Miao Exhibition released its 2024 quarterly report. In 2024, Q1 achieved revenue of 76.1309 million/yoy +12.20%, a year-on-year increase of 236.66%; realized net profit of 4.814,500 yuan/yoy +349.39%, and realized net profit of 1,5319 million yuan/yoy +311.56% after deducting non-return to mother. The company plans to distribute a cash dividend of 5 yuan (tax included) for every 10 shares, with a total cash dividend of 76 million yuan, with a dividend rate of 40.65%, corresponding to the current dividend rate of 1.48%.

Profitability remained stable overall. The overall gross margin of the 2024Q1 company reached 54.4%, down 3.8% year on year. The decline in gross margin was mainly due to two exhibitions held in 24Q1. The average single exhibition scale declined compared to 23Q1, and the scale effect was weak; the sales expenses ratio, management cost rate, and R&D expense ratio of 2024Q1 company were 42.1%/12.7%/4.1%, respectively, +0.3 pct/-3.7 pct/-2.1pct, respectively. 2024Q1's net profit margin to mother was 6.3%, +4.7pct year on year, 2.0% net profit margin after deducting non-return to mother, +1.5pct year on year. The significant increase in the company's net profit margin to mother is mainly due to fluctuations in fair value profit and loss.

Contract debt declined year-on-year, waiting for orders to be released quarterly. 2024Q1's contract debt was $17.33 million, a year-on-year decrease of 23.0%. The contract debt reflects a decline in the advance payment situation for the company's pre-sale booth compared to the same period in '23. Since the number of exhibitions scheduled for the company's Q2 exhibition decreased year-on-year in '24, and was mainly concentrated in June, we believe that fluctuations in contract debt accounts were also affected by the company's exhibition schedule pace and advance payment ratio. We expect subsequent orders to gradually increase as the company's business enters the peak season.

Build a “Miaozhan Global” service platform to deeply help enterprises go overseas. The company and Tiancheng have created a one-stop foreign trade solution platform for Chinese enterprises to go overseas. Combining Miao's overseas exhibition experience with Tiancheng's 100,000+ business management coaching success stories, foreign trade practices, etc., it provides effective experience guidance and direction guidance for domestic and foreign trade enterprises to go overseas through on-site lectures by mentors. I am optimistic that through the construction of the above comprehensive service capabilities, the company will strongly enhance customer stickiness and help grow subsequent orders.

Import and export trade continues to be booming, and we are optimistic that going overseas to host exhibitions will continue to prosper. According to CCTV data, in the first quarter of '24, China's import and export volume of goods trade exceeded 10 trillion yuan for the first time in the same period in history, and the growth rate hit a record high in 6 quarters. Foreign trade in the major traditional foreign trade provinces of Guangdong, Jiangsu, and Zhejiang all reached record highs. Customs statistics show that in the first quarter of '24, the number of foreign trade enterprises with import and export performance in China increased by 8.8% over the same period last year. Among them, private enterprises imported and exported 5.53 trillion yuan, an increase of 10.7%, accounting for 54.3% of the total import and export value. I am optimistic that with strong import and export trade, going overseas to host exhibitions will continue to prosper, and the Miao Exhibition-related business is expected to take advantage of the momentum to achieve high growth.

Investment advice: Miao Exhibition is a leading domestic and overseas self-hosted exhibition. It has multiple first-mover advantages in technology, resources, etc., and is currently in a clear upward channel. At the same time as the number of booths of the company has increased, it is also improving its overall exhibition service capabilities through specialized exhibitions/digitalization; the increase in scale/service capability/brand is expected to further consolidate the barriers of Mio as a leader in hosting domestic and overseas self-exhibitions. As China's inbound and outbound trade continues to flourish, the company's performance flexibility is expected to continue to unleash. We expect the company's net profit to be 2.7/3.4/4.4 billion yuan in 2024-2026, respectively, and the corresponding PE is 20x/15x/12x, respectively, maintaining the “recommended” rating.

Risk warning: geopolitical risk, risk of declining sales.