The company released its 2023 mid-year report. 2023H1 achieved revenue of 182 million yuan, up 135.5% year on year; net profit of 31.2 million yuan, up 185.6% year on year; realized net profit of 1.03 million yuan, up 131.1% year on year. Among them, 2023Q2 achieved revenue of 89 million yuan, an increase of 285.4% over the previous year; realized net profit of 4.9 million yuan, an increase of 120.3%; and achieved net profit of 1.77 million yuan, an increase of 107.6% over the previous year.
Traditional racing business - the macro environment has improved, and the business is back on track. The company has been deeply involved in the industry for many years and has formed the layout of the entire industry chain in the automotive sports field. The core racing business, venue management, and club management segments achieved revenue of 0.42/1.10/09 billion yuan during the reporting period, with a year-on-year growth rate of 92.8%/192.5%/112.7%. Auto sports are mostly offline activities. Previously, the pandemic had a great impact on the company's business development. Following the shift in prevention and control policies at the end of 2022, the company's business has gradually recovered, consumer demand for offline scenarios is strong, and the company's performance has been impressive during the reporting period.
Digital sports business - Expanding the online scene around “fitness for all” and creating new growth poles.
In 2021, the company's development strategy was upgraded to comprehensively lay out the two major national fitness and physical education tracks.
During the reporting period, in terms of national fitness, the company's shareholding company Yuedong World's star product “Yuedong Circle” platform matrix DAU was about 1.78 million, and the “Sports Bank” served more than 1,000 resident companies; in terms of physical education, the “extracurricular sports platform” served more than 1,000 schools, and the sports assessment system has served many regions such as Yueyang, and has been piloted in key cities such as Shenzhen. At the same time, the company continues to promote the construction of digital sports event IP and has become the exclusive operator of the National Smart Community AI Fitness Conference and the Qinghai Lake International Road Cycling Race Online Race. 2023H1, the digital sports sector achieved revenue of 7.33 million yuan, exceeding the annual revenue of 1.23 million yuan in 2022.
Actively embrace technological innovation and focus on AIGC+VR. The company's star app “Happy Circle” has been widely used in many scenarios, and has been widely used in many scenarios, and was judged by the Shenzhen Artificial Intelligence Industry Association as the initiator of the AI sports era. During the reporting period, the company further increased AIGC technology research and development efforts. On the industry side, the company reached a strategic cooperation with Baidu Network News to jointly develop sports training models, AI fitness and other directions; on the talent side, the company invested in establishing a subsidiary, Shanghai Shengsi, to form a core technical team to build a competitive barrier for the company's digital sports business; on the technical side, the company will continue to cultivate emerging content, services and products based on the original “VR immersive spectator products” to meet users' new consumer needs.
[Investment advice]
During the reporting period, the company's traditional racing business recovered steadily, the digital sports business performed brilliantly, and the two-wheel drive pattern was prominent. We maintain our previous profit forecast for the company. We expect the company to achieve operating income of 482/710/1,057 million yuan, net profit of 0.73/1.13/178 million yuan, EPS of 0.45/0.70/1.10 yuan/share respectively, corresponding PE of 39/25/16 times, and maintain a “buy” rating of 39/25/16 times.
[Risk Reminder]
Digital business development fell short of expectations
Seasonal fluctuation risk