Incidents:

The company achieved revenue of 0.701 billion yuan in the first three quarters of 2024, up 80.91% year on year; net profit to mother was 36.27 million yuan, up 10.51% year on year; and non-net profit deducted from mother was 34.11 million yuan, up 59.45% year on year. Among them, 2024Q3 achieved revenue of 0.294 billion yuan, a year-on-year increase of 59.39%; net profit to mother of 16.34 million yuan, an increase of 52.34%; and deducted non-net profit of 15.69 million yuan, an increase of 104.36% year-on-year.

Performance marketing business drives high year-on-year revenue growth in 2024Q3

2024Q3 achieved year-on-year revenue growth, mainly due to the company's overseas marketing service provider Demo Interactive and the industry's senior team to expand the overseas information streaming business; establishing Saicheng Digital Technology and Insai Henan to strengthen domestic information streaming services to provide domestic streaming services for AI applications such as Smart Spectrum AI and Ask Xiaobai; and strengthening the pioneer marketing business with its subsidiary Film Industry to continue to drive the growth of the performance marketing business.

Self-developed InsightGPT's big model efficiently empowers marketing business companies to continue to increase investment in the development and application system of the big marketing AIGC model. With unique algorithms and massive high-quality marketing data assets, they have developed their own multi-modal marketing AIGC application model InsightGPT. At present, many functions and products such as “Smart Video Editor”, “Tucson Video”, and “Wensheng Video” have been launched, and the development of modules such as marketing ideas, e-commerce marketing, marketing videos, and marketing tools focusing on marketing requirements has been completed. Relying on the InsightGPT marketing model, the company cooperates with well-known big models such as Wenxin Yiyan, Kimi, and Doubao in calling the API interface, and provides customers with marketing services with the advantages of shorter content creation time cycles and higher content quality, such as AI generation and editing of images and videos for major customers such as Tencent Games, Krafton, and Meizu.

It was announced that it plans to acquire 80% of the shares in the Wiser brand, further improving the marketing link and business layout. The company plans to purchase 80% of the total shares of the Wise Brand from Liu Yan, Ningbo Youzhi Youth Investment Management Partnership (Limited Partnership), Huang Mingsheng, Han Yanyan, and Yu Qian by issuing shares and paying cash. Wise Brand is the leading digital intelligent PR communication service provider in China. This merger and acquisition is expected to strengthen the company's PR and communication expertise, brand management and digital integrated marketing management capabilities, marketing AIGC technology and commercialization capabilities, etc., further improve the company's marketing links and business layout, broaden the application scenarios of AIGC technology in the marketing field, and achieve the sharing of strategic customer resources.

Profit Forecasts, Valuations, and Ratings

The scale of the company's performance marketing business continues to grow, and the AIGC model continues to be iteratively upgraded to empower the marketing business. Furthermore, the merger and acquisition of the Smarter brand is expected to further improve the company's marketing links and business layout.

Therefore, we expect the company's revenue for 2024-2026 to be 1.11/1.544/1.971 billion yuan, corresponding growth rates of 106.93%/39.11%/27.66%, and net profit to mother of 0.052/0.083/0.116 billion yuan, respectively, corresponding growth rates of 25.86%/59.02%/39.73%. Give the company an “gain” rating.

Risk warning

The risk of macroeconomic fluctuations, the risk of increased industry competition, and the risk that AI technology will fall short of expectations.