Event: the company released its three-quarter report in 2023, with revenue of 960 million / year-on-year + 356% in the first three quarters of 2023, net profit of 240 million / year-on-year reversal of losses, and deduction of non-net profit of 160 million / year-on-year + 650%.

Q3 domestic exhibition market continued, the further growth of exhibition funds in advance benefited from the improvement of the domestic convention and exhibition industry in the first three quarters, and the company's convention and exhibition business ushered in a full recovery. From January to September, the company hosts and undertakes 15 exhibitions with a total scale of more than 1.05 million square meters; holds 6 road running events with a total participation of more than 38000 people; the Shanghai Expo Exhibition Hall operated by the company holds a total of 69 exhibitions and activities, with a total rental area of more than 7.511 million square meters. The company's 3Q23 achieved operating income of 400 million yuan / year-on-year + 306%, and home net profit of 50 million / year-on-year + 57%, a record high.

The month-on-month decline in net profit margin is mainly affected by investment income. The gross profit margin of 3Q23 remains stable, which is 27.3%, which is basically the same as the previous month. However, the net profit margin of 3Q23 is only 13.6%, which is lower than that of 2Q23, mainly due to: 1) the third quarter is the relatively off-season of the exhibition, but the company expenses are relatively rigid; sales expense rate / management expense rate + 0.9pct, 3.1pct 2) the investment income decreased by 100 million month-on-month, mainly because 2Q23 received more dividends from financial assets, but 3Q23 had no related dividends.

Invest in pet exhibition projects, "exhibition China" strategy began to land as a state-owned exhibition company, operating momentum is strong and has landing ability, the established strategy "exhibition China" and "digital exhibition" have begun to land and achieve results. The company announced on September 27 that it intends to join with the related party Shanghai East Ruihui Exhibition Private Investment Fund Partnership to acquire 40.74% equity of Shanghai Tabos Exhibition Co., Ltd through agreement transfer and directional capital increase, of which the company intends to contribute 42.3 million yuan and hold 34.81% equity. Its main business is TOPS Pet Exhibition, which is in a period of rapid development in recent years, which can further improve the company's layout in the field of consumer exhibitions.

Industry valuation judgment and rating description:

It is estimated that the return net profit of the company in 2023-25 is 2.8,3.0 and 340 million yuan, corresponding to 18x, 17x and 15X respectively. Considering the continuous progress of the company's "exhibition China" and "digital China" strategy, and the recent acquisition of the pet exhibition project, we expect the company to further promote the endogenous + epitaxial two-wheel drive growth strategy. the medium-term growth space is expected to open up and maintain the "recommended" rating.

Risk hint: the expansion of exhibition projects in different places is lower than expected; the fair value of financial assets held changes.