Immerse yourself in a variety of downstream commercial application scenarios. The downstream market of the immersive industry is widely used, mainly in immersive markets such as immersive cultural tourism, performing arts, extended reality, art exhibitions, and nighttime entertainment. XR is the core technology that realizes immersive experiences. It combines virtual and reality, and brings users a good experience; an environment created through computer technology and wearable devices that combines reality and virtual, and can interact with humans and computers, includes VR/AR/MR and new types of immersive technology that may appear due to technological progress.

Global: The theme park market is CAGR 5.5%, and immersive experiences are one of the driving factors behind its growth. Because of its unique entertainment experience, immersive experiences can completely avoid extreme weather factors affecting the play experience, and have become one of the core driving factors in theme park investment and construction. In 2023, the number of visitors to the top 25 theme parks in the world reached 0.245 billion, with a significant increase in demand for amusement; in the same year, the market size of theme parks reached 74.2 billion US dollars, +16.1% year over year. The compound growth rate of the theme park market will reach 5.5% from 2024 to 2032, and the market size is expected to reach 132.5 billion dollars by 2032. We expect the future growth in the market size of theme parks to effectively drive the market demand for immersive experiences; immersive experiences have strong cultural and creative attributes, and there are barriers to entering the industry, such as brand, technology, and management, and industry pioneers will benefit first. Currently, the main participants in the theme park immersive experience industry are Immersive Gamebox, VRStudios, Holovis, and AISolve.

China: The immersion industry has grown significantly in recent years, with a market size of over 90 billion yuan.

The market size reached 92.7 billion yuan in 2023, a significant increase from 64.38 billion yuan in 2019, and is expected to grow further to 112.4 billion yuan in 2024.

The growth engine of the domestic immersive industry has changed from a single immersive reality entertainment market to a diversified development pattern jointly promoted by the three major sectors of immersive themed entertainment, immersive cultural tourism, and immersive reality entertainment. Currently, major domestic players in the immersive industry include companies such as Fengyuzhu, Silk Road Vision, Danghong Qitian, New Start, and Shanghai Holovis (a subsidiary of Roman Co., Ltd.).

With Roman's acquisition of Holovis in the UK, new growth is likely to be fully unleashed. By September 27th, Roman's acquisition was officially completed. (1) The purchase transaction price is low, only 0.52x PS. We think the purchase price is relatively cheap. (2) Acquisitions help strengthen the company's capabilities and help the company expand globally. By absorbing British Holovis and its technical team, the company's overall design and technology research and development capabilities will be dramatically improved, while integrating the global market customers and IP resources accumulated by British Holovis, the company will rapidly expand its global sales and service network. (3) The space for emerging growth poles is expected to be released after the acquisition. Judging from the revenue assessment, the first trading period is equivalent to a 69% year-on-year increase compared to 2023, and the second trading period assessment nearly doubled by 99%. The acquisition will bring huge room for growth to the company and is expected to achieve exponential revenue growth in digital entertainment.

Investment advice

Considering that the company will combine UK Holovis assets in the fourth quarter of 2024, and the company's revenue is expected to increase significantly in the fourth quarter, but profit contribution is relatively limited in the short term, considering the pace of recovery of the main landscape lighting business, we adjusted the 2024-2026 operating income forecast value of 1.057/1.597/2.019 billion yuan (previously 0.988/1.339/1.753 billion yuan), and lowered the net profit forecast to the mother to 0.091/0.161/0.206 billion yuan (original 1.38/ 0.171/0.209 billion yuan), corresponding EPS was lowered to 0.83/1.47/1.87 yuan (original 1.26/1.55/1.90 yuan), corresponding to the closing price of 24.74 yuan on October 11, 29.74/16.87/13.19x PE, maintaining the “buy” rating.

Risk warning

Operational risk after asset acquisition; Client funding falls short of expectations: Systemic risk.