Main points of investment

Data barrier: holding a large amount of genuine data, actively welcome the new era of 100 models. The development of domestic generative large model needs not only a large amount of data, but also high-quality and copyrighted data. Copyright and data disputes related to large models occur frequently at home and abroad, the relevant regulatory laws tend to be improved, and more attention has been paid to data compliance. Chinese online has more authentic data than 60TB, including text / audio / video types, covering novels, popular science, society and many other categories. It is expected to benefit from the multimodal era by continuously updating data through literary websites and resident authors, and magnifying the value of data assets through complete data protection and copyright protection systems.

Content barrier: holding the head IP, multi-mode AI opens the cash space. The company focuses on high-quality IP, there are various types of IP, classic IP enduring. For example, Shura has been unabated since it was serialized in 2013, and has been adapted into audio books and comics, and animated trailers have been released. In June 2023, the company announced that it intends to become the controlling shareholder of Hanmu Chunhua and obtain the high-quality animation IP "Luo Xiaohei Zhan Ji". The multimodal large model industry is developing rapidly, and the company also has related layout, which has been explored in the fields of audio books, comics, animation and video. The multimodal model is expected to further expand the capacity of IP adaptation, reduce the cost of IP adaptation and enhance the user experience.

Financial performance: 2022 results under pressure, 2023 is expected to achieve double growth in revenue and profit. In terms of revenue, the company will be affected by macro and industry adverse factors in 2022. It is expected that the company's revenue growth rate is expected to improve significantly from 2023 to 2025 as the unfavorable factors fade, AI adaptation technology iteration, and data demand increase. The report of overseas Crazy Maple Studio subsidiaries on May 1 has a certain impact on income, but has a limited impact on homing net profit. In 2022, the company has fully recorded the impairment of education business, which will no longer affect future financial performance; the company's copyright costs have been amortized year by year, and the proportion of revenue as a whole shows a downward trend; it is noteworthy that the role of AI in reducing operation and maintenance costs has been initially reflected in the financial data of overseas subsidiaries, and we are optimistic that the company will further reduce costs and increase efficiency and improve profits through iterative AI technology and deepening application.

Profit forecast and investment rating: taking into account the impact of AI R & D investment on the cost side, we reduce our EPS forecast for 2023-2025 from 0.22 to 0.30 to 0.18 to 0.24 to 0.31. The company's current stock price corresponds to 2023-2025 PE times 83-62-48, we are optimistic about the company's IP+AI business layout and quality content barriers, maintain the "buy" rating.

Risk Tip: overseas collection of price rise risk, copyright litigation and piracy risk, AI technology development is not as expected risk.