Key points of investment
Jiaoyou Holdings released its 2023 financial report. In 2023, it achieved revenue of 1.07 billion yuan, an increase of 152.4% over the previous year; commodity transaction volume (“GMV”) of more than 12 billion yuan; and adjusted net profit of 180 million yuan, an increase of about 601.3% over the previous year.
Multi-platform layout drives high GMV growth in 2023
In 2023, Jiaotou Holdings completed the “multi-platform layout” of Douyin, Taobao, and JD. The multi-platform layout+matrix model led to rapid GMV growth in the GMV broadcast room. In 2023, GMV exceeded 12 billion yuan, an increase of 71.4% over the previous year. According to the company's announcement, the GMV for making friends in the first quarter of 2024 was about 2,432 billion yuan, an increase of 25% over the same period last year, maintaining a relatively rapid growth trend.
In 2023, Jiaotou Holdings' new media service revenue was 990 million yuan, up 226.8% year on year. The revenue share increased from 71.1% in 2022 to 92%, becoming an important driving force for revenue growth; the corresponding commission rate for making friends with goods was 8.2% (note: commission rate = new media service revenue/GMV).
Gross margin has improved, and profit margins are higher than in '22
In 2023, the gross profit margin of Jiahuai Holdings was 52.8%, a year-on-year change of +6.2pct; the gross profit margin for new media services was 54%, with a year-on-year change of +2.7pct. The adjusted net profit of Jiaoyou Holdings in 2023 was 180 million yuan, an increase of about 601.3% over the previous year, and the corresponding adjusted profit margin was 16.8% (6% in 2022). Along with the development of the live e-commerce business, the company's overall profitability increased.
Multi-platform layout+deep cultivation matrix to create a replicable growth curve According to iResearch, China's live streaming e-commerce market reached 4.9 trillion yuan in 2023, with a year-on-year growth rate of 35.2%. The industry is expected to have a CAGR of 18.0% in 2024-2026. The industry is still growing rapidly. Combined policies regulate the development of the live e-commerce industry, and leading live streaming e-commerce organizations still have development opportunities.
As of April 2024, Jiaoyou Holdings had more than 30 live streaming rooms, more than 50 million followers across the network, and more than 11,000 partner brands. The company independently developed the “Friend Cloud” platform and used technology to automate the entire live streaming process and improve operational efficiency. Along with the multi-platform layout+deep cultivation of the Matrix number, the dependence on a single leading anchor gradually decreased, thus creating a replicable growth curve.
Profit forecasting and valuation
Make friends as a leader in the live e-commerce industry, with a multi-platform layout+deep cultivation of the Matrix strategy to help growth. We expect revenue of 2024-2026 to be 13.68/16.77/1,984 billion yuan, respectively, +27%/+23%/+18%; net profit to mother will be 1.88/2.50/343 million yuan, and corresponding PE is 10.0x/7.6x/5.5x respectively; adjusted net profit (excluding equity incentive costs) will be 238/3.00/369 million yuan respectively, and corresponding PE 7.8x/6.2x/5.0x, maintaining a “buy” rating.
Risk warning
Industry competition intensified; new business development fell short of expectations; consumption recovery fell short of expectations.