Agencies:Southwest Securities
Ratings:holds
Key points of investment
Company Overview:The company is an influencer incubation marketing] MCN leading enterprise, and the platform model for successful business transformation has significant advantages. Since its establishment, the company has been deeply involved in the e-commerce field of influencers, providing incubation and marketing services for e-commerce influencers. Currently, the focus of the business is also gradually shifting from a comprehensive model (self-operated) to a platform model, actively exploring and realizing business development under the platform model. Since 2017, focusing on the platform model business, with the “influencer+incubator+supply chain” business model, the advantages of scale and volume have gradually become prominent. At present, the platform model business has become the backbone of the company's performance, and it is expected that in the future, it will greatly surpass the company's original performance as the number one main self-operated business.
The company's financial improvement is expected to achieve large-scale profits, and the company's platform model business performance is impressive。 In FY2020, the company's revenue increased 18.5% year on year, the company lost 90 million yuan in non-net profit, gross margin increased by 6.5 pp, and the platform model business performance was strong. The company's net profit loss gap widened, mainly due to non-cash equity incentive amortization expenses and exclusive intangible asset amortization, totaling nearly 80 million yuan for the whole year. After deducting this type of expenses, the company's overall financial situation improved. After adjustments, the net loss attributable to the parent company narrowed by 81%, and the operating cash flow improved. As the epidemic improves, the company's total net revenue is expected to grow to 1.32 billion yuan, which is expected to achieve large-scale profits.
The profit model is implemented and opened, and the core focus is platformization。 The company is opening up a wide range of marketing services to third party merchants to maximize the commercial value of celebrities and the company, which has now become the main source of revenue growth for the company. The company moved from building its own goods in early 2016 to operating in an asset-light model of bringing goods to other brands, making the inventory cycle of its supply chain lower. Combined with the relatively low cost of the third-party cooperation model, the profit margin increased, and the platform business accounted for 35.2% of gross profit in FY2020.
The self-operated platform is developing on two tracks, and the integrated operation of the three “chains” is full of vitality.Under the platform business model, various monetization channels go hand in hand, such as joint stores, light stores, e-commerce live streaming, and product advertising. The company has begun diversified development and is committed to building a technology platform driven by AI technology. Among them, Taobao Light Stores launched in the second half of FY2019 accounted for 20% of total platform service revenue, becoming the backbone of the company's business. The number of influencers in the company's self-operated model and the size of online stores have been reduced, and overall operating efficiency has improved relatively. The company integrates the celebrity supply chain, product supply chain, and brand supply chain, and has the commercial ability to stabilize influencer output, meet mainstream demand, and target monetization. It is looking forward to subsequent platform model business growth.
Profit forecasts and investment recommendations.We forecast that the company's revenue in 2020-2022 will be 1,599/19.0/2.27 billion yuan, respectively, and net profit from the mother will be 975/6040/123.97 million yuan, respectively. The influencer economy industry continues to boom. The company is in a leading position in the field of influencer incubation and marketing, and has been given a “hold” rating for the first time.
Risk warning:Platform model business development falls short of expectations; risk of platform competition and increase in content costs; risk of leading influencers bargaining too much and increasing traffic costs.
