Key points of investment
Overseas marketing service provider, rich resources for advertisers and media. The company was founded in 2005 and mainly serves Chinese overseas enterprises. On the advertiser side, the company actively expands customers in different industries, and the share of revenue of non-e-commerce advertisers continues to rise to 76.8%; on the media side, the company covers top and medium to long tail media performance marketing to meet the diverse marketing needs of advertisers.
Benefiting from the wave of companies going overseas, the company's revenue is expected to increase. Domestic competition in the Red Sea accelerates enterprises to go overseas. For e-commerce companies, China has an efficient supply chain, and cross-border e-commerce has a competitive advantage.
For game companies, with R&D and operation advantages, going overseas is expected to increase revenue. Furthermore, e-commerce, game, and application industries are highly dependent on online advertising and promotion, so overseas marketing services are expected to grow as companies go overseas. According to Frost & Sullivan, the overseas marketing services market will reach 51.1 billion US dollars in 2025. The company is deeply involved in the overseas marketing circuit and is expected to benefit from this.
With data and technology as the core, accurate delivery lays the foundation for high profits. Unlike marketing intermediaries that only provide channel delivery services, companies are responsible for advertising effectiveness. Through an intelligent business platform, the company can more accurately match advertising orders based on advertising experience and data, thereby obtaining higher profit margins. Among them, the company accounts for more profit distribution in medium and long-term media campaigns due to lower user transparency and higher bargaining power. In the future, as technology improves and demand for programmatic advertising increases, the company's gross margin is expected to continue to rise.
Kreado AI helps overseas companies reduce costs and increase efficiency, and the commercialization process progresses steadily. In July 2023, Kreado AI, the first AIGC digital marketing creation platform, was officially launched for global creators. It can provide four major solutions, including AI digital people, AI models, AI tools, and AI creative assets. It mainly targets the generation of marketing content and materials, thereby solving the pain points of high cost, inefficiency, difficult script creation, inability to balance multiple languages, few real actors, small language communication difficulties, and high trial and error costs. The commercialization layout of AI platforms is progressing steadily, which is expected to bring the company potential for performance growth.
Profit prediction and investment rating: The company is deeply involved in the overseas marketing circuit, and has developed its own marketing intelligent business platform and Kreado AI platform to help advertisers reduce costs and increase efficiency and improve marketing effectiveness. The company is expected to benefit from the influx of enterprises going overseas. We expect the company's net profit to be 2.9/36/410 million yuan in 2024-2026, an increase of 32%/27%/14% over the previous year. The current stock price corresponds to PE 24/19/17 times, which is covered for the first time, giving it a “buy” rating.
Risk warning: AI applications/technology development falls short of expectations, AI ethical risks, industry competition risks