Performance Overview: The company released its 2024 semi-annual report. With 2024H1, the company achieved operating income of 1.086 billion yuan, an increase of 8.80% year on year; achieved net profit due to mother 0.132 billion yuan, an increase of 10.44% year on year; realized net profit to mother of 0.14 billion yuan excluding exchange gains and loss and share payments, an increase of 39.87% year on year.

With 2024Q2, the company achieved operating income of 0.605 billion yuan, a year-on-year increase of 15.23%; net profit to mother was 0.082 billion yuan, an increase of 4.73% year-on-year.

Performance advertising revenue increased year-on-year, and the proportion of direct customers increased significantly. By region, 2024H1 achieved overseas revenue of 0.928 billion yuan, accounting for 85.43% of total revenue; domestic revenue of 0.158 billion yuan, accounting for 14.57% of total revenue. In terms of business type, 2024H1's performance advertising business revenue increased 11.24% year on year to 1.047 billion yuan, accounting for 96.46% of total revenue; advertising sales agency business revenue fell 36.58% year on year to 0.035 billion yuan, accounting for 3.21% of total revenue. In terms of customer types, 2024H1's e-commerce customer revenue increased 10.32% year over year to 0.269 billion yuan, accounting for 24.79% of total revenue; revenue from app, entertainment agencies and other types of customers increased 8.04% year over year to 0.813 billion yuan, accounting for 74.88% of total revenue. The company was favored by customers with its technical capabilities, and the revenue share of 2024H1 direct customers increased by 10.18pct to 71.54%.

Complete the closed loop of AI-based marketing links and release the “AI+BI+CI” full-link digital solution for overseas markets. 2024H1, the company insists on using marketing+AI to drive enterprises with digital intelligence, and completed a closed loop of AI-based marketing links of market insight - marketing strategy - material generation - budget allocation - data feedback, and achieved full coverage of the intelligent marketing link. In May 2024, the company released the “AI+BI+CI” full-link digital solution for overseas marketing, using the three core products of the AIGC digital marketing creation platform KreadOAI and the data analysis and growth model platform Gears, the digital intelligent and intelligent multi-cloud management platform, to provide overseas enterprises with full-link solutions from continuous multi-cloud delivery, multi-cloud financial management, offshore route planning, and intelligent product upgrades to digital marketing promotion, to help overseas enterprises improve global operation efficiency at a lower cost and drive a flywheel for overseas business growth.

Empowering customers in multiple industries to enter new markets, improving efficiency is beginning to show results. 2024H1 helped Telecom enter emerging markets around the world, reduced CPM costs by 57.44%, increased brand volume by 146%, and promoted the mutually driven development of digital media and content marketing. ZmatiCoo, a subsidiary brand of the company, cooperated with Tencent WeTV to achieve efficient monetization in the Southeast Asian market. The company uses data-driven strategy adjustments to match traffic to different budgets by value and helps WeTV maintain a high bid win rate. Furthermore, the company empowers China's smart home music to increase its efficiency in the US market. With the company's technical support, Lego achieved a 1.45 times increase in orders, a 118% increase in conversion rate, and a 136% increase in revenue.

Profit forecast: The company empowers customers in multiple industries to go overseas with “AI+BI+CI” full-link digital solutions, and has seen results in reducing costs and increasing efficiency. We expect the company to achieve net profit of 0.282/0.357/0.432 billion yuan in 2024-2026, with year-on-year growth of 29.8%/26.8%/20.8%, respectively. Corresponds to PE22/17/14x and maintains a “buy” rating.

Risk warning: policy regulation risk; industry competition increases risk; exchange rate risk.