Zhewen Internet issued an announcement: In 2023, the company's total revenue was 10.818 billion yuan (yoy -26.59%), operating costs of 10.13 billion yuan (yoy -28.13%), profit attributable to mother was 192 million yuan (yoy +136.1%), deducted from non-profit of 126 million yuan (yoy +79.99%); profit and loss from fair value changes and disposal of financial assets and financial liabilities, mainly from non-financial enterprises, and net operating cash flow of 366 million yuan Yuan, cash flow improved; in a single quarter, 2023Q4's net profit was 78 million yuan (year-on-year loss, up 79.19% month-on-month); since the parent company's distributable profit in 2023 was negative, it is planned not to pay cash dividends in 2023, and the company has prepared 125 million yuan for impairment of various assets in 2023.
Key points of investment
2023 results come to an end, actively reduce operating risks, improve business quality, increase gross sales margin and net profit margin in 2024, consolidate the basic market and lead the new development of digital marketing
The decline in the company's revenue growth rate in 2023 was mainly due to the reduction of low-profit businesses (such as a double reduction in revenue costs due to active optimization and adjustment of the performance marketing business), actively reducing operating risks and improving the quality of operations, which in turn saw improvements in gross profit margin and cash flow. The company's gross sales margin increased from 4.33% in 2022 to 6.33% in 2023, and the net sales margin increased from 0.52% in 2022 to 1.76% in 2023.
The company's main business is digital marketing (brand marketing and effect marketing) and innovative business. According to the main business classification, the brand marketing revenue of the company's digital marketing business in 2023 was 3.04 billion yuan (yoy +15.12%). On the digital marketing effect marketing business side, the company took the initiative to increase gross profit margin on the basis of revenue reduction.
2023 is a year for the company to actively slim down and improve its quality. 2024 is a key year for the company to continue deepening mixed ownership reform. As a digital culture technology company controlled by the state, it uses the advantages of various sectors such as film and television content, cultural space operation, and cultural finance under Zhejiang Cultural Investment to deepen business cooperation in digital copyright transactions, IP operations, etc., and continue to innovate and accelerate in the field of digital culture under the premise of stabilizing the digital marketing infrastructure business, and promote investment in the cultural industry's computing power base and innovative business expansion.
With AI as the fulcrum, the dual power from infrastructure to application is expected to become an important engine for the company's new journey
In August 2023, the company's fixed expansion was successfully completed. As the main platform for digital culture technology under Zhejiang Weninvestment, the subsequent company will use AI as a fulcrum to leverage new markets from computing power infrastructure to application. On the hardware side, the Zhejiang Internet Hangzhou Intelligent Computing Center was officially put into operation in December 2023. It is expected that Zhejiang Cultural Investment strategic partners such as Zhijiang Laboratory will strengthen external cooperation in cutting-edge technology and application research and development to build the competitiveness of major enterprises in the digital culture industry chain; the AI application side has built the AIGC painting tool “Rice Painting”, the Wenshengwen tool “Mi Wen”, the metaverse scene generation tool “Digital Warrior”, and small marketing vertical industry copywriting models, etc., through virtual human IP “Jun Ruojin” and “Lan LAN” Field of explanation It obtained better applications, launched the AI digital human product “Digital Eye” and the production platform “Star Sound Generation”, and launched the “MR Star Project” to further promote the innovative dissemination of cultural IP and brand IP, and help the company build a second growth curve with AI to empower the main business.
Profit forecasting
It is predicted that the company's revenue for 2024-2026 will be 115.4\ 123.6\ 13.32 billion yuan, respectively, and EPS of 0.18, 0.2, and 0.22 yuan, respectively. The current stock price corresponding to 2024 to 2026 is 26.4, 23.1, and 20.6 times, respectively. As a leading digital marketing and digital culture enterprise, it will respond to the “National Nine Rules” policy. Under the leadership of state-owned shareholder Zhejiang Wentou, the company is expected to promote share repurchases and dividends, and pass Resource integration accelerates the construction of a digital cultural technology platform, thereby maintaining a “buy” investment rating.
Risk warning
Risk of increased market competition, risk of loss of core talent, risk of accounts receivable, risk of impairment of goodwill, risk of loss of goodwill, risk of high concentration of media traffic suppliers, risk of tax policy risk, risk of falling short of expectations in new business, risk of COVID-19 fluctuation, risk of macroeconomic fluctuations.