Key points of investment:
The company released its report for the first quarter of 2024, and the results were in line with expectations. According to the company's announcement, 24Q1 achieved revenue of 76.13 million yuan, an increase of 12.2% over the previous year. Achieved net profit of 4.81 million yuan to mother, an increase of 349% over the previous year. Net profit attributable to mother after deducting non-recurring profit and loss was 1.53 million yuan, an increase of 312% over the previous year. The gross margin of the company's main business in the first quarter of '24 was 54%, down 4 pcts from the same period last year; the sales expenses ratio was 42%, the same as the previous year; and the management expenses ratio was 13%, down 4 pcts year on year.
The company achieved fair value change revenue of 3.28 million yuan in the first quarter, a significant increase over the same period last year.
The company held two major exhibitions in the first quarter, the Indonesia exhibition and the Vietnam exhibition. The number of exhibitions was slightly lowered. Judging from the results of the exhibition, both the number of exhibitors and the bill of lading rate improved significantly. On March 13, the 6th (Indonesia) Trade Fair was grandly opened at the Jakarta International Convention and Exhibition Center. Over 400 companies from Guangdong, Zhejiang, Jiangsu, Sichuan, Jiangxi and other places formed more than 500 booths to participate in the exhibition, with a total display area of more than 15,000 square meters. Furthermore, this year's Indonesian exhibition period was extended from the traditional 3 days to 4 days, making it an iconic trade event for Chinese companies to “grab orders” and deeply connect with the Southeast Asian market. Vietnam has launched a “middleware” trade boom. As the largest exhibition independently hosted by China in Vietnam and an important platform for Chinese enterprises to explore the RCEP market, the exhibition area of this year's Vietnam exhibition exceeds 12,000 square meters, bringing together nearly 500 companies from 13 provinces including Zhejiang and Guangxi to participate in the exhibition, with more than 600 booths. The exhibition attracted more than 22,000 professional buyers from Vietnam and RCEP markets within three days, accounting for 36% of the bill of lading visitors.
The exhibition industry is full of opportunities to go overseas, and the company diversifies its layout to host international exhibitions. In 2024, many parts of the country will raise the level of internationalization of local exhibition companies as an important development goal. China will continue to deepen reform and opening-up, promote the further expansion of foreign trade, and accelerate the cultivation of new impetus for foreign trade. The company hosted the “Guangdong Trade Global” 2024 seminar, where representatives of over 100 enterprises participated and explored global development plans. In 2024, the company will continue to use the online exhibition O2O digital platform to efficiently expand overseas markets. It plans to hold 16 exhibitions throughout the year, spread across 11 countries.
The company issued an announcement on the implementation of equity distribution in 2023. The company distributed 5 yuan for 10 shares and increased 5 shares from the capital reserve fund. Based on the company's total share capital of 153 million shares as of the end of 23 years, the company distributed a cash dividend of 5 yuan for every 10 shares to all shareholders, for a total cash dividend of 76.48 million yuan. At the same time, the company's capital reserve fund was sufficient. The capital reserve fund was used to transfer 5 shares for every 10 shares to all shareholders, for a total increase of 76.48 million shares. After the transfer, the total share capital of the company was changed to 230 million shares.
Investment analysis opinion: Chinese companies have a strong desire to expand the market overseas, supporting the company's performance growth in the medium to long term, and the company's digitalization empowers buyers and sellers to reach orders faster, increase the exhibition repurchase rate, reduce sales expenses, and increase the sales volume of O2O products. We maintain our 24-26 profit forecast. We expect the company to achieve net profit of 2.7/37/450 million yuan in 24-26, respectively. The current stock price corresponds to a price-earnings ratio of 19/14/11 times for 24-26, maintaining a “buy” rating.
Risk warning: geopolitical risk, risk of booth sales falling short of expectations, risk of export trade decline.