Event
The company recently released its half-yearly report on 2023. 2023H1 achieved 1.002 billion yuan in operating income, an increase of 17.66 percent over the same period last year, and its mother's net profit was 12.5062 million yuan, reversing losses over the same period last year.
Comment
Data elements drive income growth, while AI reduces costs and increases profitability. The value of the company's data elements continues to be released, and the business structure is constantly optimized. 2023H1 digital traffic effects business achieved revenue of 876 million yuan (year-on-year + 20.80%), accounting for 87.43% of revenue (+ 2.27pct); brand content traffic business achieved revenue of 85 million yuan (year-on-year-23.36%), accounting for 8.44% of revenue (- 4.51pct); and game business of 15 million yuan (+ 17.81%), accounting for 1.47% of revenue.
The gross profit margin increased to 17.41% from the same period last year, mainly due to the reduction of cost and efficiency in the intelligent marketing of AI Central Taiwan. In terms of expenses, sales expenses increased from 2.04pct to 6.26% compared with the same period last year, mainly due to the increase in labor costs in traffic business and the increase in projects such as private product development and brand incubation; the rate of management expenses increased to 8.18% year-on-year, and financial expenses decreased to-0.23% due to the increase in interest income; and R & D expenses increased by 0.33pct to 3.06% year-on-year. The net interest rate of 2023H1 is 1.79% (+ 1.75pct), the income from asset disposal is 11.4442 million yuan (2022H1 is 9200 yuan), and the net profit after deducting non-return is 104.98% higher than the same period last year.
Innovate the "park + platform + finance" model to release the value of data elements. The Shanxi data flow Ecological Park, which the company invests in and operates, revolves around the industrial chain of "aggregation-circulation-application" of data elements, drives all kinds of data elements to gather to the park across regions on the industrial chain, and constructs a full-stack closed-loop system of "data elements + scene application + intelligent algorithm", which is expected to accelerate the virtual aggregation, platform operation and network coordination of industrial resources in the future. By the end of 2023H1, the number of enterprises entering the park has exceeded 570, covering more than 10 areas of digital economy, such as digital intelligent manufacturing, digital energy, digital e-commerce, etc., the circulation and transaction scale of data elements has exceeded 3.3 billion yuan, and the cumulative revenue of enterprises entering the park has exceeded 19.5 billion yuan.
Build AI middle platform model and transform intelligent marketing. The company's innovative AI mid-platform model is expected to promote the transformation of meta-universe marketing, mobile application distribution, short video marketing and other scenes to intelligent marketing: 1) meta-universe marketing: the company's virtual digital human "Tianqi" has gained nearly 5.5 million fans, more than 400 million video views, nearly 30 million Douyin points, and more than 1 billion related topics. 2) Mobile application distribution: the intelligent recommendation system for mobile application distribution takes the intelligent recommendation algorithm as the core and constantly optimizes the recommendation experience. the number of new registered users has exceeded 13.2 million, and the total number of registered users has reached 299 million. 3) short video marketing: the company uses intelligent marketing assistants to produce nearly 1 million short videos, the company creates 300000 plans for 1200 + advertising accounts every day, and the back-end of the platform interacts with media interfaces more than 1000 times a day. As of 2023H1, the company has served a total of 1140 customers.
Profit forecast
We expect the company to achieve operating income of 20.43,23.13 and 2.521 billion yuan from 2023 to 2025, an increase of 17%, 13% and 9% over the same period last year. The net profit of the parent company is 0.61,1.02 and 138 million yuan, an increase of 122%, 68% and 35% over the same period last year, corresponding to EPS of 0.04,0.06,0.08 yuan respectively, and the PE corresponding to the stock price on September 8, 2023 is 150-89-66 times, maintaining the "overweight" rating.
Risk Tips:
The risk that the progress of technological development is less than expected; market competition aggravates the risk; asset impairment risk; macroeconomic risk.