Incidents:
The company released its 2023 annual report and 2024 quarterly report.
Comment:
Revenue increased steadily, and net profit to mother turned loss into profit. The company announced the annual equity distribution plan. In 2023, the company achieved operating income of 52,616 billion yuan, an increase of 43.44% over the previous year, and net profit to mother of 117 million yuan, an increase of 105.36% over the previous year. The loss was turned into a profit, and net profit without return to mother was 150 million yuan, an increase of 107.91% year on year. With 2024Q1, the company achieved revenue of 15.782 billion yuan, a year-on-year increase of 61.47%, net profit to mother of 82.2347 million yuan, and net profit of non-return to mother of 79.896 million yuan. The company announced the 2023 equity distribution plan to distribute cash dividends of 0.10 yuan (tax included) to all shareholders for every 10 shares, for a total cash dividend of 248.754 million yuan (tax included), accounting for 21.34% of the company's current net profit to mother.
The scale of various businesses has been rising steadily, and the overseas business has performed well
In 2023, the full-case promotion service, full-case advertising agency, and overseas advertising business achieved revenue of 11.282 billion yuan, 3,971 billion yuan, and 37.363 billion yuan respectively, with year-on-year increases of 73.05%, 4.68%, and 41.69%, respectively. The revenue scale of all businesses improved significantly compared to 2022. The overseas advertising business performed well. The advertising revenue growth rate of agency Meta and Google remained in double digits, the gross margin of the business increased steadily, and the advertising revenue growth rate of the agency TikTok For Business was close to 50%. The company adheres to the second growth curve for overseas business, helping more than 70,000 Chinese companies reach the global market.
Implementing the “AI2” strategy for a long time to accelerate progress towards AI Native, the company attached importance to the development of new technologies. In 2023, along with the development of AIGC, it proposed the “AI” strategy and achieved initial results. By the end of 2023, the company's “AI+ human” work model had achieved 100% coverage of all employees, and the ability to create was significantly improved. Benefiting from the application of AI technology, the company's overall business productivity increased by about 50%, global overseas business efficiency increased by 100%-1000%, and domestic digital marketing business increased by 35%-100%. The company has nurtured a new business model based on AI. In 2023, the company created nearly 300 AI marketing cases, and AI-driven revenue reached 108 million yuan, continuing to contribute to a high growth rate.
The company built BlueAI, a marketing industry model, and cooperated with well-known cloud platforms at home and abroad such as Baidu, Microsoft China, and Google to give full play to its scenario advantages, create enterprise-level marketing assistants, and achieve more full business empowerment.
Investment advice and profit forecasting
As a leading digital marketing company, the company's core business has maintained steady growth along with macroeconomic recovery, going overseas to open up new business growth space, and at the same time actively embraces AI technology to achieve the advance layout of new technologies.
We expect that in 2024-2026, the company will achieve net profit of 366/496/631 million yuan, and EPS of 0.15/0.20/0.25 yuan, respectively, corresponding to 42/31/25 times PE, maintaining a “buy” rating.
Risk warning
Economic recovery fell short of expectations; risk of declining industry sentiment; overseas business growth fell short of expectations.