Master Lu is a leader in the domestic system tool software industry and has huge potential for growth.
The company's new business focuses on certified used smartphones and factory smartphones, which will enhance the synergy of Master Lu's various business lines.
A leading provider of software and system evaluation and monitoring solutions
According to F&S data, based on the number of users, Master Lu was the largest provider of PC and mobile device hardware and system evaluation and monitoring solutions in China in 2018. Its MAU (monthly active users) market shares for personal computers and mobile devices reached 98.8% and 58.9%, respectively. Master Lu software is its most famous product. It can check the authenticity of hardware, evaluate system configurations, measure the temperature of computers, check for viruses, etc. The company mainly provides free products in exchange for online traffic and monetizes through online advertising and online gaming businesses. The company is further expanding its business through sales of electronic devices. By the end of 2019, the total MAU of all products reached 152.6 million, an increase of 34.3% over the 1136 million in the same period last year. Master Lu is a subsidiary of Chinese software giant Qihu 360 [601360.CH].
The combined power of online and offline businesses is expected to boost the company's development
In 2017, the company set up a new business line, sells used personal computers and other electronic devices, and launched a series of physical experience centers to provide professional and customized smart hardware maintenance services, bring customers online product experience opportunities, and sell electronic devices. The company will continue to focus on online business, but at the same time, it is anticipated that the offline physical experience center will act as a window and extension of its online business, expand the brand's influence, and supplement the online business by providing on-site demonstrations of the company's technology.
The company believes that the continued growth and scarcity of demand for such offline services will drive offline business to become one of the main sources of revenue in the future.
The market is overly concerned about related transactions
Master Lu's main clients are Qihu 360 and Songheng Network, both of which are major shareholders of the company. The market is concerned about these relationships, but we think the market may be overly concerned: a) the Chinese advertising market has different advertising networks (AliMama, 360 navigation), which establish uniform cooperation rules and pricing mechanisms for all publishers in the league; b) the Chinese Internet market is divided into different camps led by different internet giants (such as Alibaba, Tencent, ByteDance, and 360). Cooperation within the camps is driven by commercial factors such as supply and demand; c) Although Master Lu expects to maintain this relationship, the company is reducing its dependence on these two companies. For example, the continued growth of its offline business and online gaming business will enhance its independence.
Growth engine
Despite the company's leading position, it is expected that the company's hardware and system evaluation and monitoring software will continue to grow strongly for the following reasons: a) the market demand for system tool software that analyzes, competes, configures, and optimizes electronic devices continues to grow; b) the demand for traditional PCs, tablets, and new electronic devices continues to grow. In addition, the company plans to further develop overseas markets. Currently, the company's Dual Space and Easy Clean products for overseas markets have experienced rapid growth and great success. The company also hopes to explore growth opportunities through a diversified software product portfolio. Its e-commerce platform for used electronic devices grew steadily during the economic downturn. This is because customers prefer to buy certified products with good quality control.