Event: Yinguniverse released its 2023 annual report. In 2023, the company achieved operating income of 6.845 billion yuan, an increase of 8.3% over the previous year; net profit of 401 million yuan (loss of 168 million yuan in the same period last year), and adjusted net profit of 426 million yuan.
Comment:
The live streaming social segment is developing steadily, and revenue from skits is growing rapidly. Throughout 2023, the company achieved revenue of 6.845 billion yuan, including value-added service revenue of 5.220 billion yuan, a year-on-year decrease of 10%; content service revenue of 959 million yuan, last year's revenue of 40.66 million yuan; and other revenue of 666 million yuan, an increase of 8.32% year-on-year. The increase in revenue for the full year of 2023 is mainly due to the company's commitment to the product matrix development strategy last year, consolidating the core business while actively innovating to drive overall revenue growth. The decline in value-added service revenue is mainly due to the steady operation of its live streaming social networking business; the rapid increase in content service module revenue stemmed from the company entering the skit business in the second half of 2023, opening up the entire short drama industry link, producing multiple sales, and successfully entering the first tier of the short drama industry; other revenue comes from the company's innovative business segment, and the growth mainly comes from overseas business layouts. Looking ahead to 2024, the company will actively explore and seize market opportunities based on the global market with live streaming and social networking as the core. Revenue from value-added services is expected to remain steady; skits will solidify the competitive advantage.
Effectively control costs, and turn net profit into profit. (1) The company's sales cost for the full year of 2023 was 4,012 billion yuan, with a gross profit margin of 41.4%, an increase of 1.1 percentage points over the previous year; (2) Sales expenses of 2,074 million yuan, with a sales rate of 30.3%, an increase of 8.4 percentage points over the previous year, mainly due to the company's short drama business promotion, which increased 706 million yuan; management expenses of 2.27 million yuan, a decrease of 8.9 percentage points year-on-year, mainly due to no longer being affected by goodwill impairment provisions during the reporting period; R&D expenses were 272 million yuan, a year-on-year decrease of 30% The R&D rate was 4.0%, down 2.2 percentage points, mainly due to the company's adjustment of operating strategies and optimization of the employee structure; (3) The company's net profit of 426 million yuan turned a loss into a profit. Excluding the impact of goodwill impairment, share incentives, etc., the company's adjusted net profit was 426 million yuan, and the adjusted net interest rate was 6.2%.
Accelerate the construction of overseas product matrices and open up room for overseas market growth. In 2023, Yinguniverse's overseas revenue was 136 million yuan, an increase of 75 million yuan over the previous year, and revenue growth was significant. By the end of 2023, the company had accelerated the localization process of overseas social products. Some products had reached the top of the Vietnamese social app bestseller list, and gradually expanded to Southeast Asian countries and emerging markets such as the Middle East.
In the future, the company will focus on overseas market development, customize differentiated payment strategies to improve user stickiness and usage time, expand product coverage and penetration; accelerate the construction of a diversified product matrix with personality matching, voice communication, video companionship, and interactive sharing, and open up room for growth in overseas markets.
Investment advice: The company's live streaming social section is developing steadily, and the skit business and overseas markets are becoming new growth points for the company. We expect the company's net profit to be 364 million yuan, 402 million yuan, and 410 million yuan respectively in 2024-2026, corresponding to the current share price PE of 4.2X, 3.8X, and 3.7X respectively, maintaining the “recommended” rating.
Risk warning: (1) Strengthening supervision of domestic live streaming and social networking services; (2) rapid increase in skit promotion costs; (3) overseas market expansion falls short of expectations.