Futu Information on April 22, Chizi City Technology shares rose sharply today and are now up 26.87% to HK $7.13.

Southwest Securities Research News pointed out that the company has put forward a "flow +" strategy to introduce existing traffic into the game social product line, and in the future it may dig vertically in the direction of e-commerce, finance and education, so as to further obtain richer and high-quality external traffic. it is expected to form a commercial closed loop.

The bank gave the company a target price of HK $6.87, covering a "buy" rating for the first time.

Recommendation logic: "Traffic +" empowers leading Internet platform companies

The company is the leading Internet platform in China's offshore industry. in the early days of its establishment, the company launched tool-based products to obtain customers and cash out, and formed a global traffic pool.

The company has focused on the game field for 18 years and made efforts on the social track for 20 years, and put forward the "flow +" strategy to introduce the existing traffic into the game social product line, and in the future it may dig vertically in the direction of e-commerce, finance and education. further access to richer and high-quality external traffic is expected to form a commercial closed loop.

The two-pronged approach of leisure and moderate games will help the company realize diversification.

On the one hand, the company continues to improve the high-quality leisure game matrix, including Archery Go, Tank Heroes and Beetles.io, and obtains stable income through embedded advertising; on the other hand, it actively grabs the moderate game value depression, and the existing reserve of synthetic and decrypted card games can be realized through internal purchase + incentive video. By the end of 20Q4, the company had accumulated 150 million game users, and the average number of monthly active users of game applications reached 11.51 million in 2020.

The future game diversified realization mode runs smoothly, the strong flow may support the performance to exceed the expectation.

M & An and self-developed products with two-wheel drive to expand the social application matrix

The company has continued to lay out its social business and increase its business transformation this year. Acquired the global open social platform Mico in April 20, and listed it to the parent company in July 20. The company keeps adding to its social business to form a product matrix that includes Yiyo, which the company developed and launched in March, and two products that were born out of Mico, Mico and Yoho. Mico provides an open social platform for users around the world. Yiyo and Yoho focus on audio, video and language room social networking.

From the user point of view, the company's social business has leapfrogged from zero to one. 20Q2 only has a social MAU of 4.62 million; at the end of 20Q4, it grew to 13.18 million, with 180 million social users for the whole year, and an average of 11.36 million monthly active users for social products in 2020.

The company's social business has leapfrogged from zero to one. At present, the social business accounts for about 55% of the annual revenue, and may become the future revenue growth point of the company.

Profit forecast and rating

It is estimated that the EPS of the company from 2021 to 2023 is 0.40,0.55,0.76 yuan respectively. The average PE of the industry in 2022 is 8.07 times. Considering the initial results of the "traffic +" strategy of the company's 20-year transformation, the social business has achieved a leap from zero to one, and the business matrix has been gradually improved. In the future, the game business will cut into the medium game track, move from flow realization to content realization, and the payment rate will be further raised, giving the company a premium of 10.5 times PE for 22 years, corresponding to a target price of HK $6.87, with a "buy" rating for the first time.