, brand communication and commodity sales, accounting for 43%, 26%, 19%, 12%, respectively, of revenue in 2018. (1) interactive display mainly includes car show, mobile tour exhibition, test drive and other services; (2) retail terminal management mainly includes promotion management, tally management and sales representative management and other services; (3) brand communication mainly includes brand strategy and creative services, public relations services, digital marketing and other services; (4) commodity sales are mainly fast consumer goods sales in cooperation with BABA Retail.
The domestic advertising market is growing steadily, the strong interaction of experiential marketing is consistent with the marketing pain points, and the company's national layout can be replicated strongly. (1) with the steady growth of the domestic economy, the price of online traffic continues to rise and the entrance value of offline traffic is revalued; (2) experiential marketing can effectively reach consumers and help brand owners to achieve a closed loop from marketing to sales. (3) the high immersion and real-time interaction brought by VR and other new technologies are highly consistent with the needs of marketing, and the company has set up a nationwide marketing scene execution network with wide coverage and high replicability.
Electro-acoustic shares of the IPO proposed to issue no more than 42.33 million shares, raised funds of 480 million yuan will all be used for the main business-related projects and supplementary working capital. Fund-raising projects are mainly for the expansion of experience marketing implementation network, the construction of big data operation platform and information management platform. We believe that the completion of the fund-raising project will strengthen the company's advantages in the field of experiential marketing, expand customer scale, enhance customer stickiness and strengthen internal management capabilities, and enhance the company's market competitiveness and profitability.
Electro-acoustic shares show a higher ROE level in the horizontal comparison of the same industry, with an average ROE of 21.29% in the last three years, mainly benefiting from the high gross profit margin of the company's core business experience marketing.
At the same time, the company's revenue growth rate is in the upper reaches of the industry, during which the expense rate decreases year by year, but the accounts receivable turnover rate still needs to be improved.
As an experience marketing service company, Electro Acoustic shares have the attributes of both advertising agency and media. We select the companies related to the advertising industry that have been listed to compare the relative valuations of the same industry, and the current average valuation of the industry is about 25 times in 2019. The company's issue price is 10.20 yuan, which is 23 times PE in 2018.
Risk hint: downstream industry prosperity change risk, customer concentration is high risk, fund-raising project does not meet the expected risk
