Key points of investment
Revenue side growth is under pressure in the short term, and fundamentals will gradually improve:
In 2022, the company's total revenue increased 18.6% year-on-year to RMB 2.80 billion, achieving steady growth; net profit increased from -3.9 billion yuan in 2021 to 290 million yuan, thanks to increased revenue, improved cost control and improved operating efficiency; Guimu's net profit increased from -290 million yuan in 2021 to 130 million yuan, and the profit level increased. The increase in revenue and profit was mainly contributed by social networking businesses. In terms of social services, the average monthly active users of the company's social products increased by about 20% year-on-year to about 22.9 million in 2022; social networking business revenue increased 22.0% year-on-year to 2.56 billion yuan.
The decline in revenue growth was mainly affected by the World Cup and the downturn in the macroeconomic environment.
User activity in core social networking regions continues, and the potential to launch new products is beginning to appear:
We expect the company's core social networking business to continue to grow steadily in many markets around the world in 2023, and continue to improve monetization efficiency through intensive and refined operations. The profitability of its core social products continues to break through. Currently, MICO is still the company's main source of revenue, and products such as Yumy, YoHo, and Toptop still have plenty of room for growth and huge potential for development.
In the future, Akazicheng Technology will continue to enrich its product matrix and expand growth space through different types of products. It also further increased the scale of the business through the synergy of “social+gaming”. In the short term, based on the successful experience of products such as MICO and the ability of Akagoshiro Technology to incubate new products and find commercial value, various TopTop data is expected to continue to grow rapidly throughout the year.
It also shows that Blue City continues to be rich in social products, and commercialization is expected to accelerate:
The company is currently the main Internet company in China, and has formed four differentiated social networking products to enter the Middle East, Southeast Asia and other places. Among them, MICO, YoHo, Yumy, and Toptop products are still vibrant. And the innovative boutique game business will drive the company's second growth curve. The company's merger with Lancheng Brothers will bring huge growth to performance, giving the company 8 times PE corresponding to net profit of the parent in 2023, with a target price of HK$2.34, maintaining the purchase rating.