Net profit from 24H1 deducted from non-return mother fell 39%, mainly due to increased R&D investment

The company achieved 24H1 revenue of 0.716 billion yuan (yoy +5.69%), net profit of 7.6579 million yuan (yoy -72.81%) to mother, deducting non-net profit of 11.9834 million yuan (yoy -39.07%). Among them, Q2 achieved revenue of 0.42 billion yuan (yoy -0.99%) and net profit to mother of 30.37 million (yoy +5.25%). The main reasons for the year-on-year decline in H1 profit were: 1) the company's R&D investment in AIGC and overseas business increased by 13.92 million yuan compared to 23H1; 2) Q1 charity donations of 10 million yuan. Due to the growth of the company's information promotion and internet marketing business falling short of our expectations, the company's net profit for 24/25/26 is estimated to be 0.08/0.13/0.16 billion yuan.

Comparatively, the 25-year Wind agreed that the average PE value was 21 times. Considering that the company invested heavily in R&D in 24 and is currently at a low level of performance, the AI business has a lot of room for subsequent development. We gave 25 times PE in 25 years, a target price of 16.33 yuan (previous value 21.11 yuan), and lowered it to an “increase in weight” rating.

The operating service fee business led to an increase in revenue. “What is worth buying” users grew steadily and healthily. 24H1 The company's information promotion business achieved revenue of 0.31 billion yuan, a decrease of 4.3%; the revenue of the Internet performance marketing platform was 0.165 billion yuan, a decrease of 10.3%. 24H1 “What's Worth Buying” and the corresponding mobile app confirmed that GMV reached 9.181 billion, a decrease of 16.14%, and a 21.89% increase in content publishing. Among them, machine-contributed content (AIGC) also increased by 46.03%, accounting for 39.61%. The 24H1 platform MAU was 37.7903 million people, an increase of 1.62%. By the end of June, the number of registered users reached 29.6445 million, an increase of 7.02%. In terms of new business, operating service fee revenue was 0.182 billion yuan, an increase of 61.4%; product sales were 3.14 million yuan, an increase of 3275.4%. The rapid growth of new businesses has become the main driver of revenue growth.

Gross profit margin has declined, and R&D investment has increased

24H1's gross profit margin was 46.97%, yoy-2.15pct, mainly due to a decline in revenue from Internet performance marketing platforms and information promotion services with high gross margins. The sales expense ratio was 18.22%, yoy-1.20pct, mainly due to the reduction in advertising and campaign expenses and coin exchange; the management fee ratio was 12.55%, yoy-0.21pct; the R&D cost ratio was 12.62%, yoy+1.34pct, and R&D expenses also increased by 18.21%.

As AIGC enables platform content production, the platform content continues to be enriched, and the number of users is expected to continue to increase. It is expected that AI will help the company reduce costs and increase efficiency, scale effects are expected to be further reflected, and cost rates are expected to improve.

The company released a comprehensive AI strategy. “What is worth buying” was upgraded in May 24. The company released a comprehensive AI strategy to transform and upgrade the core product “What's Worth Buying” app to “What's Native AI Is Worth Buying GEN2” to create a consumer content platform that uses AI technology to collect, analyze, refine, and recommend consumer content across the network based on users' personalized interests. The platform launched the “ZDM-CiPilot Assisted Creation Tool” to enrich AI-assisted creation capabilities. Currently, GEN2 is in the closed beta stage, and will gradually be rolled out in the future based on closed beta data and user feedback. It is expected that in the future, AI will continue to empower the company's business through cost reduction, efficiency, and innovative growth.

Risk warning: GMV growth fell short of expectations, e-commerce industry policy risks, AI investment and transformation fell short of expectations.