Main points of investment
The company's new curve exploration has made initial achievements: benefiting from the multi-product and multi-track strategy, the company has achieved accelerated revenue growth. In 2021, revenue reached 9.2 billion yuan, an increase of 85% over the same period last year, of which social products and dating products achieved revenue of 5.7 billion yuan and 600 million yuan respectively, an increase of 276% and 48% respectively over the same period last year. The profitability increased slightly in 2021, and the adjusted net profit reached 450 million yuan. The driving force of the company has successfully changed from a single product to a multi-product matrix.
The precipitation in the live broadcast field and the strong China and Taiwan jointly support the company's new strategic development. On the one hand, Yingke Live, as a live broadcast platform with leading technology and strong user stickiness, its stable cash flow supports the company's exploration in new areas. On the other hand, the "Kaihai" mid-Taiwan system set up by the company in 2020 provides technical support for the company's multi-product, multi-track and multi-market strategy by improving the efficiency of product research and development and enhancing the ability of product realization. In addition, the company's internal horse racing, partnership, emphasis on the project profit cycle assessment and other mechanism design is also conducive to product innovation.
Strangers socializing, cloud dating and overseas markets will continue to contribute more. (1) socializing with strangers:
The overall market of the industry is stable, but there are still opportunities for subdivision, and we are optimistic about the long-term development of the value-added service model represented by Soul, Jumu, etc. The company realizes the breakthrough through the multi-product strategy, fully verifies the commercialization ability of the company under the strong middle-Taiwan mechanism. (2) Cloud dating: driven by demand and catalyzed by the epidemic situation, there is still room for growth in the domestic online dating market. Based on Yingke live broadcast technology and commercial experience, the pace of growth and commercialization is good, and there are commercial realization opportunities for online and offline activities in the future. The new product "Super Love" realizes the closed loop of online and offline matchmaking scenes, improves the weak authenticity of online matchmaking, and is expected to contribute new increments to the company's matchmaking business. (3) going out to sea: competition in overseas social markets is fierce, but there are still opportunities in subdivided tracks and emerging markets. For example, the paid social interactive reading market, according to iResearch, the overseas market of Chinese online literature is expected to reach 3.1 billion yuan in 2021, an increase of 172% over the same period last year. We are optimistic about the reuse of the company's existing experience and resources in overseas markets, further increase market share and effectively drive performance growth in 2022 with the initial success of the model in 2021.
Against Match and Chizi City, the future of the company is promising. Match is a giant in the online dating industry in Europe and the United States, and Chizi City Technology is the main overseas social product company in China. They are not only the main competitors of the company's social products, but also provide a lot of reference for the company's development. (1) comparison of development paths: all three expand the social product matrix through acquisition / self-research to drive revenue growth. Among them, Match invests more in acquisition, and its product matrix covers a number of head targets.
(2) comparison of user assets: there is still a gap between the size of Yingke users and Match, but users pay more deeply in its charging model based on virtual gifts. (3) Financial comparison: the limitation of business model makes Yingke's profitability weaker than Match, but there is still room for optimization in gross profit margin and expense rate in the long run.
Profit forecast and investment rating: we are optimistic about the company's ability in product development and commercialization. we expect the company to adjust its EPS to 0.24max 0.27max 0.30 yuan in 2022-2024. with reference to the average valuation of overseas companies in the live broadcast industry and social industry, we will give the company 10 times PE in 2022, with a target price of HK $2.91. the company's current price is cost-effective and covers for the first time, giving the company a "buy" rating. (note: unless otherwise specified, the exchange rate of RMB against Hong Kong dollar in this document is HK $1 = 0.8391 RMB on 2022-4-29.)
Risk hints: the entry of the new track is not as expected, the competition on the social track in overseas markets is fierce, and the changes in regulations or policies in overseas markets are not as expected.