Incident: Worth Buying in 2023 achieved operating income of 1,452 billion yuan, a year-on-year increase of 18.17%, achieved net profit of 75 million yuan, a year-on-year decrease of 11.92%, and realized net profit without deduction of 63 million yuan, a year-on-year decrease of 5.59%. The company achieved operating income of 296 million yuan in 2024Q1, an increase of 16.85% over the previous year, and achieved a net loss of 23 million yuan to mother, a loss of 687,600 yuan in the same period last year, achieved a net loss of 16 million yuan without deduction to mother, and a loss of 3.8306 million yuan for the same period last year.

Comment: Main site data performance is steady, and AI fully empowers user experience optimization. The company's main site business performance was steady. The annual GMV reached 20.918 billion yuan, up 1.23% year on year, MAU reached 39.29 million people, up 1% year on year, and the number of registered users was 28.9 million, up 9.5% year on year. The company fully embraces AI, independently developed a large model worth buying, and based on this, launched a series of applications such as “AI Review Bot”, “AI Purchase Suggestions”, and “ZDM-Copilot Creator Tool” within the “What's Worth Buying” app. The “Small Value AI Shopping Assistant” was launched on February 29, 2024, which can generate word-of-mouth summaries, product comparisons, product recommendations, and network-wide price comparisons through dialogue to further improve the quality of consumer decisions and user experience.

The proxy operation business performed well, and brand marketing revenue grew rapidly. The company's operating business performance in the 2023s was impressive, with operating service fees of 279 million yuan, an increase of 97% over the previous year. The subsidiary Risheng Xingluo continued to increase the Douyin platform layout, serving many well-known international beauty and personal care brands, including P&G Group, Helena, Keyan, TAKAMI, Yuexi, and Nivea. The subsidiary Heltech also further strengthened its proxy operation capabilities, and has served nearly 70 domestic and foreign brands and industrial plants. In addition, the company's brand marketing revenue reached 122 million yuan, an increase of 69% over the previous year. The subsidiary's multiple channels continued to provide commercial monetization for brands by building a matrix of professional consumer IP accounts.

Focus on product upgrades & AI application performance, and the “worth buying” model is worth looking forward to going overseas. 1) Product upgrade: In 2024, the company will redesign the main site app, restructure the content production and distribution system, and continue to introduce AIGC related functions. The main site is expected to return to the growth path. 2) Application iteration: Based on the big consumption model worth buying, the company will continue to develop AIGC tools, continuously upgrade the small value of AI consumer assistants, and will promote the small value to the market as an independent product, and open up its capabilities to more brands and e-commerce platforms. 3) Going overseas: Facing e-commerce development opportunities in emerging countries, the company will begin to promote the “worth buying” model in 2024 through self-management and cooperation, and the global layout is worth looking forward to.

Investment advice: The company is expected to achieve revenue of 1,746/20.03/2,209 billion yuan in 2024-2026, up 20%/15%/10% year on year, and achieve net profit of 1.18/1.68/216 million yuan, up 58%/42%/29% year on year. The corresponding PE is 30x/22x/17x, maintaining a “buy” rating.

Risk warning: policy and regulatory risks, increased risk of industry competition, business progress falling short of expectations