Description of the event

The company announced its 2023 annual report and 2024 quarterly report: in 2023, it achieved operating income of 5.284 billion yuan, down 6.54% year on year; realized net profit attributable to the parent company was 528 million yuan, down 28.36% year on year; 2024Q1 achieved operating income of 936 million yuan, up 0.60% year on year, and realized net profit attributable to the parent company of 49 million yuan, down 65.53% year on year.

Incident comments

Promote the implementation of advertising projects and make full use of superior resources. In 2023, the company actively promoted the implementation of various major projects and new projects, promoted special media programs such as CCTV, and carried out brand advertising on special media programs for telecom operators, financial and other industry customers; for China Resources Group, China Mobile, Yili and leading automobile customers SAIC-GM Buick, FAW-Toyota, Dongfeng Honda, FAW-Audi, Dongfeng Fengshen, and FAW-Volkswagen. In the field of new energy vehicles, it carried out media marketing services for brands such as Rantu Auto and Jihu Auto; National sports The Sports Lottery Management Center of the General Administration, the Hubei Provincial Department of Culture and Tourism, the Shangluo Municipal Administration of Culture and Tourism, the Zhejiang Provincial Tourism Administration, and Huangshan Tourism provided integrated marketing services; at the same time, the scene event business and campus media social media marketing business were successfully implemented. The smooth development of various businesses has ensured the steady growth of the company's main business.

Actively expand business boundaries and launch multi-modal AI products in the marketing field. Relying on HKUST iFLY Spark Model 3.0 and the company's 20 years of professional marketing experience and data, the company pioneered the launch of a multi-modal AI product in the marketing field: “One” AI, which aims to provide advertisers with intelligent full-process marketing services including early marketing strategies, mid-term creative output, and late-stage intelligent delivery. The company maintains long-term and close cooperative relationships with many top media, and relies on strong customer resources and continuous growth in media procurement to ensure that the company obtains industry-competitive media procurement prices. This enables advertisers to achieve high quality marketing requirements at a lower cost.

Explore data element market cultivation and fully unlock the value of data elements. The company closely follows the country's strategic policy of “promoting the development of the real economy through the digital economy” and reached a strategic cooperation with the Guiyang Big Data Exchange in April 2023 to jointly build a big data trading platform for future industries. The aim is to provide customers with more comprehensive services, including but not limited to data supply, procurement, trading, etc., to meet customers' data procurement and transaction needs outside of advertising and marketing. By providing high-quality data resources, expanding the scale of data transactions, actively promoting data trading activities, and striving to improve and optimize the market maker mechanism of the exchange, we support customers to achieve innovation and breakthroughs in the field of data element capitalization.

Entering the sports lottery business, the first project has already been launched at Chaoji Heshenghui in Beijing, and has achieved good sales results. 2024 marks the 30th anniversary of the release of the China Sports Lottery, with cumulative sales exceeding 3 trillion yuan and the Community Chest exceeding 800 billion yuan. The company reached a strategic cooperation with Hesheng Creative Development Group to jointly promote the sports lottery business. The company will use its professional advantages in the field of digital marketing, combined with high-quality customer resources and national layout, to actively expand sports lottery outlets in commercial complexes, shopping malls and other channels, promote the development of sports lottery business, and explore innovative sports lottery businesses.

Profit forecast: Net profit due to mother is expected to be achieved in 2024-2025 of 657 million/739 million yuan, corresponding to PE of 12/10X, respectively, maintaining a “buy” rating.

Risk warning

1. Advertisement repair falls short of the expected risk;

2. New business implementation falls short of anticipated risks.