Institution: China Merchants Securities
Rating: recommended
Chizi City Technology is an international mobile application developer and mobile advertising service platform provider supported by AI technology. Since its inception, it has focused on the global layout. Since it went public on December 31, 2019, its excellent growth ability, business model and high gross margin income have attracted wide market attention. In this report, we will describe the development process and business model of Chizi City, deeply analyze its core competitiveness, and explore the direction and growth space of the value of deep ploughing flow in the vertical field under the "flow +" strategy. and try to answer the questions about Chizi City's high attention in science and technology.
High-quality mobile application provider and mobile advertising platform service provider with nearly 800 million users. The company's Solo X matrix gathers the APP of mobile applications such as Solo Launcher, other system tools, media entertainment, fitness, games, etc. As of 2019, the total number of C-end users of H1Solo X is about 800 million, with an average MAU1.64 of 100 million and DAU3500 of 10 million in 19 years. Solo Math platform continues to add different functions in the past five years, providing diversified services to advertisers and advertising service providers in B to B mode. By the end of 2019H1, the average number of equipment reached up to 220 million times a day.
The "realization of self-owned application traffic + advertising platform service fee model" under the enabling of AI brings rapid growth of revenue.
The company downloads the Solo X matrix for free, rapidly increases the traffic, charges advertisers to realize the traffic, and generates service revenue by docking advertising resources through the Solo Math platform. At the same time, since its inception, the company has deeply realized that continuous improvement of technology is the basis of sustainable development. 2017-2019H1 R & D expenses increased by 442.3%, 52.2% and 8% compared with the same period last year. As of 2019H1, R & D personnel accounted for 43.6%. By continuously improving the user experience and increasing the number of users, excellent AI technology accurately locates the preferred audience for specific content in various usage scenarios, and the average number of daily displays has increased from 43 million in 2016 to 116 million in 2018, with a compound growth rate of 65.5%. Under this model, Chizi City's income from 2016 to 2018 is 137 million yuan, 182 million yuan and 277 million yuan respectively, and the revenue growth of 2019 is expected to be no less than 30%.
To optimize the track and gain a foothold in the world, the "flow +" strategy gives unlimited possibilities to the future. According to iResearch, from 2018 to 2023, the size of the global mobile application market is expected to reach 935.2 billion yuan at a compound annual growth rate of 20.7%, and China's offshore scale is expected to reach a compound annual growth rate of US $38.5 billion at a compound annual growth rate of 22.2%. The company's main business is in the dominant track and will enjoy the industry growth dividend; at the same time, the company has a global foothold since its inception, as of 2019H1, the company's domestic income accounts for only 20.6% of the total income, and the overseas layout advantage is obvious. And in the recent performance forecast, the company will implement the "flow +" strategy to promote products in different vertical directions by stages, so that the flow ecology can be rapidly extended in different fields and achieve high-speed growth.
Answer the core questions before you answer them. First, compared with the byte beating CBA business structure, Chizi City traffic operation has unique development characteristics; second, the "flow +" strategy will bring a new direction for future growth; third, through the re-comparison of peer companies, Chizi City technology market value still has room for growth.
Risk hints: C-end product matrix development is not as expected; B-side business performance and efficiency improvement is not as expected; the risk of increased competition in the industry; regulatory policy changes and other risks.