Successfully removed from the head anchor, and the Matrix vertical live broadcast room quickly fissified
Since making friends changed from traditional radio and television business to e-commerce live streaming and new media marketing operations, unlike other MCN organizations, the company has changed its focus on becoming a leading anchor and focusing on brand IP. While the number of live broadcasts by Lo Wing-ho gradually declined, the company trained a group of new anchors and built a “1+N” vertical live streaming matrix to split from one main account to vertical accounts in various segments, with the goal of becoming a new online retail company. Each live broadcast room is endorsed with the “make a friend” prefix to create an institutional brand IP with “make a friend” as the core. The advantage of standardizing live broadcast rooms is that they can be rapidly expanded on a large scale. So far, the company has set up more than 30 live broadcast rooms, more than 11,000 cooperative brands, and a team of more than 100 anchors. Meet Friends successfully achieved cross-platform operation. It was the first live streaming agency to lay out the three major e-commerce platforms Douyin, Taobao, and Jingdong. In 2023, the number of live streaming fans exceeded 50 million, and GMV surpassed 12 billion yuan (RMB, same below), entering the leading e-commerce market for live streaming.
Driven by technology, the “Friend Cloud Platform” improves operational efficiency
Make friends and focus on the ability to standardize the operation of the live broadcast room. The company uses scientific and technological innovation to explore the BI field of e-commerce, and self-developed the “Friend Cloud Platform” to automate the entire e-commerce live streaming process. By collecting data and using technical means such as predictive analysis, the platform helps live broadcast rooms better understand market trends, optimize operating processes, and enhance customer experience to achieve the goal of increasing sales revenue. The platform helps companies make decisions and improve management efficiency in various aspects such as talent recruitment, merchant entry, hot product recommendation, and product selection. With the help of cloud platforms, the company's sales and administrative expenses fell from 43.0% of revenue in 2021 to 40.5% in 2023.
Proprietary products and overseas markets are expected to create a second growth curve in the long term
Making friends is planning to deepen the layout of the industrial belt, search for specialty products and industrial belts as self-operated products. While providing consumers with high-quality and cost-effective products, the company helps manufacturers develop customer acquisition channels. The company is also exploring the live streaming business overseas and using social media to set up a live streaming business in Southeast Asia. We believe that with reference to the experience of Interbank Oriental Selection (1797 HK), self-employed products and overseas markets can further enhance the company's profitability in the long term.
The current valuation is only 8.6 times the FY24E price-earnings ratio
As the scale of the live streaming business expanded, FY23 had revenue of 1.07 billion, up 152.4% year over year, and net profit of 120 million (180 million after adjustment). Driven by multiple platforms and diversified live streaming stations, FY24E's GMV is expected to be around 16 billion, and the GMV conversion rate continues to increase. Revenue increased 43.5% year over year to 1.54 billion, and net profit is 170 million, up 45.5% year on year. Currently, the company's valuation is about 8.6 times the FY24E price-earnings ratio, which is about 14% to 55% off compared to the valuation of companies in the live streaming industry.
Risk warning: 1) Regulatory risks in the live streaming industry; 2) Increased competition in the live streaming industry; 3) New live streaming rooms, self-operated products, and overseas business expansion fall short of expectations.