Key points of investment:

A global marketing and promotion service provider, the performance continues to improve steadily. 2024H1, the company's total revenue of 1.09 billion yuan (+8.8% year over year), including overseas business revenue of 0.928 billion yuan, accounting for 85.4% of total revenue; comprehensive gross profit margin 21.1% (year-on-year decrease of nearly 3 pcts); income tax expenses -20.05 million yuan (-179.3% year over year), mainly due to Hong Kong companies' offshore exemption from income tax impact; net profit attributable to mother 0.132 billion yuan (+10.4% year over year), net profit not attributable to mother of 0.125 billion yuan (+17.8% year over year). Due to fluctuations in the exchange rate of RMB against the US dollar and share payment fees for equity incentives, 2024H1, the company excluded net profit from foreign exchange profit and loss of 0.13 billion yuan (+27.78% year over year), excluding exchange profit and loss and net profit to mother of 1.4 yuan (+39.9% year over year); net cash flow from operating activities was 0.13 billion yuan (+662.5% year over year), which was positive compared to the same period last year.

It focuses on providing performance advertising and brand advertising services, and has the advantage of global media resources and global customer resources.

2024H1, the company's Internet marketing revenue was 1.08 billion yuan (+8.6% year over year), accounting for 99.7% of total revenue; by customer investment industry, e-commerce customer revenue was 0.27 billion yuan (YoY +10.3%), application, entertainment agents and other customer revenue 0.81 billion yuan (YoY +8.04%); by customer type, the number of direct customer categories was 580 (up 191 places year on year), investment revenue 0.77 billion yuan (YoY +26.6) %).

Technology and R&D advantages have been strengthened, data accumulation advantages are outstanding, and a systematic marketing product system has been established. In May 2024, the company released the “AI+BI+CI” overseas full-link digital solution, based on scientific and technological innovation, using the three core products of AIGC digital marketing creation platform KreadOAI, data analysis & growth model platform digital intelligent and intelligent multi-cloud management platform Gears, to provide overseas enterprises with full-link solutions from continuous multi-cloud delivery, multi-cloud financial management, overseas route planning, and intelligent product upgrades to digital marketing promotion to help overseas enterprises improve global operation efficiency at a lower cost; 2024/6 In January, the content generation algorithm independently developed by AIGC's digital marketing creation platform KreadOAI successfully passed the National Internet Information Office registration. Currently, the platform has covered 203 countries around the world, the number of registered users exceeds 1 million, and the number of monthly user visits exceeds 1 million, and has been recognized by users in many countries around the world.

Profit forecasting and valuation. We expect the company's total revenue for 2024-2026 to be 2.44 billion yuan, 2.74 billion yuan and 3.05 billion yuan, respectively, with year-on-year growth rates of 13.8%, 12.5% and 11.1%; net profit to mother of 0.298 billion yuan, 0.374 billion yuan and 439 million yuan respectively, with year-on-year growth rates of 37.2%, 25.6% and 17.3% respectively; corresponding fully diluted EPS of 0.63 yuan, 0.79 yuan and 0.93 yuan, respectively.

Referring to the comparable company's 2024 PE valuation of 37 times, we gave the company a PE valuation of 30-35 times in 2024, corresponding to a reasonable value range of 18.90-22.05 yuan/share, maintaining a “superior to the market” rating.

Risk warning. Overseas countries' macroeconomic environment and policy supervision risks, and the progress of industry customers going overseas fell short of expectations.