Events: The company announced 23H1 results and achieved revenue of HK$1,003 million, up 80.3% year on year; achieved gross profit of HK$393 million, up 70.6% year on year, and gross margin decreased by 2.2 pct to 39.2% year on year, mainly due to low gross margin of Particle Technology acquired by the company 22M5; realized net profit of HK$29 million, up 16.4% year on year, adjusted net profit of HK$58 million, corresponding adjusted net profit margin of 5.8%.
Comment: New cooperation has been implemented intensively, and content assets are being managed and expanded. By business, the subscription business achieved revenue of HK$467 million, a significant increase of 131.4% year over year; the value-added business achieved revenue of HK$536 million, an increase of 51.8% year over year.
By region: 1) Overseas (US) business revenue was HK$440 million, an increase of 34.2% over the previous year, mainly due to the company's continuous exploration and monetization of its sub-brand content after upgrading contracts with existing customers such as Warner and Discovery. 2) Mainland China generated HK$560 million in revenue, a significant increase of 148.2% over the previous year.
23H1 China's copyright business has launched a large number of new collaborations: 1) A new API cooperation was reached with Douyin and launched on 23M4; 2) Signed a contract with China's copyright chain, as the platform's only copyright technology service provider, to develop a vertical copyright service ecosystem for digital content, digital education platforms, e-sports games, etc.; 3) Signed a contract with China Mobile International to provide copyright protection services to domestic and foreign B-end customers; 4) Cooperation with Ant Group has been further deepened to build a digital copyright chain with the China Copyright Protection Center; 5) Cooperation with Bilibili TV has been established in Chongqing, Shanxi, Shanxi, China Other places Online operation.
Outstanding progress in cultural overseas development: 1) As the exclusive partner of Hunan Radio and Television, it has further expanded its overseas new media cooperative distribution business; 2) collaborated with China Mobile International to create Hong Kong Station and Macau Station; 3) The company built a multi-lingual base platform for the State Administration of Radio, Film and Television, and a Hong Kong node for the Chinese cultural big data platform.
The number of customers and content managed is growing steadily: as of 23H1, the company had 216 content customers and 137 platform customers, an increase of 18 in total customers; social media platforms had 2.81 million active assets, an increase of 260,000 over the previous month; and video payment platforms managed 2.3 million hours of content, an increase of 200,000 hours over the previous month. Increase investment in key technologies and explore copyright protection in AIGC applications. 1) Leveraging technical advantages and data accumulation: Construct a basic information service platform for China's integrated media, and cooperate with the State Administration of Radio, Film, and Television to integrate domestic audiovisual data resources. Fingerprint technology is used to track the entire life cycle of audiovisual content throughout the network, including publication, dissemination, authorization, monetization, and consumption. 2) The topic of digital human rights protection was accepted by the China Copyright Protection Center. In the future, it will explore new standards for the digital content authorization industry in the AIGC era with the China Internet Audiovisual Association. 3) Develop a new product system based on AIGC to provide video technology services for B-side and individual creators.
Profit forecasting, valuation and ratings: Fu Bo provides IP property rights protection solutions for the world's leading DTC streaming media. There is still a lot of room for improvement in overseas penetration, and China's business is developing rapidly; the company has accumulated core digital authorization capabilities over a long period of time, and AIGC development is expected to bring new opportunities to copyright protection. The company's domestic and overseas business grew strongly. We maintained our 23-25 revenue forecast of HK$20.1/28.3/ HK$3.95 billion; maintained our net profit forecast of HK$1.3/21/360 million for 23-25; and maintained a “buy” rating.
Risk warning: The development of the copyright party DTC falls short of expectations, the assumption of a new business model and domestic business progress falls short of expectations, and there is a risk that new technology threatens its leading position.