An international intelligent marketing service provider, 2024Q1 has achieved high performance. The company was founded in 2011 and is the world's leading international intelligent marketing service provider for enterprises. It was listed on the Shenzhen Stock Exchange in 2022. The company is committed to providing customers with global marketing and promotion services to help them efficiently acquire customers, enhance brand awareness and achieve commercial monetization. Currently, the company's main business includes performance advertising services, brand advertising services and leading media account management services. Its revenue mainly comes from overseas, accounting for 87.49% of overseas revenue in 2023. In 2023, the company achieved revenue of 2.143 billion yuan, down 7.04% year on year; realized net profit due to mother of 217 million yuan, down 17.20% year on year. The decline in net profit due to mother was mainly affected by exchange gains and losses, share payments and credit impairment losses; in the first quarter of 2024, the company achieved revenue of 481 million yuan, an increase of 1.66% year on year, and achieved net profit to mother of 50.94 million yuan, an increase of 21.23% year on year.
E-commerce overseas has led to an expansion of demand, and the rise of medium- and long-tail media has caused changes in supply. With performance advertising services as its core business, the company is deeply involved in leading global media businesses such as Google, Meta, and Twitter, while building advantages in medium- and long-tail media platforms. The company uses a differentiated billing model to reduce advertisers' advertising risks, and the KPI achievement rate is stable in a high range. On the demand side, the trend of e-commerce going overseas has opened up broad room for growth for the company. In recent years, policy dividends have helped cross-border e-commerce flourish, and the cross-border e-commerce independent website model has spawned an increase in marketing demand.
At the same time, leading overseas players competed, and the leading e-commerce platforms served by the company, such as Alibaba and SHEIN, all participated in fierce competition in e-commerce overseas, and the marketing demand generated by this brought growth dividends to the company. On the supply side, the iOS privacy policy that came into effect in 2021 brought growth opportunities for medium- and long-tail media, and the company, as an advertising service provider, can efficiently help medium- and long-tail media marketing with self-developed systems, which is expected to benefit from the rising industry trend of medium- and long-tail media.
AIGC's digital marketing products are launched, and strategic cooperation leverages application value. The company has created business scenario models such as digital human marketing models, material generation models, and AI vertical e-commerce models. At the same time, it has built a product technology framework based on the AI big model, and built an AI platform with multi-modal capabilities to empower marketing externally and improve its own business efficiency internally. The company lays out to develop technology-side DI (data intelligence), cloud service CI (Cloud intelligence), and BI (business intelligence) to provide customers with a package of native AI overseas solutions, forming a closed-loop AIGC service application logic. In July 2023, the company launched KreadOAI, the first AIGC digital marketing creation platform, which achieved remarkable results in cost reduction and efficiency after application. At the same time, the company reached strategic cooperation with Amazon, Alibaba Cloud, Huawei, etc., to further explore the commercial application value of AI products such as KreadoAI.
Profit forecast and investment advice: We expect the company to achieve net profit of 2.82, 3.57, and 432 million yuan in 2024-2026, respectively, with year-on-year increases of 29.78%, 26.83%, and 20.82%, respectively. The company is expected to enjoy the dividends of e-commerce development, and AIGC digital marketing products have achieved remarkable results in reducing costs and increasing efficiency. We gave the company a target market value of 10 billion yuan in 2025, corresponding to 28x PE in 2025, and gave it a “buy” rating for the first time.
Risk warning: policy regulation risk; industry competition increases risk; exchange rate risk.