Event: The company achieved revenue of HK$2,001 billion in 2023, up 38.70% year on year. Its domestic business revenue increased 43.68% year over year to HK$1,002 million. Overseas business was mainly in the US, and revenue increased 32.80% year over year to HK$983 million, accounting for 49.11% of total revenue. The company's gross profit level was further improved. The gross margin increased by 1.5 pct to 42.49% year on year, and EBITDA increased 6.59% year over year to 319 million.

The subscription service product matrix continues to improve, and the service field continues to expand. In 2023, the company's subscription service revenue increased 58% year over year to HK$870 million. In 2023, the company extended its service capabilities to a wider range of copyright fields. During the year, it expanded new customers in the fields of trademarks, literary works, commercial images, etc., and provided intellectual property services for top international events. In addition to traditional live streaming, it also developed other commercial monitoring areas such as licensed product protection and hidden sponsor marketing. In addition, it also carried out a number of technical service upgrades and product development to optimize the user service experience; the company also made many important developments after successfully integrating with the Particle Technology business. Not only did it expand the large-scale UGC platform as an upstream content cooperation platform and reached full content cooperation Business has been launched in important provinces and cities in China, and content operation cooperation has been reached with major telecom operators' video bases, and large-scale revenue has been generated.

Actively promote technological upgrading and product innovation, and further provide incremental space with value-added services. In 2023, the company's value-added service revenue increased 27% year over year to HK$1.13 billion, accounting for 57% of total revenue. Demand for the company's international monetization business continues to grow in the streaming media transformation environment, and contracts between the Group and major customers continue to be upgraded, greatly increasing the content management penetration rate for major customers; in the Chinese market, the company systematically manages its copyright through platform construction for customers, and has completed participation and ongoing construction in multiple projects. At the same time, China's overseas content services have shown huge demand. Currently, the company has established continuous cooperation with many major Chinese content parties and continuously expanded the scope of services. We believe that with the development of the digital content industry, the company will continue to deploy new products and technologies to enhance service capabilities, and the expansion of value-added services and product matrices is expected to continue to provide reliable support for performance growth.

Actively adapt to the development trend of Web3 & AI and expand the construction of new business formats for copyright content. As generative AI unleashes creative productivity, high-quality copyright library materials are one of the cornerstones of industry development. The industrial role of the company and its major customers has not changed, and the scale of the copyright protection and monetization industry will expand rapidly as the scale of content expands rapidly and rights usage scenarios become more complex. The company actively grasps the development opportunities brought by new technology, and has made extensive forward-looking technical reserves and layouts. The R&D and operation center built by the company in Florida, USA has already been put into operation. In addition, the company signed a cooperative project with a subsidiary of China Central Radio and Television to launch the construction of a blockchain-based one-stop service platform for copyright protection and trading.

Profit forecasting and valuation analysis. We expect the company's 2024-2026 revenue to be HK$2,501, 3.06 and HK$4.536 billion, respectively. Referring to comparable companies, we gave the company 2.0~2.5 times dynamic PS in 2024, corresponding to a reasonable value range of HK$2.23 to 2.79 HKD/share, maintaining a “superior to market” rating.

Risk warning. The application process of watermarking technology fell short of expectations, and content policy regulation was uncertain.