Zhejiang Internet released the 2023 Interim Report: Revenue for the first half of 2023 was 5.722 billion yuan (-26% year on year), attribution and non-profit deduction of 0.71 billion yuan, 0.697 million yuan (YoY +10.7%, +8.5%); looking at a single quarter, total revenue and total operating costs for the second quarter of 2023 were 29.3 billion yuan, 2.88 billion yuan (-20%, -20.6% YoY), and attribution and non-profit deducted 0.33 billion yuan. 32 billion yuan (+13.56 percent, +12.15%). On August 29, 2023, it was announced that a fixed increase of 800 million yuan (485 yuan/share, issued 165 million shares) was completed, and the company's share capital had changed from 1,322 million shares to 1,487 million shares.
Key points of investment
In 2023, we will not simply pursue an advantage in scale, but rather optimize the main business structure to enhance the profitability of the main business. 2023, Zhewen Investment's shareholding ratio is 16.47%, and long-term value will be anchored
In the first half of 2023, brand marketing in the company's main business, digital marketing, continued to deepen the layout of leading customers (continued to have a leading market share position in the automotive industry segment, and accelerated the promotion of non-automotive brand customer service, and further expansion in terms of central state-owned enterprise customers); the effect marketing business side maintained close cooperation with leading media such as Massive Engine; overall, in 2023, the company will not pursue a simple advantage in scale, optimize the main business structure and improve the profitability of the main business (revenue decline in the first half of 2023). In August 2023, the company's total assets and net assets will increase at the same time, the balance ratio will decline, and Zhejiang Cultural Investment's holding ratio will rise to 16.47%. The capital raised will mainly focus on technology upgrades and innovative business sectors. The company is expected to strengthen the digital culture sector under the leadership of Zhejiang Cultural Investment to help the company go from digital marketing to a smart marketing ecosystem to advance digital culture.
The development of AI applications is expected to become an important engine for the company's new journey, and the company's digital culture strategy will go one step further
The company has implemented industrial applications in fields such as virtual digital people, the AIGC creator community (the AI painting tool “Rice Painting” of the subsidiary Mita Community completed a new upgrade in July), automobiles, and the cultural tourism metaverse. The successful completion of the fixed increase will bring capital supplies and resource preferences to the company's development on the AI racetrack. It will help promote innovation in the company's business model, business upgrade and changes in the development system. It will also lay the foundation for corpus accumulation in the marketing industry and digital culture industry. The successful completion of the fixed increase is another foothold and a new starting point for the company's development. As the main digital culture technology platform under Zhejiang Cultural Investment, the company is expected to use AI as the fulcrum to leverage new markets.
Continuing to advance the metaverse to the 2023 Asian Games
In the first half of 2023, the company promoted the launch of the “Greek Mythology AR Art Park”, the first large-scale virtual and real integrated experience space in China. Through MR support and new technology, the company was able to reconstruct cultural scenes and further explore the symbolic value of cultural IP. At the same time, the company was the official online brand promotion service provider for the 19th Hangzhou Asian Games and an investor in LGD Electronics and Technology Club to launch a new stage of digital marketing; it will also combine its superior resources in digital marketing and metaverse marketing to empower the Hangzhou Asian Games e-sports event.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 124.5\ 138.3\ 15.38 billion yuan respectively, gross profit of 271\ 3.3\ 398 million yuan, EPS is 0.18\ 0.22\ 0.27 yuan respectively, and the current stock price corresponding to PE is 33\ 27.2\ 22.6 times, respectively. As a leading enterprise in digital marketing and digital culture, the fixed increase was completed in August 2023 to help the company empower the digital culture industry with the “AI+” model, thereby maintaining the “buy” investment rating.
Risk warning
Risk of increased market competition, risk of loss of core talent, risk of accounts receivable, risk of impairment of goodwill, risk of loss of goodwill, risk of high concentration of media traffic suppliers, risk of tax policy risk, risk of falling short of expectations in new business, risk of COVID-19 fluctuation, risk of macroeconomic fluctuations.