Report summary:
[WantaXing BL Co., Ltd. EE] Product Filmora launched more than 10 AI tools, using AI to close the competitiveness gap. The company's product that currently accounts for the largest share of revenue is the video creative software Wanxing Meowing/Filmora. It is mainly aimed at semi-professional creators and some ordinary users, and is similar to products such as screenings. For semi-professional users, the basic functions of Filmora and screenplay are highly homogenized. The main difference is materials such as templates, filters, and stickers, which make it difficult to reflect the product competitiveness gap. Along with the advancement of the underlying technology of the big AI model, Filmora launched more than 10 AI tools. After comparative analysis, we believe that Filmora is more advantageous in terms of the diversity of AI functions. In addition to AI functions for screening, it has also launched functions such as AI Copilot, AI copywriting generation, and AI music generation, which can greatly improve users' creative efficiency and user experience in video production, thereby changing user preferences, increasing the number of paid users and user stickiness of Filmora, and opening up the product competitiveness gap.
The company continues to enrich its product matrix and effectively broaden its customer base. The company rapidly expanded its product matrix through self-development and mergers and acquisitions: 1) The company has successively acquired Yitu Software, Sharpening Stone, and Graphics Technology, and added products such as the drawing software Yitu series, the online prototyping and collaboration platform Inkjet, and the mobile video camera application Sweet Selfie to deepen the company's layout in office drawing and consumer entertainment scenarios; 2) The company seizes generative AI development opportunities and continues to release new products, such as Wanxing Broadcom can use AI to generate oral broadcasts and digital human marketing videos, mainly for cross-border e-commerce customers; Wan Xing Zhi uses AI to generate presentations and explanatory videos, mainly aimed at knowledge-sharing bloggers, education and training staff. The new products are expected to gradually generate large-scale revenue, adding impetus to the company's performance growth.
The company comes with its own implementation scenario and will continue to benefit from AI technology upgrades. We believe that the long-term growth of Wanxing Technology is closely related to the iteration of AI models. The company adopted the method of “large external cooperation model+small model developed independently” to improve the effectiveness of its AI tools. On the overseas side, the company is one of the first manufacturers to connect to the GPT model, and features such as Yitu Overseas Edition and Filmora 13 have been launched; it is expected that after OpenAI opens the Sora API interface, the company will also be able to access it as soon as possible. On the domestic side, the company has adopted general-purpose models such as Wenxin Yiyan and Kimi. In terms of self-developed models, the company released a “sky curtain” model based on domestic computing power, focusing on vertical scenarios and providing algorithm technical support for various creative software products under the company.
Investment advice: We expect the company to achieve revenue of 1,50/18.6/2.26 billion yuan in 2023-2025, an increase of 27%/24%/22% year-on-year; achieve net profit to mother of 0.84/132/186 million yuan, an increase of 104%/57%/41% year-on-year. In the past, Wanxing Technology traded 2.9-17.6 times P/S; comparable to the company Jinshan Office/Foxit Software/Meitu traded 25/9/4 times P/S in 2024. Referring to the three, we gave the company 10 times P/S in 2024, giving it a “buy” rating.
Risk warning: The results of the company's AI function development and launch fell short of expectations; progress in the transformation of the subscription system fell short of expectations; market competition intensified.