Incident: 1Q24 achieved revenue of 76.13 million yuan/year over year; achieved net profit of 4.81 million yuan/year on year +349%; realized deduction of non-net profit of 1.53 million yuan/year on year +312%.
Q1 The number of off-season exhibitions increased compared to last year, driving revenue growth. The overseas self-hosted exhibition business is seasonal. Q1 is usually off-season throughout the year, so the company's overall revenue and profit volume is small. From a growth perspective, the number of 1Q24 company exhibitions increased by one compared to last year, driving revenue growth of 12%. However, due to the small number and scale of the company's exhibitions in the second quarter and the concentration of overseas trips last year, the company's 1Q24 contract debt reached only 170 million yuan/-23% year over year. Looking at the full-year outlook, since part of the increase in the number and scale of the company's exhibitions this year is mainly concentrated in Q3 and Q4, we expect the company's pre-sale progress to accelerate starting in the second quarter.
Fluctuations in profitability were mainly affected by the scale of the exhibition and non-economic factors, 1Q24's gross profit margin was 54.4% /year over year - 3.8 pct, mainly due to the fact that the scale of the Q1 exhibition only increased slightly year on year, resulting in limited scale effects. In terms of period expenses, 1Q24's sales expenses ratio is 42.1% /year over year +0.3 pct, which is expected to be mainly affected by the increase in the number of exhibitions; the management expenses ratio is 12.7% /-3.7 pct year over year, mainly due to a decrease in share payments; financial expenses brought 1.32 million yuan in revenue year over year due to the increase in interest income; and the R&D expense ratio is 4.1% /-2.1 pct year over year. In addition, 1Q24 recorded fair value change earnings of 3.28 million yuan, an increase of 3.46 million yuan over the previous year, mainly due to fluctuations in the prices of financial assets held. Overall, 1Q24's net profit margin was 4.2% /year over year +5.3pct, mainly contributed by changes in fair value.
A profit distribution plan was first introduced after the listing of A-shares. The company's shareholders' meeting with a dividend rate of over 40% recently passed the 2023 profit distribution plan. It plans to distribute a cash dividend of 5 yuan (tax included) for every 10 shares and use the capital reserve fund to increase 5 shares for every 10 shares. Referring to the company's net profit for 2023, the total cash dividend for the current faction was 76 million yuan, with a dividend rate of 40.6%, corresponding to a dividend rate of 1.36%.
Investment advice
Overseas expansion has now become a consensus between Chinese enterprises and the government. As an important channel for serving Chinese enterprises to go overseas, the company will continue to benefit from this industry trend in the future. Furthermore, we believe that the company's future growth path still lies in the three-dimensional expansion of exhibition scale, quantity, and unit price (professional exhibition+digital service). Combined with private enterprises, flexible management and incentive mechanisms, the growth momentum of medium- to long-term companies is still sufficient. We expect the company's net profit to be RMB 2.8, 360, and 4.4 billion yuan respectively in 2024-26, with corresponding PE being 19X, 15X, and 12X, respectively, maintaining the “recommended” rating.
Risk warning: Risk of off-site exhibition project expansion falling short of expectations; risk of fluctuations in the fair value of financial assets held.