Main points of investment
Users operate SaaS leader, and industry barriers are gradually strengthened: in the initial stage of the development of the whole user operation SaaS industry, barriers to entry are relatively low, but after nearly five years of development, the company's advantages based on the accumulation of user data tags and the double barriers of high sunk costs under the industry's free strategy directly shut out many new players. In addition, the upstream supply chain docking based on bonus mall function has a strong scale effect, which further strengthens the company's relative competitiveness. According to the data compiled by iResearch Consulting, Duiba is currently in the leading position in this industry segment. As of December 31, 2018, the number of registered mobile APP of Duiba has more than 1 million DAU, 58 DAU more than 9 million, and the total number of MAU of all registered APP is more than 15000 million, surpassing other peers.
Interactive advertising business collaboration to deepen data competition barriers: according to the data compiled by iResearch Consulting, according to the revenue data for fiscal year 2018, the company accounted for 51.7% of China Mobile Limited's interactive effect advertising market, ranking first in the industry. The scale of users and media resources respectively build large-scale competition barriers for the company from the perspective of supply and demand. However, considering that the scale of the Internet business model is easy to catch up, we believe that technical barriers have more long-term competitive advantages. For example, the company launched the oCPC optimized bidding system in May 2017, which can automatically identify appropriate content distribution channels for specific advertising content and greatly increase the rate of return on expenses of advertisers. As of June 2018, the system has been used for more than 40% of ad page views. In addition, the company launched the "crowd targeted Advertising function" in March 2018, which predicts user advertising interaction and optimizes advertising based on user historical behavior and attribute data.
Investment suggestion: as the industry segment leader of users operating SaaS system and interactive effect advertising industry, in the future, with the continuous improvement of industry concentration, the continuous strengthening of relevant capital entry and technical barriers, the company's high-speed business growth will return to profitability improvement. In the specific business development, with the promotion of the charging business model and the continuous penetration in the relevant vertical segments of industries, users operating SaaS business will maintain the rapid growth of revenue and net profit in the short term. As for the interactive advertising business, considering that its corresponding industry concentration will further improve rapidly, and the company's commercial advantages based on the industry technology transition will be gradually strengthened, it is expected that its advertising business revenue will gradually transform from the focus of scale expansion to the focus of profitability. Based on the above future expectations, we expect the company's net profit from 2019 to 2020 to be-124.98 yuan and 530.26 million yuan, corresponding to EPS of-0.11 yuan and 0.48 yuan, with a "buy" rating for the first time.
Risk tip events: 1, the overall advertising industry expenditure is affected by macroeconomic, there is a more obvious decline; 2, the head advertising flow platform to accelerate the realization, raise the bargaining threshold. 3. The user-operated SaaS charging model of small and medium-sized enterprises is not up to expectation.