occurrences
On December 16, the 3D digital collection of the Chinese ice and snow mascots “Ice and Snow Wa”, which was jointly released by the China Sports Mathematics Department and the Winter Sports Center, was launched on the Alipay platform. On December 22, the 3D digital edition of the commemorative medals and badges of the first Beijing Marathon, created jointly by the China Olympic Road Run and the Department of Mathematics, went online.
Brief review
The annual performance was greatly affected by the epidemic. The annual revenue and performance of major revenue-generating companies that contributed to sports operations and sports lottery were still affected by the cancellation of some events due to the pandemic, the signing of lottery business contracts, and the optimization of real estate business. Looking at business revenue by business, the revenue of the real estate business in the first half of the year was 98.657 million yuan, a year-on-year decrease of 68.79%, mainly due to increased transformation into the main sports industry and the gradual optimization of the real estate business; sports business revenue was 158 million yuan, an increase of 50% over the previous year. Among them, the tournament, communication, and space sector businesses gradually improved, with both revenue and profit growing; lottery business revenue was 155 million yuan, down 55% from the previous year, mainly because some technical service contracts were not signed during the reporting period. As the public welfare nature of lotteries continued to strengthen, sports lottery-related businesses showed a gradual level of profit The trend is narrowing. The operating expenses budget of lottery ticket issuing and sales agencies in 2021 was 4.358 billion yuan, down 4.1% from the execution in 2020. However, the company's main sports lottery business focused on core technology system development and maintenance, thermal ticketing, that is, lottery ticket printing, etc. after acquiring China Sports Color Technology in 2020. It is expected that future demand will be generally stable. Overall, the sports business accounted for 37.4%, an increase of 24.0 pct over the previous year. The improvement trend in the main business structure is obvious. The overall gross profit margin was 30.37%, a decrease of 9.57 pct, but in the sports business, the gross margin of the event management and operation, stadium operation management, and leisure and fitness business increased significantly.
The sports industry chain is deeply cultivated and differentiated digital collections are launched
The company is deeply involved in the sports industry chain and related services, and has strong collaboration capabilities throughout the industry chain. It is the only listed company controlled by the State Administration of Sports. Currently, its main business includes events, sports communication, education and training, sports lotteries, offline sports space platforms, online digital technology platforms, standard certification, etc., which involve all aspects of the sports industry chain. In the past two years, some events were postponed or cancelled due to the epidemic. During the year, the company cooperated with the General Administration of Sports to find new growth points, such as signing a strategic cooperation framework agreement with the Winter Sports Management Center, signing a strategic cooperation framework agreement with the Human Resources Development Center of the General Administration of Sports, and signing a strategic cooperation agreement with the martial arts management center of the General Administration of Sports. The company launched part of the digital collection. Combining the official endorsement of the competition's recognition with the special value of the digital collection itself will have a good collection effect. The 3D digital collection of the Chinese ice and snow mascot “Ice Doll, Snow Doll”, which was jointly released by China Sports Mathematics and the Winter Sports Center, has landed on the Alipay platform, and the 3D digital edition of the first Beijing Marathon commemorative medals and badges created jointly by the China Olympic Road Run and Mathematics has been launched, achieving high-quality sales results.
Investment suggestions: As the only listed company controlled by the China General Administration of Sports, the company has a strong endorsement effect. The sports operation and management business and lottery business have become the main performance contribution points. The company is currently gradually transforming into the main sports industry, continuously iterating on its core capabilities such as sports event operation and stadium operation, while at the same time opening up new performance growth points by relying on its advantages in sports lottery core technology and printing. The company has kept pace with the times and launched sports-specific digital collections, and the future expansion of the business also has great potential and room for development. With the continuous rapid development of national fitness, high-end sporting events, snow and ice sports, etc., the company's core competitive advantage will gradually become apparent.
The company is expected to achieve net profit of 50 million yuan, 132 million yuan, and 189 million yuan from 2021 to 2023. The current stock price corresponding to PE is 262X, 99X, and 69X respectively, giving it an “increase in holdings” rating.
Risk warning: The epidemic continues to be affected repeatedly; the hosting and development of large-scale racing tracks falls short of expectations; the impact of changes in sports lottery-related policies and development trends on the overall scale of the industry; competition in the event operation market, etc.