Zhitong Finance App learned that Zhishang Securities released a research report stating that maintaining the “Buy” rating of Make Friends Holdings (01450), as a leader in the live e-commerce industry, the multi-platform layout+deep-cultivation matrix strategy helps growth. It is estimated that 2024-2026 operating income will be 13.68/16.77/1,984 million yuan, respectively, and net profit to mother will be 88/250/343 million yuan, respectively; adjusted net profit (excluding equity incentive costs) is 238/3.00/369 million yuan, respectively. The company released its 2023 financial report. In 2023, it achieved revenue of 1.07 billion yuan, an increase of 152.4% year on year; commodity transaction volume (“GMV”) exceeded 12 billion yuan; adjusted net profit of 180 million yuan, an increase of about 601.3% year on year.

The main views of Zheshang Securities are as follows:

Multi-platform layout drives high GMV growth in 2023

In 2023, Jiaoyou Holdings completed the “multi-platform layout” of Douyin, Taobao, and JD. The multi-platform layout+matrix model led to rapid GMV growth in Jiaoyou live broadcast rooms. In 2023, GMV exceeded 12 billion yuan, an increase of 71.4% over the previous year. In 2023, Jiaoyou 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 gross margin has improved, and the profit margin is higher than in '22

In 2023, the gross profit margin of Jiaoyou 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. In 2023, the adjusted net profit of Jiaojiaoyou Holdings was 180 million yuan, up about 601.3% year on 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 number to create a replicable growth curve

According to iResearch, the size of China's live e-commerce market reached 4.9 trillion yuan in 2023, with a year-on-year growth rate of 35.2%. The CAGR is expected to be 18.0% from 2024 to 2026. The industry will continue to grow rapidly. Combined with policies regulating the development of the live e-commerce industry, leading live streaming e-commerce organizations still have opportunities for development. 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.