Event Overview:
The company released financial results for the first three quarters of 2024. In the first three quarters of 2024, the company achieved operating income of 0.425 billion yuan, -9.44% year-on-year, and realized net profit of 0.068 billion yuan to mother, a year-on-year decrease of 16.62%. Q3 achieved operating income of 0.165 billion yuan, +42.29% year over year, and realized net profit of 0.027 billion yuan to mother, +395.58% year over year.
Analytical judgment:
Companies are more willing to go overseas. The company performed well at the third quarter exhibition, and achieved high revenue and profit growth under the low base effect:
The increase in 24Q3 revenue and profit was mainly due to the year-on-year increase in the number of scheduled shows and the larger scale of individual exhibitions. The 24Q3 exhibition schedule is higher than the same period last year. Miao Exhibition will host four exhibitions in the United States, Mexico, Brazil, and South Africa in the third quarter of 2024, and three exhibitions in Turkey, Japan, and South Africa in the third quarter of 2023.
In addition to the initial exhibition, the third quarter of 2024 was relatively large: according to the company's official account, more than 400 companies participated in the US exhibition, with an exhibition area of 0.01 million square meters; more than 700 companies participated in the Mexican exhibition, which doubled from the previous exhibition; more than 400 companies participated in the Brazilian exhibition, with an exhibition area of 0.012 million square meters; and more than 290 companies participated in the South African exhibition, with an exhibition area of nearly 0.01 million square meters.
Profit margins increased year-on-year in the third quarter, mainly due to cost ratio optimization:
In 24Q3, the company's net profit margin was 16.6%, up 4.76pct year-on-year. Looking at the spin-off, the 24Q3 company's gross profit margin was 43.85%, down 9.71 pct from the previous year. We believe it was mainly due to factors such as low gross margin at the beginning of the US exhibition and increased initial cost investment in specialized reforms. The 24Q3 company's sales expenses and management expenses were 0.034 billion yuan and 0.015 billion yuan respectively. The overall rate remained flat during the same period last year. The cost ratio was greatly optimized under revenue expansion. The 24Q3 sales expenses ratio and management expenses ratio were 20.7% and 8.9%, respectively, down 6.6 pct and 1.7 pct year-on-year respectively.
The company has deep barriers, an excellent business model, and a medium- to long-term high-growth exhibition. We believe that the company will continue to enjoy racetrack dividends. At the same time, the company has outstanding resources, flexible management strategies, and high growth in the medium to long term. 1) The company is a leader in outreach and has deep operating barriers. According to the company's annual report, the company's overseas exhibition area, number of exhibitors, number of booths, etc. all accounted for more than 50% of the parameters of the overseas exhibition project approved and implemented in 2023, ranking first among domestic exhibitors organizing overseas exhibitions. The first-mover advantage in IP, pavilion resources, and overseas layout is remarkable. 2) Continued promotion of specialization and internationalization to help long-term growth. The specialized layout is gradually taking shape, organizing industry forums, empowering Chinese manufacturers and Chinese brands to go global, serve more suppliers on the basis of deep industry cultivation, expand the scale of professional exhibitions, and attract more professional buyers to participate in the company's professional exhibitions, forming a virtuous circle. The company invested in the establishment of a wholly-owned subsidiary in Singapore and set up a company in Indonesia to help develop the RCEP national exhibition business. The exhibitors are expected to gradually expand to overseas foreign trade enterprises. 3) Digital construction enables exhibition upgrades. According to the company's annual report, the company has achieved widespread use of AI in data matching, content generation, and video production, and has gradually created a data-driven digital professional exhibition to accurately connect the entire link of digital exhibition, digital exhibition, and digital exhibition viewing.
Investment advice
In view of the uncertainty brought about by factors such as geopolitics and global macroeconomics, and that the company is still in the early stages of specialized reform, we lowered our previous profit forecast. We expect the company to achieve revenue of 0.978, 1.345, and 1.63 billion yuan respectively on 24-26 (the original forecast was 1.08, 1.36, 1.64 billion yuan, and net profit due to mother was 0.21, 0.3, and 0.38 billion yuan, respectively (the original forecast was 0.25, 0.33, and 0.41 billion yuan) billion yuan), EPS was 0.92/1.30/1.65 yuan, respectively (the original forecast was 1.09/1.42/1.78 yuan). Referring to the closing price of 19.85 yuan/share on October 29, 2024, the corresponding latest PE was 22x/15x/12x, respectively, maintaining the company's “gain” rating.
Risk warning
(1) Risks such as entry and exit restrictions and exhibition delays caused by repeated epidemics; (2) the risk of international political conflicts impacting the economies and exhibitions of countries or regions such as the “Belt and Road” and RCEP; (3) the risk of declining export trade.
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