Summary:

Feitian Cloud Motion, formerly known as Feitian Technology, mainly engaged in games and game-related business, completed the withdrawal of games and game-related business in May 2019, and began to shift its focus to AR/VR content and services business. The company actively promotes the layout of AR/VR, covering marketing services, content and SaaS. AR/VR marketing service is the main source of revenue, AR/VR content business has the characteristics of high gross margin and high gross profit margin, AR/VR SaaS gross profit contribution ability continues to increase, and the gross profit margin is the highest. At present, the AR/ VR online advertising market is developing rapidly. As a small leader in the market segment, the company holds the first-mover advantage and unites with the Internet giants. In addition, the participation of heavy cornerstone investors can also be seen in the full trust and cooperation intention of the local state-owned assets platform to Feitian Cloud.

Core content:

1. AR/VR business is bright and resolutely marches into meta-universe. The game business starts, taking advantage of the potential to layout meta-universe. The management team is experienced and the backbone is stable. AR/VR business performance is eye-catching, the performance is stable, the gross profit margin remains stable, and the expense rate is lower than in previous years.

2. Triple business model to provide comprehensive customer service. AR/VR marketing services: company development + help customers use; AR/VR content: company development + customer use; AR/VR SaaS: customer development + customer use; AR/VR ecosystem: business synergy.

3. AR/VR content and service market is developing at a high speed. Online advertising tends to be presented in various forms, and AR/VR marketing has advantages. With the rapid development of China's AR/VR content and service market, with the gradual popularity of AR/VR technology in marketing and e-commerce scenarios, more and more enterprises try AR/VR marketing or VR e-commerce cloud store innovation.

4. Subdivide the small leader of the market and grasp the first-mover advantage. The company is the market leader of AR/VR content and services in China, allied with Internet giants, and backed by cornerstone investors such as Zhejiang Anji State Asset, Shangtang Technology and so on. The company has rich experience and data accumulation in AR/VR, mastering comprehensive VR/AR technology.

Combined with the above judgments and assumptions on the development trend of the industry and the fundamentals of the company, we estimate that the operating income of the company from 2022 to 2024 will be 8.22 yuan 10.93 / 1.439 billion yuan respectively, and the net profit of returning to the mother will be 1.43 yuan 1.43 / 182 million yuan respectively.

Risk tips: unable to effectively control the risk of flow acquisition cost, the risk of performance growth falling short of expectations, the risk of policies and laws and regulations, the risk of significant fluctuations in stock prices, the risk of negative public opinion, the risk of intensified competition, the risk that the development of the industry is not as expected, the risk of loss of business participants, the risk of dependence on customers and suppliers.