The company is a leading domestic motor sports operation service provider. As a benchmark enterprise in the domestic racing field, the company has formulated a new “IP-led, digitally driven” development strategy and built a business layout integrating space, IP, and digitalization. Tournament operations recovered in 2023, and the company's revenue recovered rapidly. The company's revenue declined significantly in 2020-2022 compared to 2019, mainly due to the impact of the domestic epidemic. In 2023, spectators will be able to watch the game live, and the company's event operating business revenue has increased dramatically. According to the company's 2023 semi-annual report, the company's revenue for the first half of the year was 182 million yuan, up 135.4% year on year.
With policy support, the tournament operation business is steady, moderate and improving. In 2021, the country successively issued policies such as the “National Fitness Plan (2021-2025)” and “14th Five-Year” Sports Development Plan to promote the development of the sports industry. According to the policy plan, by the end of 2025, the total size of China's sports industry will reach 5 trillion yuan, accounting for 2% of the gross domestic product. The company system has several well-known international or national competition IPs. Examples include the FIA Asian Formula 3 Championship, the CTCC China Auto Track Professional League, and the CKC Racing League Super League - China Kart Championship; authorized to exclusively operate TCR China to establish and operate independent events such as the SEC Super Endurance Championship, Tianma, Zhongnan Racing Festival, Lisheng Super Track Festival, Elite Series, Fengyun Battle, and 24-hour Kart Endurance Race. The company's tournament operations will be steady, moderate and positive in 2024.
The company's main racing schedule for 2024 has been announced, including the FIA UAE Formula 4 Championship, TCR (Car Race), and the Lamborghini SUPER TROFEO Asia Challenge (sports car series), which was added in 2023.
Digital sports are expected to become the second growth curve. The domestic sports market is developing from the stage of information sports and digital sports to the stage of smart sports and smart sports. According to the “China Smart Sports Development Report”, the domestic smart sports market will reach 150 billion yuan in 2023, of which the smart sports and fitness market will reach 34.8 billion yuan. Since 2022, the company has been developing smart sports equipment, sports software system products and related services.
In 2023, the company plans to raise no more than 600 million yuan in total capital, of which 100 million yuan will be used to invest in artificial intelligence digital sports projects. The company hopes to use AIGC technology to develop an intelligent app based on the existing digital business. The app aims to provide users with personalized and accurate sports advice and guidance.
Product profit models mainly include AI service revenue, advertising revenue, and product and service revenue for enterprise users.
Profit forecast and investment rating: The company is a leading domestic auto sports operation service provider. It responds to the national sports industry policy and actively expands the digital sports business. We expect the company's net profit from 2023 to 2025 to be 0.33/0.580.75597 million yuan, respectively, and the corresponding PE will be 83X/48X/38X, respectively, covered for the first time, and given a “recommended” rating.
Risk warning: Domestic auto racing is not very influential, and the digital sports business is progressing slowly.