Core views:
Incident: Tianxia Show released its 2024 quarterly report. In 24Q1, the company achieved revenue of 965 million yuan, an increase of 1.10% and a decrease of 6.52%; gross profit margin of 17.09%, a decrease of 3.09 pct, an increase of 0.45 pct; net profit to mother of 14.61 million yuan, a decrease of 23.18%, turning a month-on-month loss into a profit; deducting non-net profit of 8.9364 million yuan, a decrease of 46.59% month-on-month. In 24Q1, the company's net operating cash flow was -32 million yuan, compared to 79 million yuan for the same period in '23, mainly due to a decrease in customer payments.
Looking at the cost level, 24Q1, sales expenses 0.62 million yuan, YoY -18.42%, QoQ +8.77%, sales expense ratio 6.42%, decrease of 1.54pct, increase of 0.9pct; management expenses of 55 million yuan, YoY +12.24%, QoQ -8.33%, management expenses rate 5.70%, 0.57pct, decrease 0.11pct month-on-month; R&D expenses 0.29,000 yuan, YoY -1.04%, QoQ +7.63%, R&D expenses rate decreased by 2.97% 0.06pct, up 0.39pct month-on-month.
On the business side, “AI+ overseas” two-wheel drive continues to gain strength, focusing on overseas revenue growth. According to the official account, Inspiration Island's AI creative assistant functions are continuously updated, providing 30+ functional modules, covering all creative scenarios. In 23 years, it has helped hundreds of thousands of content creators complete the creation of nearly 10 million pieces of content, and the number of users has grown steadily. In addition, the company launched aDream, a SaaS platform for overseas celebrity marketing, to support overseas brands and cross-border MCN in improving resources and efficiency.
According to the official account, in January '24, the company signed a contract with KOLS.ASIA to lay out a new media cross-border training business and further expand the international strategic layout.
Profit forecasting and investment advice. As a leading company in the celebrity economy, the company expects revenue of 4.725/5.250 billion yuan for 24-25 years, respectively; net profit to mother of 177/254 million yuan, respectively. The 24-year marketing market is expected to recover further, and innovative business will enable more new industry scenarios to be launched. Refer to comparable company valuations and maintain the company's 24-year 50X PE, corresponding to a reasonable value of 4.88 yuan/share, maintaining a “buy” rating.
Risk warning. (1) The growth rate of the advertising market fell short of expectations; (2) celebrity marketing competition intensified; (3) Web 3.0 development fell short of expectations.