As a leading domestic exhibition enterprise, Lan Sheng Co., Ltd. is backed by the Shanghai State-owned Assets Administration Commission. It has excellent resource endowments, a complete business ecology, and a steady growth rate of stock business. At the same time, the company continues to contribute to performance growth and enhance its digital capabilities and improve efficiency. Covered for the first time, an increase in holdings rating is given.

Key points to support ratings

Lansheng Co., Ltd.: Backed by the Shanghai State-owned Assets Administration Commission, the restructuring focuses on the exhibition business. After completing the asset restructuring in '20, the company officially transformed into a listed company with exhibition as its main business. Backed by the Shanghai State-owned Assets Administration Commission, shareholders have strong resources to help the company build the entire exhibition industry chain. After the restructuring, the company's exhibition organization business developed rapidly, and the business structure was continuously optimized. In '23, the company's exhibition hall business made concerted efforts, and various businesses ushered in a full recovery, achieving net profit of 199 million yuan to mother, which has already caught up with the performance of 19 years before the epidemic.

Exhibition industry: The market has great potential for growth, and resources are concentrated at the top after the epidemic. Domestic exhibition demand is strong, exhibition halls rank first in the world, government agencies dominate the industry, and the clean-up of the industry has accelerated after the epidemic, leading enterprises are expected to benefit. Currently, governments at all levels have strong support for the exhibition industry. At the same time, increased cross-border convenience is expected to accelerate domestic and foreign economic and trade exchanges and encourage enterprises to participate in exhibitions.

Company advantages: Complete business ecology and superior stock resources. 1) Master the resources of the entire industry chain. The company's main business covers exhibition organization, exhibition hall operation, conference events and exhibition services, and all business aspects empower each other. It has many high-quality IPs, and 4 exhibitions have been certified by UFI. The “launch” is the first IAAF Platinum Marathon in China, and has high international influence. 2) Relying on Shanghai's resources and location advantages. Using the majority shareholders' resources, the company obtained the right to operate the Shanghai World Expo Exhibition Hall, which has scarce exhibition hall resources, and has the highest rental rate; with Shanghai as its base, it has also fully enjoyed the advantages of the exhibition economy.

Future highlights: “Exhibition China” expands the market, and “digital exhibition” improves efficiency. 1) Offsite expansion of the stock exhibition. Mature exhibitions such as the Industrial Fair and the Guangzhou Printing Fair have achieved remote expansion, and are also adopting the model of international cooperation to expand overseas markets. 2) Mergers and acquisitions continue to advance. The company has successively acquired the CMM Electronics Manufacturing Automation & Resources Exhibition and TOPS Expo to lay out the electronics and new consumer industries. Currently, the company has plenty of capital. The World Expo Hall and exhibition funds can help investigate and incubate early projects, and future expansion is expected to accelerate. 3) Upgrading digital capabilities. The company has built a multi-dimensional “digital exhibition” management system, which empowers the main business in all aspects from pavilion operation and digital marketing.

valuations

The company has resources from the entire industry chain of the exhibition industry. In the context of state-owned assets, the company has outstanding resource endowments, and its stock business is growing steadily; it continues to contribute to performance growth through endogenous cultivation and epitaxial acquisitions, and continuous improvement of digital capabilities is expected to improve efficiency. We expect the company's net profit to be 3.03/3.40/386 million yuan in 24-26, corresponding P/E of 14.3/12.8/11.2 times. Covered for the first time, an increase in holdings rating is given.

The main risks faced by ratings

The risk of macroeconomic downturn, epitaxial expansion falling short of expectations, and changes in the fair value of financial assets.