The Zhitong Finance App learned that Dongxing Securities released a research report stating that it maintains the “recommended” rating of Yingzhou (03700) and expects net profit of 35.419/494 million yuan in 2023-25. The company started with a single broadcast product, and successfully implemented live streaming, social networking, blind dates, skits, and overseas product layouts. Currently, the short drama business and overseas markets are becoming new growth points for the company. The company achieved operating income of 3.126 billion yuan in the first half of 2022, an increase of 38.4% over the second half of 2022; net profit of 193 million yuan and adjusted net profit of 206 million yuan.
The main views of Dongxing Securities are as follows:
The live streaming social ecosystem continues to improve, and skits have become a new growth point.
In the first half of 2023, the company achieved revenue of 3.126 billion yuan, of which content service revenue was 472 million yuan. It had not yet incubated this business in the same period last year; other revenue was 339 million yuan, an increase of 128% over the previous year. The rapid increase in content service revenue stemmed from the company starting to lay out the short drama business in the second half of last year and seizing the opportunities for rapid growth in the short drama market this year. Currently, the company's skits are in the first tier of the industry; other revenue comes from the company's innovative business segments, and the growth mainly comes from overseas and other business layouts. Looking ahead to the second half of the year, the company's live streaming social networking ecosystem continues to improve. The “Super Like” blind date business focuses on post-90s single youth and accelerates offline store expansion. Revenue from value-added services is expected to rise steadily over the first half of the year; skits have become a new growth point, and content service revenue is expected to maintain a relatively rapid growth rate.
The gross margin was stable, and the net profit turned into a profit.
(1) In the first half of 2023, the company's sales cost was 1,796 million yuan, with a gross profit margin of 42.6%, which remained stable; (2) Sales expenses of 962 million yuan, sales rate of 30.8%, an increase of 9.5 percentage points over the previous year, mainly due to the company building an innovative product matrix and short drama business promotion. Promotion expenses increased by 104 million yuan; management expenses of 100 million yuan, management expenses of 3.2 percent, a year-on-year decrease of 12.0 percentage points, mainly due to loss of reputation of the subsidiary Blueberry Social Network in the same period last year; R&D expenses of 143 million yuan; R&D expenses of 4.6 billion yuan %, remained stable; (3) The company's net profit was 193 million yuan, achieving profit. If the impact of such matters as impairment of goodwill and stock incentives is not taken into account, the company's adjusted net profit is 206 million yuan, and the adjusted net interest rate is 6.6%.
Strengthen overseas market expansion and actively deploy AIGC.
Audio and video social gameplay is becoming a “soft demand” for internet users around the world. Currently, Yingyu has launched several products overseas, covering many countries and regions such as Europe, America, and Southeast Asia. In the second half of 2023, the company will invest more resources in overseas markets to expand the number of overseas users and product penetration rate; in April 2023, the company connected to GPT3.5 turbo to actively explore AIGC development directions such as interactive social networking, AI music, AI script, AI operation, and digital human live streaming; in July, the company carried out technical cooperation with Kunlun World Wide to promote technology research and development of large-scale models and drive the intelligent evolution of live streaming and social networking services to AI.