Incident: Tianxia Show released 2024H1 earnings report.

① 2024H1: Revenue of 2 billion yuan, -4.9% YoY; net profit to mother 0.05 billion yuan, -28.2% YoY.

② 2024Q2: Revenue 1.04 billion yuan, -9.9% YoY; net profit to mother 0.03 billion yuan, -30.3% YoY

Gross margin and expenses: The company's gross profit margin in 2024H1 was 17.60%, -1.7 pcts year over year. 2024H1's sales/management/R&D/finance expenses ratio was 5.7%/5.4%/2.4%/0.1%, respectively, -0.8/+0.3/+0.1pcts year-on-year, respectively.

WEIQ celebrity marketing platform: Influencer and MCN resources are growing steadily. As of 24H1, the cumulative number of registered merchant customers reached 20,3014, an increase of 3,225; the cumulative number of registered celebrity accounts on the platform reached 3.198 million, of which the number of professional celebrity accounts reached 1.671 million, an increase of 0.202 million over the previous year; the number of MCN institutions that have entered the WEIQ platform reached 17,968, an increase of 694 over the end of 2023. 24H1 waist and tail celebrities received 88.3% of revenue.

Improve the economic and ecological layout of celebrities and explore overseas markets and innovative technologies: ① For clients, the company created 3D virtual social networking and content software “Rainbow Universe”, focusing on the development and application of virtual digital content presentation and related technologies. ② Facing the celebrity side, the company digs deep into the value monetization capabilities of celebrities, actively develops the innovative AIGC product “Inspiration Island” based on AI technology, gives full play to the advantages of the Group's largest social marketing Chinese corpus, and provides content creators with cost-effective services such as personalized creative inspiration recommendations and commercial service recommendations.

Profit prediction and valuation: The company's influencer and MCN resources are growing steadily, and the commercialization efficiency of celebrities continues to be improved through data products and technical tools. In the future, as the company's AI technology is applied to data services, content services, etc., and the successful operation experience of domestic celebrities is exported overseas, it is expected that a new monetization model will be realized. The comprehensive forecast is that 2024-2025, the company will have a net profit of 0.16/0.225 billion yuan, corresponding to the current 38x/27xPE, maintaining the “recommended” rating.

Risk warning: Consumption recovery falls short of expectations, AI application implementation falls short of expectations, overseas business falls short of expectations