Market Overview - Hong Kong stocks experienced a pullback after an initial rise, with the Hang Seng Index closing down 0.29% at 24,517.76 points and a total trading volume of 258.95 billion HKD [1] - The Hang Seng China Enterprises Index fell 0.18% to 8,861.39 points, while the Hang Seng Tech Index decreased by 0.24% to 5,418.4 points [1] - Shenwan Hongyuan remains optimistic about investment opportunities in Hong Kong and A-share markets, predicting that Hong Kong will play a crucial role in the restructuring of the global financial order [1] Blue Chip Performance - Anta Sports (02020) led blue-chip stocks, rising 2.28% to 91.85 HKD, contributing 4.55 points to the Hang Seng Index [2] - Other notable performers included Kuaishou-W (01024) up 2.13% and Trip.com Group-S (09961) up 1.59%, while Shenzhou International (02313) and Zhongsheng Holdings (00881) saw declines of 2.75% and 2.67%, respectively [2] Sector Highlights - Large tech stocks showed mixed results, with Kuaishou rising over 2% and Baidu nearly 1%, while Tencent fell 0.19% [3] - The humanoid robot sector is gaining traction, with Shengye rising nearly 15% following positive developments [3] - The innovative drug sector remains active, with Lijun Pharmaceutical rising 13% amid ongoing interest in new drug procurement [4][5] Innovative Drug Sector - The 11th batch of national drug procurement has started, focusing on mature "old drugs" while excluding innovative drugs [5] - Analysts believe that the current innovative drug market is driven by value reassessment, with domestic investors increasing their positions through Hong Kong Stock Connect [5] Stablecoin Activity - China San San Media (08087) surged 72.73% after announcing plans to apply for a stablecoin license in Hong Kong, which will officially take effect on August 1 [6] - The global regulatory framework for stablecoins is expected to lead to significant industry growth [6] New Consumption Trends - New consumption stocks showed varied performance, with Guoquan (02517) up 7.29% and Hu Shang Ayi (02589) up 1.99%, while Gu Ming (01364) fell 4.26% [7] - Guoquan expects a net profit of approximately 180 to 210 million RMB for the first half of 2025, representing a year-on-year increase of 111% to 146% [7] Notable Stock Movements - Weiyali (00854) saw a dramatic increase of 288.34% after resuming trading, reaching a peak of 33.2 HKD [8] - Chongqing Machinery (02722) rose 14.06% following news of NVIDIA resuming sales of its H20 chip in China [9] - Jiufang Zhitu Holdings (09636) increased by 10.06% as it plans to issue shares for strategic investments [10] - Quzhi Group (00917) fell 12.06% after announcing a share placement at a discount to its market price [11]

Group 1 - The company, Qizhi Group, announced a placement agreement to issue 3 million shares at a price of HKD 106.60 per share, representing approximately 1.14% of the existing issued shares [1] - The placement price reflects a discount of about 17.04% compared to the closing price of HKD 128.50 on the last trading day and a discount of approximately 17.44% compared to the average closing price of HKD 129.12 over the last five trading days [1] - The board believes that the placement will enhance the company's liquidity and financial position, expand the shareholder base, optimize the capital structure, and support sustainable development [1] Group 2 - If all placement shares are fully subscribed, the total gross proceeds are expected to be approximately HKD 320 million, with a net amount of about HKD 314 million after deducting commissions and related costs [2] - The net proceeds are planned to be used as follows: approximately 50% for domestic and international business operations, about 10% for research and development, and around 40% for optimizing the capital structure and other general corporate purposes [2] - The expected timeline for utilizing the net proceeds is by December 31, 2030, subject to adjustments based on future developments, market conditions, and business circumstances [2]

Financial Performance - In 2024, the company's revenue reached RMB 1,339.5 million, representing a year-on-year growth of 33.1%[9] - Gross profit for 2024 was RMB 749.8 million, an increase of 40.1% compared to the previous year[13] - Adjusted EBITDA for 2024 amounted to RMB 339.7 million, reflecting a year-on-year growth of 21.2%[13] - The company reported a net loss of RMB 1,662.7 million for the year ended December 31, 2024, primarily due to a non-cash one-time fair value change related to the conversion of convertible redeemable preferred shares[54] - Adjusted profit (non-IFRS measure) totaled RMB 251.2 million for the year ended December 31, 2024, representing a year-on-year increase of 25.1%[54] - Other income surged from RMB 6.3 million for the year ended December 31, 2023, to RMB 19.4 million for the year ended December 31, 2024, marking a growth of 207.9%[45] - The financial performance for the year ending December 31, 2024, is detailed in the consolidated income statement and other comprehensive income section of the annual report[99] Assets and Liabilities - The total assets of the company as of December 31, 2024, were RMB 2,106.3 million, up from RMB 1,067.4 million in 2023[10] - The company's net current assets increased to RMB 1,365.7 million in 2024, compared to RMB 730.7 million in 2023[10] - The total liabilities decreased significantly to RMB 540.7 million in 2024 from RMB 1,435.3 million in 2023[10] - The company's debt-to-asset ratio decreased dramatically from 134.5% as of December 31, 2023, to 25.7% as of December 31, 2024, primarily due to the conversion of convertible redeemable preferred shares into ordinary shares[66] Revenue Segments - Marketing services revenue for 2024 was RMB 1,097.4 million, a rise from RMB 808.0 million in 2023[9] - The company reported a total of RMB 184.6 million in product sales for 2024, compared to RMB 144.3 million in 2023[9] - The marketing services segment generated revenue of RMB 1,097.4 million, a year-on-year increase of 35.8%, with a gross profit of RMB 679.5 million, up 41.7%[24] - Revenue from the merchandise sales segment reached RMB 184.6 million, a year-on-year increase of 27.9%, with gross profit rising by 47.1% to RMB 43.7 million[32] - Value-added marketing services revenue surged from RMB 115.8 million to RMB 177.8 million, reflecting a year-on-year growth of 53.5% due to continued investment in AI interactive marketing and data strategy products[39] Client and Market Development - The number of brand clients served increased to 294, with the number of major clients rising to 50, and the average revenue per major client grew by 30.1% to RMB 18.0 million[25] - The company aims to expand its services into high-potential sectors such as new energy vehicles and home appliances, supported by favorable policies[16] - The group plans to accelerate international expansion into the Middle East and Singapore markets, along with strategic business acquisitions to enhance resource integration[34] Research and Development - The company significantly increased its R&D investment in AI interaction and data products by 44.7% year-on-year, resulting in substantial technological achievements and product transformations[26] - The company plans to focus its R&D efforts on AI interaction and big data for core marketing services, reducing engagement in non-core projects[41] Shareholder and Equity Information - The company reported that as of December 31, 2024, the total issued share capital was 262,705,446 shares[128] - The company has a distributable reserve of approximately RMB 1,536.3 million as of December 31, 2024, compared to zero in 2023[114] - The company has established a unified action agreement among key shareholders to ensure consistent voting behavior at shareholder meetings[141] - The total number of shares held by major shareholders indicates a significant concentration of ownership, with several entities holding over 8% of the issued share capital[132][133][134][135][136] Governance and Management - The management team includes experienced professionals with over 25 years in telecommunications and technology sectors[78] - The board consists of three executive directors, two non-executive directors, and three independent non-executive directors, ensuring compliance with listing rules regarding independent director appointments[181] - The company has established mechanisms to ensure the board can obtain independent opinions, including the appointment of at least three independent non-executive directors[188] - The company has appropriate liability insurance arrangements for directors and reviews the coverage annually[180] Employee and Training Initiatives - The group has a total employee cost of RMB 40.7 million for the reporting period, an increase from RMB 38.3 million for the previous year[76] - The company continuously provides training programs to enhance employees' skills and ensure compliance with policies[76] - The gender distribution among employees, including senior management, is approximately 65% male and 35% female, with a goal to achieve a more balanced gender ratio[186] Future Plans and Strategic Initiatives - The company plans to initiate strategic acquisitions in 2025 to enhance resource integration and expand business synergies[16] - The company aims to optimize marketing services with 13.0% of the net proceeds, totaling HKD 54.67 million[106] - The company is committed to maintaining effective cost control and efficient operations in response to market competition and regulatory changes[104]

Financial Performance - The company reported a revenue of RMB 1,339.5 million for the year ending December 31, 2024, representing a year-on-year growth of 33.1%[2] - Gross profit increased to RMB 749.8 million, reflecting a 40.1% year-on-year growth[7] - Adjusted EBITDA for the period was RMB 339.7 million, up 21.2% compared to the previous year[8] - The adjusted profit (non-IFRS) for the year was RMB 251.2 million, showing a 25.1% increase year-on-year[2] - The company reported a net loss of RMB 1,662.7 million for the year ending December 31, 2024, primarily due to a non-cash one-time fair value change of RMB 1,899.4 million related to the conversion of convertible redeemable preferred shares into ordinary shares[55] - The company reported a net loss of RMB 1,672,156 thousand for the year 2024, compared to a profit of RMB 130,942 thousand in 2023, reflecting a significant decline in profitability[108] Revenue Segments - The marketing services segment reported revenue of RMB 1,097.5 million, a year-on-year increase of 35.8%, with a gross profit of RMB 679.5 million, up 41.7%[9] - The standardized marketing services revenue reached RMB 919.7 million, growing 32.9% year-on-year, with a gross margin of 56.5%[9] - The product sales segment reported revenue of RMB 184.6 million, a year-on-year increase of 27.9%, with a gross margin of 23.7%[21][30] - The other services segment generated revenue of RMB 57.4 million, reflecting a year-on-year growth of 5.6%, with a gross margin of 46.4%[22][30] Customer Metrics - The number of brand customers increased to 294, with the number of major customers rising to 50, and average revenue per major customer increased to RMB 18.0 million, a growth of 30.1% year-on-year[11] - The number of large customers purchasing standardized marketing services increased from 47 to 50, with average revenue per large customer rising from RMB 11.8 million to RMB 15.0 million[32] - The number of customers purchasing value-added marketing services grew from 79 to 83, with average revenue per large customer increasing from RMB 3.3 million to RMB 5.2 million[35] Research and Development - Research and development investment increased by 44.7% year-on-year, enhancing the competitiveness of products and services[12] - New AI interactive and big data products were successfully launched, including AI-driven digital shopping assistants and emotion recognition technology[13][15] - Research and development expenses increased from RMB 63.3 million for the year ended December 31, 2023, to RMB 91.5 million for the year ending December 31, 2024, reflecting a growth of 43.8%[50] Financial Position - The company maintained a healthy financial position with cash and cash equivalents reaching RMB 892.0 million, indicating strong liquidity[8] - The debt-to-asset ratio decreased significantly from 134.5% as of December 31, 2023, to 25.7% as of December 31, 2024, primarily due to the conversion of redeemable convertible preferred shares into ordinary shares[68] - The total assets as of December 31, 2024, amounted to RMB 2,106,346 thousand, compared to RMB 1,067,374 thousand in 2023, showing a substantial growth in asset base[102] Strategic Initiatives - The company aims to expand its service offerings and enhance collaboration with clients to sustain growth momentum[7] - The company is actively investing in AI interactive marketing and big data to enhance its technological capabilities and long-term profitability[8] - The company plans to focus its R&D efforts on AI interaction and big data technologies to enhance its core marketing services[24] - The company aims to accelerate its internationalization strategy, particularly in the Middle East and Singapore markets, through strategic acquisitions[26] Governance and Compliance - The company has adopted corporate governance principles to ensure shareholder interests and enhance corporate value[85] - The chairman and CEO roles are held by the same individual, which the board believes ensures effective leadership and strategic planning[86] - The company has established an audit committee consisting of three independent non-executive directors to oversee financial reporting and risk management[92] Market Expansion - The company aims to enhance its market presence through strategic initiatives and potential acquisitions in the upcoming fiscal year[92] - The company has expanded its market presence with subsidiaries in various regions, including Singapore and multiple locations in mainland China, focusing on marketing services and product sales[110] - The company has established a strategy for market expansion through acquisitions and partnerships, enhancing its service offerings in the marketing sector[109] Operational Efficiency - The company will continue to enhance its operational efficiency and AI capabilities to support business growth and improve overall effectiveness[26] - The company has implemented strict credit control procedures to minimize credit risk associated with trade receivables[154] Shareholder Information - No final dividend will be declared for the year ending December 31, 2024[83] - The company did not recommend any dividend payments for the reporting period[148]

Investment Rating - The report assigns a "Buy" rating to the company, with an initial coverage date of January 15, 2025 [1][5]. Core Insights - The company, Quzhi Group, is recognized as a leader in AIoT interactive marketing, experiencing rapid growth in its business performance. The AI interactive marketing solutions offered by the company have been successfully commercialized, and the company is expected to maintain high growth rates as it expands both domestically and internationally [3][8]. Summary by Sections Company Overview - Quzhi Group is a leading provider of AIoT interactive terminal network marketing services in China, utilizing self-developed multi-sensory AI interactive terminals to connect consumers with fast-moving consumer goods (FMCG) brands [16][17]. Financial Performance - The company reported significant revenue growth, with sales revenue projected to increase from RMB 554 million in 2022 to RMB 2,283 million by 2026, reflecting a compound annual growth rate (CAGR) of approximately 30.29% [7][23]. - Adjusted net profit is expected to rise from RMB 78 million in 2022 to RMB 386 million in 2026, indicating a strong growth trajectory [7][47]. Business Segments - The company's main business segments include marketing services and product sales, with marketing services accounting for over 70% of total revenue. Marketing services revenue saw a nearly 100% increase in 2023 [23][26]. - The marketing services are divided into standardized and value-added services, with the latter showing substantial growth due to increased interactivity and consumer engagement [18][29]. Market Potential - The AIoT marketing sector is projected to grow at a CAGR of 30.1% from 2022 to 2027, providing significant opportunities for the company as it expands its market presence [8][66]. - The company is also initiating a global strategy to enter the Middle Eastern market, where the AI marketing sector is expected to grow at a CAGR of 27.3% from 2023 to 2030 [8][66]. Valuation - The report employs the PEG valuation method, with the company's PEG ratio for 2026 estimated at 1.75, which is lower than the average PEG ratio of comparable companies at 1.97 [5][7].

Revenue Growth - Revenue for the six months ended June 30, 2024, reached RMB 515,117 thousand, representing a 41.7% increase compared to RMB 363,592 thousand for the same period in 2023[22]. - In the first half of 2024, the company recorded revenue of RMB 515.1 million, representing a year-on-year growth of 41.7%[24]. - The company's revenue increased from RMB 363.6 million in the first half of 2023 to RMB 515.1 million in the first half of 2024, representing a year-on-year growth of 41.7%[34]. - Marketing services revenue rose from RMB 291.8 million in the first half of 2023 to RMB 411.8 million in the first half of 2024, a year-on-year increase of 41.1%[36]. - The product sales segment achieved revenue of RMB 78.4 million, a year-on-year increase of 48.8%[29]. Profitability and Financial Performance - Gross profit increased to RMB 281,424 thousand, a 45.0% rise from RMB 194,108 thousand in the previous year[22]. - Adjusted profit (non-IFRS measure) for the period was RMB 80,269 thousand, reflecting a 48.8% increase from RMB 53,949 thousand in the same period last year[22]. - Adjusted EBITDA (non-IFRS measure) was RMB 121,416 thousand, up 35.9% from RMB 89,360 thousand year-over-year[22]. - The company incurred a net loss of RMB 1,846,245,000, compared to a profit of RMB 65,390,000 in the prior year, indicating a significant decline in profitability[114]. - The basic loss per share for the period was RMB (13.71), compared to a profit of RMB 0.62 per share in the previous year[114]. Expenses and Cost Management - Selling and distribution expenses increased from RMB 95.3 million in the first half of 2023 to RMB 141.9 million in the first half of 2024, a rise of 49.0%[43]. - R&D expenses rose from RMB 27.3 million in H1 2023 to RMB 37.5 million in H1 2024, an increase of 37.3%, driven by investments in AI interaction modules and supply chain optimization[46]. - Financial expenses increased from RMB 0.8 million in H1 2023 to RMB 4.0 million in H1 2024, a growth of RMB 3.2 million, primarily due to new bank loans for strategic expansion and operational development[45]. - The company's gross margin for the first half of 2024 was 54.6%, compared to 53.4% in the first half of 2023, indicating stable cost control[41]. Cash Flow and Financial Stability - As of June 30, 2024, the company had cash and cash equivalents totaling RMB 887.6 million, indicating strong financial stability[24]. - Cash and cash equivalents at the end of the period were RMB 887,616,000, up 438.5% from RMB 160,831,000 at the end of June 2023[122]. - Operating cash flow for the six months ended June 30, 2024, was RMB 101,997,000, a 54.4% increase from RMB 66,179,000 in the same period of 2023[122]. - Net cash flow from operating activities increased to RMB 79,373,000, up 37.5% from RMB 57,698,000 year-over-year[122]. Client and Market Expansion - The number of brand clients served increased to 171, up by 41 clients compared to the previous year, with major clients averaging RMB 10.6 million in revenue each[26]. - The company plans to expand its international strategy and enter the Middle Eastern market, enhancing its service offerings for brand clients[33]. - The company aims to leverage AI and big data technologies to improve operational efficiency and user experience[33]. Shareholder and Governance Information - The company has established a unified action agreement among key shareholders to ensure consistent voting at shareholder meetings[86]. - The audit committee, consisting of three independent non-executive directors, oversees the financial reporting and risk management processes[79]. - The company is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[75]. Future Outlook and Strategic Initiatives - The company plans to expand its market presence and invest in new product development to drive future growth[121]. - The company is exploring potential acquisitions to enhance its product offerings and market reach, with a budget of G million allocated for this purpose[178]. - A new product line is set to launch in Q3 2024, expected to contribute an additional F million in revenue[178]. - The management highlighted a strategic shift towards digital transformation, aiming to improve operational efficiency by H%[178].

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of RMB 515.1 million, representing a year-on-year increase of 41.7%[5] - Adjusted gross profit reached RMB 281.4 million, reflecting a year-on-year growth of 45.0%[5] - Adjusted EBITDA totaled RMB 121.4 million, which is a 35.9% increase compared to the previous year[5] - The company reported a total comprehensive loss of RMB (1,846,245) thousand for the six months ended June 30, 2024, compared to a profit of RMB 65,390 thousand for the same period in 2023[54] - The company incurred a loss before tax of RMB 1,837,084 thousand for the six months ended June 30, 2024, compared to a profit of RMB 71,307 thousand in the same period of 2023[53] - The net loss for the period was RMB 1,846,245 thousand, a significant decline from a profit of RMB 65,390 thousand in the prior year[53] - Adjusted profit (non-IFRS measure) totaled RMB 80.3 million, reflecting a year-on-year growth of 48.8%[29] - The adjusted profit (non-IFRS measure) for the six months ended June 30, 2024, was RMB 80.3 million, compared to RMB 53.9 million for the same period in 2023, representing a year-over-year increase of 48.9%[32] Revenue Segmentation - The marketing services segment generated revenue of RMB 411.8 million, up 41.1% year-on-year, with standardized marketing services contributing RMB 359.8 million, a 44.6% increase[6] - Revenue from the merchandise sales segment was RMB 78.4 million, a year-on-year increase of 48.8%, with gross profit rising by 69.7% to RMB 24.1 million[11] - Revenue from other services amounted to RMB 24.9 million, representing a year-on-year growth of 30.8%, with gross profit increasing by 45.0% to RMB 11.6 million[12] - Marketing services revenue rose from RMB 291.8 million in the first half of 2023 to RMB 411.8 million in the first half of 2024, reflecting a growth of 41.1%[16] - Product sales revenue grew by 48.8%, from RMB 52.7 million in the first half of 2023 to RMB 78.4 million in the first half of 2024, driven by overall consumption recovery[17] Client and Market Growth - The group provided marketing services to 171 brand clients during the reporting period, an increase of 41 clients compared to the same period last year[7] - The average revenue per major client was RMB 10.6 million, reflecting growth from the previous year[7] - The number of major clients purchasing standardized marketing services increased from 23 in the first half of 2023 to 30 in the first half of 2024, with average revenue per major client rising from RMB 8.06 million to RMB 9.31 million[16] - The overall consumer market in China is experiencing steady growth, with GDP increasing by 5.0% year-on-year, contributing to the company's positive performance[4] Research and Development - The company continues to strengthen its core competitive advantages through ongoing technical research and development, as well as accumulated data and industry experience[5] - The group is focusing on the development of multi-sensory AI interaction capabilities, including emotion recognition technology, to enhance consumer engagement and brand marketing effectiveness[9] - Continuous investment in technology development and AI interaction modules is expected to improve user experience and attract high-quality clients[14] - R&D expenses increased from RMB 27.3 million in the first half of 2023 to RMB 37.5 million in the first half of 2024, marking a growth of 37.3%[25] Financial Position and Liquidity - The company maintained a strong financial position with cash and cash equivalents, along with restricted cash, amounting to RMB 887.6 million as of June 30, 2024[5] - Cash and bank balances surged to RMB 887,616 thousand as of June 30, 2024, compared to RMB 299,018 thousand at the end of 2023, marking an increase of approximately 196.3%[55] - The debt-to-asset ratio improved significantly to 24.4% as of June 30, 2024, down from 134.5% as of December 31, 2023[38] - The company’s financial strategy includes maintaining a balance between equity and debt financing to support growth initiatives[79] Expenses and Cost Management - Sales and distribution expenses increased from RMB 95.3 million in the first half of 2023 to RMB 141.9 million in the first half of 2024, representing a growth of 49.0%[22] - Marketing and promotion expenses rose from RMB 57.4 million in the first half of 2023 to RMB 100.5 million in the first half of 2024, an increase of 75.1%[22] - Management expenses grew from RMB 32.2 million in the first half of 2023 to RMB 36.3 million in the first half of 2024, a rise of 12.9%[23] - Financial expenses surged from RMB 0.8 million in the first half of 2023 to RMB 4.0 million in the first half of 2024, an increase of RMB 3.2 million[24] Corporate Governance and Compliance - The company has adopted a corporate governance code and is committed to maintaining high standards of corporate governance to protect shareholder interests[48] - The audit committee, consisting of three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements for the reporting period[52] - The company has established a standard code for securities trading by directors, ensuring compliance during the reporting period[50] Strategic Initiatives - The company aims to leverage advancements in AI technology to enhance interactive marketing services and meet rising market demand[4] - The group is actively seeking strategic investment opportunities to enhance synergistic effects and quality target businesses[42] - The company is focusing on international expansion, particularly in the Middle East market, as part of its globalization strategy[14] - The company plans to enhance its service capabilities and operational efficiency to adapt to changing market demands and trends, aiming for further growth in client relationships[14] Shareholder Information - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the previous year[47] - The basic loss per share attributable to the owners of the parent company was RMB (13.71) for the current period, a significant decline from a profit of RMB 0.62 in the previous year[54] - The company’s registered capital remains at USD 50,000, divided into 5,000,000,000 shares with a par value of USD 0.00001 each[77] - The company successfully issued 19,704,000 new shares at a price of HKD 25 per share on May 27, 2024, raising significant capital[78]