Core views
In the main performance marketing business, AI integration and algorithm iteration have achieved remarkable results in reducing costs and increasing efficiency, driving gross margins to remain high. At the same time, under good cost control, such as excluding exchange benefits and equity incentive fees, performance achieved high growth. Looking ahead to the whole year, on the one hand, we are optimistic that the main business will benefit from going overseas, and revenue will return to a growth trajectory; on the other hand, we are optimistic about continued investment in AI, which will bring about a logic of increasing gross margin in the medium to long term.
By simultaneously upgrading the advertising system with leading overseas media, AI is expected to continue to enhance the company's multi-platform marketing, cross-platform budget allocation, and marketing timing selection capabilities, thereby not only improving clients' performance of marketing KPIs, but also improving their own profit levels.
Continuing to focus on the series of products and services launched by the company based on AIGC technology and around the actual needs of overseas enterprises, the company's value as a service provider for overseas enterprises is expected to further enhance, and achieve incremental business expansion while enjoying the dividends of Chinese companies going overseas.
We expect the company to achieve net profit of 2.82/3.54 billion 434 billion in 2024-2026, a year-on-year increase of 29.82%/25.56%/22.65%. The PE corresponding to the closing price on April 26, 2024 is 28.82/22.96/18.72x. Continue to focus on being optimistic and maintain a “buy” rating.
Risk analysis
Risk that user growth and payment rates for AI products and services fall short of expectations; risk that the cost reduction and efficiency of AI products and services falls short of expectations; risk that Bing's traffic and channel value growth falls short of expectations; risk of new customer expansion falling short of expectations; risk of data security risks caused by generative AI; risk of global economic environment deterioration; risk of customer suffering at home and abroad due to geopolitics; risk of increased competition; risk of leading advertisers' budget reduction risk, risk of brand customer growth falling short of expectations, risk of cross-border e-commerce boom decline, gaming The risk of declining seascape attitude, the risk of rising raw materials and cross-border logistics costs, and the risk of brain drain.