We initially gave a “Buy” rating, with a target price of HK$4.75. We use relative valuations based on price-earnings ratios. Considering the current valuation level of Hong Kong stock TMT industry companies, especially social networking companies with high growth potential, we combined the industry's valuation level with the company's special growth opportunities. Therefore, we gave the company a price-earnings ratio of 9.5 times 2025 and calculated a market value of approximately HK$6.698 billion. While we recognize that profit contraction in 2024 is highly certain, we expect 2025 to be a decisive year for business development, reflecting the company's true growth potential. We forecast that Chizicheng Technology's earnings per share from 2024 to 2026 will be RMB0.32, RMB0.45 and RMB0.59 respectively.

Chizicheng Technology is an information technology company focused on the Middle East and Africa, providing users with a unique interactive experience through its innovative social platforms. The company focuses on video and voice social networking, and has achieved outstanding results in the global market with advanced technology and deep market insight. Through a strategic focus on the “social+gaming” field, the company has diversified its products and consolidated its market position in these regions. Most of its revenue comes from these innovative social apps, and an effective localization strategy has increased its share of the social media market in the Middle East and North Africa.

Currently, the company's Internet applications span more than 150 countries and regions, supported by more than 20 operating centers around the world, and serve more than 1 billion users. Furthermore, the company is expanding its social networking business for diverse groups by integrating its original business with the Blue City Brothers.

Despite market concerns about the growth of Chizicheng Technology in mature markets, the company's profitability surpassed a single region, given its management's deep understanding of the Internet industry, flexible strategies, effective localization, continuous product innovation, and leading technology. The market is generally skeptical about the short-term growth of China's Internet platform economy, and is also cautious about Chinese Internet companies going overseas. Chizicheng Technology is one of the few Chinese Internet companies that has successfully expanded comprehensive overseas Internet social networking services and developed diversified social interaction services on a global scale. However, in the past two years, many Internet companies have failed in the process of going overseas, causing the market to worry about future profitability growth. We believe that the company's competitive advantage stems from management's deep understanding of the fundamentals of the Internet and the flexibility of the team. These factors enable the company to effectively adapt and develop in a diverse market environment, continue to penetrate emerging markets through integration, and improve profitability.

Catalysts: Launch of new social apps, significant developments in the Middle East and East Africa, and progress in social networking businesses for diverse groups.

Risks: 1) Uncertainty in overseas market policies; 2) uncertainty about R&D investment in innovative businesses; 3) uncertainty related to acquisitions.