Net profit is expected to increase by more than 200% year over year in 2020
The company released a positive earnings report. Revenue is expected to increase by 41-53% year on year to 46-5 billion yuan in 2020. Of these, 2H20 revenue is expected to increase by more than 50% year on year, and annual net profit is expected to increase by more than 200% year on year, or more than 150 million yuan, mainly due to (1) steady growth in Yingke Live App; and (2) rapid revenue growth of various innovative product apps. Yingxi reports that the company's 2H20 revenue growth is accelerating, net profit is gradually improving, and the interactive entertainment business ecosystem is improving.
The main live streaming business has maintained steady development
Affected by the pandemic, demand for online entertainment has surged. According to data from Yiguan, the main audience of Yingke is the 24-35 age group, which increased from 46% in December 19 to 55% in December '20. Among them, the share of mainstream paying users (24-30 years old) increased sharply from 19% to 26%. I believe the improvement of the user structure is one of the important factors promoting the steady development of the live streaming business.
The diversification strategy has been effective. Innovative products drive a steady increase in core performance. In recent years, the company has actively expanded its product layout in the fields of video social networking and audio social networking. In addition to the core business of the Yingke live streaming app, there are already more than 20 innovative products, including the blind date app “Match” and the social networking platform “Accumulation”, and the revenue share is gradually increasing. Recently, the US audio social networking product “Clubhouse,” which entered the market with an invitation code, has become the focus of the market. Under these circumstances, the company quickly took the lead in launching similar products in China, which shows that the company has the ability to launch new products in a relatively short period of time, and has an opportunity to quickly seize opportunities after discovering target markets with growth potential. Although “Let's Talk” is currently undergoing product upgrades to meet regulatory requirements, it is still worth paying attention to. We are optimistic about the company's ability to expand the audio and video social circuit and continue to incubate new products.
Risk warning: (1) fierce competition; (2) new product development falls short of expectations; (3) regulatory risk