Core views

We believe that Zhejiang digital culture mainly benefits from two aspects of the general trend of the industry:

1. Data elements: As the controlling shareholder of Zhejiang Big Data Trading Center, we benefit from Zhejiang's first-mover advantage as a pilot area for the construction of important data elements. Currently, the policy is still at an important stage where implementation continues. There are still many policies to be implemented at the national level. Follow the official document of the “Data Factor X” action plan and the public data price formation mechanism jointly discussed by the NDRC Price Department and the National Data Bureau. As the implementation of the policy accelerates, Zhejiang is an important pilot region, and the company is expected to take the lead in benefiting from data element market construction with its location advantage.

2. The cornerstone of the game: Wingman Network is the cornerstone of performance, focusing on casual board games.

In recent years, the company has actively expanded the WeChat Mini Program channel. With the characteristics of casual board games such as small size, short time per game, strong interactivity, and strong stickiness, they are in line with WeChat's social product attributes, and are expected to benefit the incremental market of mini-games.

We expect the company to achieve net profit of 733/807 million yuan in 2023-2024, a year-on-year increase of 49.66%/10.09%. The PE corresponding to the closing price on December 27, 2023 is 18.26/16.58 x, giving it a “buy” rating.

Investment advice:

We believe that Zhejiang digital culture mainly benefits from two aspects of the general trend of the industry:

1. Data elements: As the controlling shareholder of Zhejiang Big Data Trading Center, we benefit from Zhejiang's first-mover advantage as an important pilot region and the construction of a national data factor market. Currently, the data factor market is still at an important stage where policies continue to be implemented. Follow-up policies have yet to be implemented at the national level. Follow the official documents of the “Data Factor X” action plan and the relevant documents on the public data price formation mechanism discussed jointly by the Price Department of the Development and Reform Commission and the National Data Bureau. As the implementation of the policy accelerates, Zhejiang is an important pilot region, and the company is expected to take the lead in benefiting from data element market construction with its location advantage.

2. The cornerstone of the game: As the cornerstone of Zhejiang's digital cultural performance, Winger Network focuses on casual board games. In recent years, the company has actively expanded the WeChat Mini Program channel. With the characteristics of casual board games such as small size, short time per game, strong interactivity, and strong stickiness, they are in line with WeChat's social product attributes, and are expected to benefit the incremental market of mini-games.

We expect the company to achieve net profit of 733/807 million yuan in 2023-2024, a year-on-year increase of 49.66%/10.09%. The PE corresponding to the closing price on December 27 is 18.26/16.58 x, giving it a “buy” rating.