Due to customer restructuring, the company's revenue fell 5.0% in the first half of the year. 1) In the first half of 2024, the company's revenue was 2 billion yuan, down 5.0% year on year, mainly due to customer restructuring and weak customer demand; net profit to mother was 0.045 billion yuan, a year-on-year decrease of 28.2%, including 0.024 billion in credit impairment losses and 0.1 billion yuan in foreign currency financial statement conversion differences. Gross margin fell 1.7 percentage points year over year to 17.6%; overall expense ratio decreased 1.2 percentage points to 9.4%. 2) Looking at the second quarter alone, the company's revenue was 1.04 billion yuan, down 9.9% year on year, mainly due to weak demand from advertisers and last year's high base effect; net profit to mother was 0.03 billion yuan, down 30.3% year on year.

The main business is operating steadily, and the industrial layout of the celebrity economy continues to be improved. 1) In terms of the main celebrity marketing platform, the number of active customers and fans continued to increase; in terms of customers, as of the end of June 2024, the cumulative number of WEIQ registered merchant customers exceeded 0.2 million, an increase of 3,225; from the celebrity side, the cumulative number of celebrity accounts reached 3.2 million, of which the number of full-time celebrity accounts/MCN institutions was 1.67/0.0179 million, up 11.9%/3.8% from the end of 2023. In the face of industry fluctuations, the company's The position of “high-efficiency connectors” is more stable. 2) In terms of new business, the company continues to improve its business layout in the celebrity economy industry, laying out innovative businesses such as celebrity vocational education (celebrity vocational education brand “Tianxiaxiu Education”), the trendy content district “West Fifth Street”, (a trendy content app for Gen Z people), IMSOCIAL accelerator (providing services to accelerate growth for celebrities and MCN organizations), TOPKLOUT Claura's leading domestic authoritative self-media value ranking and copyright brokerage management third-party data testing agency). In addition, the company also lays out innovative e-commerce and IMsocial businesses, mainly through celebrity marketing and celebrity distribution.

The company has accumulated a large amount of resources in the celebrity economy industry and is the first to occupy an advantageous card position. In terms of main business, the company has now accumulated a large amount of data, customers, and media resources, and has an advantage in analysis and monitoring. It will continue to consolidate its position as a “superconnector” of the entrepreneur economy in the first half of 2024. In terms of new business, the company lays out various innovative businesses based on the upstream and downstream layout of the celebrity industry, empowered by innovative data product forms such as “heatwave data”, “WEIQ-SAAS”, and “customized demand analysis systems”, which not only improved the marketing efficiency of merchants, but also helped monetize the value of celebrity accounts, and pioneered the sorting of industrial resources and business model exploration.

Risk warning: macroeconomic downturn; long payback cycle for innovative businesses; customer pressure on gross profit margin.

Investment advice: Optimistic about the company's layout in the celebrity economy industry and maintain a “superior to the market” rating. Due to macroeconomic impact and advertisers' pressure on gross profit margins, we lowered our profit forecast. We expect net profit to be 0.08/0.18/0.22 billion (originally 0.15/0.26/0.34 billion) for 24-26, respectively, -9.5%/115.4%/23.1% YoY; diluted EPS = 0.05/0.1/0.12 yuan, and the current stock price corresponds to PE = 74x/34x/28x. The company has accumulated a large number of customers, celebrities, data and other resources in the celebrity economy industry, is scarce, and maintains a “superior to the market” rating.