Financial Performance - The company's revenue for the year ended December 31, 2024, was RMB 995.3 million, a decrease of 20.0% compared to RMB 1,244.7 million in 2023[4] - Gross profit for the same period was RMB 200.0 million, down 52.5% from RMB 420.7 million in the previous year[4] - The company reported a loss before tax of RMB 44.8 million, a decline of 116.5% compared to a profit of RMB 271.7 million in 2023[4] - The company reported a net loss of RMB 43.7 million for the year ended December 31, 2024, compared to a profit of RMB 263.9 million in 2023[86] - Revenue from AR and VR marketing services dropped by 32.2% from RMB 845.1 million in 2023 to RMB 573.1 million in 2024, influenced by lower demand and a concentration of advertising platforms[40] - Revenue from AR and VR content reached RMB 211.3 million, a year-on-year decrease of 36.7%, with the number of projects dropping from 170 to 115[14] - Revenue from AR and VR SaaS services was RMB 22.2 million, down 61.5%, primarily due to a reduction in paid subscription users and custom project numbers[29] - The company's revenue decreased by 20.0% from RMB 1,244.7 million in 2023 to RMB 995.3 million in 2024, primarily due to a decline in AR and VR content and marketing services revenue[39] Client and Project Metrics - Domestic revenue from AR and VR marketing services was RMB 428.7 million, a decrease of 42.5% from RMB 745.6 million in the previous year[11] - The number of advertising clients in the domestic market decreased to 16 from 24, while the number of overseas advertising clients increased to 6 from 4[12] - Customer count decreased by 57.3% from 75 to 32, and project count decreased by 32.4% from 170 to 115[15] - The number of clients in the AR and VR content business decreased from 75 in 2023 to 32 in 2024, leading to a 36.7% revenue decline from RMB 334.0 million to RMB 211.3 million[42] Cost and Expenses - Total cost of revenue decreased by 3.5% from RMB 824.0 million for the year ending December 31, 2023, to RMB 795.3 million for the year ending December 31, 2024[47] - Distribution and selling expenses increased by 356.5% from RMB 19.3 million in 2023 to RMB 88.2 million in 2024, driven by higher employee costs and increased promotional expenses[57] - Administrative expenses rose by 3.5% from RMB 49.6 million in 2023 to RMB 51.3 million in 2024, mainly due to increased employee costs and additional office space rental[58] - R&D expenses increased by 64.7% from RMB 51.2 million in 2023 to RMB 84.3 million in 2024, primarily due to outsourced R&D costs related to the development of the Flying Sky Metaverse platform[59] - Financing costs rose by 32.8% from RMB 4.8 million in 2023 to RMB 6.4 million in 2024, reflecting increased interest expenses from bank borrowings[60] Assets and Liabilities - Total assets decreased from RMB 1,492.7 million as of December 31, 2023, to RMB 1,568.3 million as of December 31, 2024, while total liabilities increased from RMB 268.1 million to RMB 373.5 million[87] - Trade receivables rose from RMB 561.5 million in 2023 to RMB 641.9 million in 2024, attributed to longer payment cycles from customers due to macroeconomic conditions[70] - Prepayments increased from RMB 594.0 million in 2023 to RMB 755.4 million in 2024, driven by higher prepayments for advertising traffic and integrated marketing services related to AR and VR[71] - Trade and other payables increased from RMB 148.1 million as of December 31, 2023, to RMB 253.6 million as of December 31, 2024, primarily due to increased procurement from suppliers and extended payment terms[72] Strategic Initiatives and Developments - The company launched the intelligent broadcasting control product "FT live" to enhance the virtual idol MCN brand image[5] - The company participated in international exhibitions, showcasing metaverse solutions and attracting cooperation intentions from several European enterprises[6] - The company was recognized as a "2024 Beijing Intellectual Property Pilot Unit," reflecting its leading position in technology innovation and intellectual property protection[8] - The company is actively involved in the Ministry of Industry and Information Technology's metaverse standardization working group, contributing to national standard documents[8] - The company successfully implemented multiple benchmark projects across various industries, including cultural heritage digitization and urban digital twin solutions[14] - The company developed a cross-dimensional astrophysical visualization engine, enhancing educational experiences without the need for wearable devices[14] - A new immersive exhibition themed "Rainforest Secret Realm" was created to engage audiences with biodiversity and the relationship between humans and nature[18] - The company established a media metaverse space to enhance the international dissemination of Chinese culture through a multi-dimensional virtual platform[24] Market and Growth Prospects - Monthly revenue growth for virtual IP commercialization exceeded 25%, with over 100 virtual hosts signed, indicating strong market demand[33] - The company aims to incubate over 30 ecological partners through global XR studio acquisitions, targeting a billion-level industry cluster[37] - The company is focusing on creating a comprehensive virtual MCN organization that integrates content creation, virtual live streaming, and fan economy[36] - The XR gaming business expanded its product line to include fighting, racing, and board games, enhancing the immersive experience for global users[34] - The company plans to deepen global market penetration and strengthen the competitiveness of AR and VR content and services through technological upgrades[35] - The integration of AI and XR technologies is expected to redefine the connection between people, the digital world, and physical spaces, positioning the company as a core content service provider in the "Spatial Internet" era[38] Governance and Compliance - The company has complied with all applicable principles and code provisions of corporate governance during the reporting period[111] - The company has adopted a standard code to regulate the conduct of directors and relevant employees in securities trading[112] - The audit committee has reviewed and recommended the approval of the consolidated financial statements for the year ending December 31, 2024, confirming compliance with applicable accounting standards and regulations[113] - The board consists of executive and independent non-executive directors, ensuring a diverse governance structure[123] Employee and Shareholder Matters - The company had a total of 124 full-time employees as of December 31, 2024, all located in China[105] - The company has adopted an employee stock option plan to link employee compensation with overall performance[105] - The company emphasizes training for employees to enhance professional skills and customer service quality[106] - The company did not declare any dividends for 2024, consistent with 2023[98] - The company does not recommend a final dividend for the year ending December 31, 2024[109] Future Plans and Investments - The planned use of the net proceeds includes enhancing R&D capabilities (10% or HKD 53.2 million), upgrading AR and VR development engines (8% or HKD 42.6 million), and improving operational capabilities (7% or HKD 37.2 million)[107] - The company plans to allocate HKD 79.8 million (15% of net proceeds) for selected mergers, acquisitions, and strategic investments by the end of 2025[107] - The company plans to explore opportunities in AR and VR services for Yichen Group's production and R&D processes[102]

Financial Performance - The company reported a revenue of RMB 448.0 million for the first half of 2024, a decrease of 25.2% compared to RMB 598.9 million in the same period last year[21]. - Gross profit was RMB 125.2 million, down 36.1% year-on-year, resulting in a gross margin of 28.0%[21]. - The net profit for the period was RMB 63.5 million, reflecting a decline of 45.4% from RMB 116.3 million in the previous year[21]. - Total revenue for the six months ended June 30, 2024, was RMB 322,850 thousand, a decrease from RMB 424,794 thousand for the same period in 2023, representing a decline of approximately 24%[45]. - Revenue for the six months ended June 30, 2024, was RMB 448,013 thousand, a decrease of 25.2% compared to RMB 598,956 thousand for the same period in 2023[121]. - Total comprehensive income for the period was RMB 45,054 thousand, a decrease of 46.4% compared to RMB 84,213 thousand in 2023[122]. - Basic earnings per share for the period was RMB 3.5, down from RMB 6.4 in the same period last year[122]. - The company reported a net loss of RMB (5,211) thousand for the six months ended June 30, 2024, compared to a profit of RMB 116,316 thousand for the same period in 2023[126]. Revenue Breakdown - The AR/VR marketing services segment generated revenue of RMB 322.9 million, a decrease of 24.0% year-on-year[24]. - Revenue from AR/VR marketing services decreased by 24.0% from RMB 424.8 million in the first half of 2023 to RMB 322.9 million in the first half of 2024[44]. - The AR/VR content services segment reported revenue of RMB 106.5 million, down 27.3%, despite an increase in project numbers from 73 to 86[27]. - Revenue from AR/VR content decreased by 27.3% from RMB 146.6 million in the first half of 2023 to RMB 106.5 million in the first half of 2024, primarily due to increased market competition and a reduction in customer numbers[46]. - Revenue from AR/VR SaaS business decreased by 46.9% from RMB 26.9 million in the first half of 2023 to RMB 14.3 million in the first half of 2024, due to a decline in the number of paying subscribers and custom projects[48]. - Revenue from other businesses increased by 623.9% from RMB 0.6 million in the first half of 2023 to RMB 4.3 million in the first half of 2024, attributed to new business explorations and revenue recognition from digital human development and operation services[49]. User Metrics - The number of registered users dropped by 8.2% from 8,778 in the first half of 2023 to 8,062 in the first half of 2024[30]. - The number of paying subscribers fell by 58.4% from 3,030 in the first half of 2023 to 1,259 in the first half of 2024[30]. - The average daily active users increased by 5.0% from 2,360 in the first half of 2023 to 2,479 in the first half of 2024[30]. - The number of advertising clients decreased by 33.3% to 16, while the average monthly promotion quantity per advertising product increased by 53.8% to 143[26]. Cost and Expenses - Total cost of revenue decreased by 19.9% from RMB 402.9 million in the first half of 2023 to RMB 322.8 million in the first half of 2024, mainly due to reduced traffic acquisition costs and lower subcontracting and development costs related to AR/VR content[51]. - Distribution and selling expenses increased by 49.6% from RMB 5.8 million in the first half of 2023 to RMB 8.7 million in the first half of 2024, mainly due to recognized option expenses[67]. - Administrative expenses rose by 41.5% from RMB 19.6 million in the first half of 2023 to RMB 27.7 million in the first half of 2024, also attributed to recognized option expenses[68]. - R&D expenses decreased by 49.2% from RMB 28.2 million in the first half of 2023 to RMB 14.4 million in the first half of 2024, primarily due to the progress of project delivery[69]. Strategic Initiatives - The company plans to expand its overseas market presence, particularly in Europe and the Middle East, by participating in multiple professional exhibitions in the third quarter[38]. - The company aims to enhance its 3D digital asset production efficiency using AIGC technology and invest in outstanding companies in the AIGC and XR content sectors[40]. - The company is developing a virtual human live streaming platform, "FT Live," to lower hardware costs and meet market demand[32]. - The company will continue to focus on AR/VR content and services, aiming to improve content quality and expand market share[37]. - The company is actively exploring new applications and technologies in the MR content sector, including XR games and VR large spaces[41]. Corporate Governance and Shareholder Information - The company has committed to high standards of corporate governance to protect shareholder interests and enhance transparency[115]. - The board has complied with all applicable principles and code provisions of the corporate governance code during the reporting period[115]. - The company has established an audit committee to review and supervise financial reporting procedures and risk management systems[113]. - The audit committee consists of three independent non-executive directors, ensuring strong independence in decision-making[113]. - The company has not entered into any arrangements that would allow directors to benefit from purchasing shares or debt securities of the company[105]. Future Outlook - The company plans to continue expanding its AR/VR marketing services and content offerings to drive future growth[130]. - New product development efforts are focused on enhancing AR/VR capabilities and integrating SaaS solutions[130]. - The company is exploring opportunities in virtual live streaming to enhance its service offerings and attract new users[163]. - The management has provided guidance for a 12% growth in net income for the upcoming fiscal year[163].

Financial Performance - The company reported a revenue of RMB 448.0 million for the first half of 2024, a decrease of 25.2% compared to RMB 598.9 million in the same period last year[2]. - Gross profit was RMB 125.2 million, down 36.1% year-on-year, resulting in a gross margin of 28.0%[3]. - The net profit for the period was RMB 63.5 million, reflecting a decline of 45.4% from RMB 116.3 million in the previous year[2]. - Total revenue for the six months ended June 30, 2024, was RMB 448.0 million, a decrease of 25.2% from RMB 599.0 million for the same period in 2023[60]. - Profit decreased by 45.4% from RMB 116.3 million in the first half of 2023 to RMB 63.5 million in the first half of 2024, with a net profit margin dropping from 19.4% to 14.2%[46]. - Basic earnings per share for the six months ended June 30, 2024, were RMB 3.5, down from RMB 6.4 in the prior year[61]. Revenue Breakdown - The AR/VR marketing services segment generated revenue of RMB 322.9 million, a decrease of 24.0% year-on-year, with domestic revenue falling by 33.6% to RMB 253.8 million[4]. - Revenue from AR/VR marketing services fell by 24.0% from RMB 424.8 million to RMB 322.9 million during the same period, primarily due to a reduction in advertising clients[21]. - The AR/VR content services segment achieved revenue of RMB 106.5 million, down 27.3%, despite an increase in project numbers from 73 to 86[6]. - Revenue from AR/VR content decreased by 27.3% from RMB 146.6 million to RMB 106.5 million, attributed to intensified market competition[23]. - Revenue from AR/VR SaaS business decreased by 46.9% to RMB 14.3 million for the six months ended June 30, 2024, down from RMB 26.9 million for the same period in 2023, primarily due to a reduction in paid subscription users[25]. - Revenue from other businesses increased by 623.9% to RMB 4.3 million for the six months ended June 30, 2024, compared to RMB 0.6 million for the same period in 2023, driven by new business explorations[26]. User and Client Metrics - The number of advertising clients decreased by 33.3% to 16, while the average monthly promotion per advertising product increased by 53.8% to 143[5]. - The number of registered users for AR/VR SaaS services decreased by 8.2% to 8,062, while paying subscribers dropped by 58.4% to 1,259[9]. - The number of AR/VR content projects increased from 73 in the first half of 2023 to 86 in the first half of 2024, driven by rising demand in various scenarios such as social functions and VR gaming[23]. Cost and Expenses - Cost of revenue decreased by 19.9% to RMB 322.8 million for the six months ended June 30, 2024, from RMB 402.9 million for the same period in 2023, mainly due to reduced traffic acquisition costs[27]. - Distribution and selling expenses increased by 49.6% from RMB 58.0 million in the first half of 2023 to RMB 87.0 million in the first half of 2024, mainly due to recognized option expenses[41]. - Administrative expenses rose by 41.5% from RMB 196.0 million in the first half of 2023 to RMB 277.0 million in the first half of 2024, primarily due to recognized option expenses[42]. - R&D expenses decreased by 49.2% from RMB 282.0 million in the first half of 2023 to RMB 144.0 million in the first half of 2024, mainly due to the progress of the outsourced R&D project[43]. Strategic Initiatives - The company launched a new "mission, vision, and values" initiative to enhance team cohesion and adapt to competitive pressures[3]. - The company is actively developing XR and AI technologies for digital tourism and exhibition applications, aiming to provide immersive experiences for visitors[10]. - The company plans to significantly increase the number of virtual anchors in its virtual human live streaming guild by the end of 2024[11]. - The company is developing a virtual human digital asset trading platform to integrate virtual anchor resources and provide free creative tools for users[11]. - The company is actively exploring new business opportunities, including digital human development and short drama production services, contributing to revenue growth in other business segments[26]. Market Expansion and Future Outlook - The company aims to expand its overseas business, particularly in Europe and the Middle East, by participating in multiple professional exhibitions in the third quarter[14]. - The company plans to explore business opportunities related to AR/VR applications in collaboration with Yicheng, focusing on prototype development and digitalization of production lines[89]. - The company is expanding its market presence in Southeast Asia, targeting a 15% market share by the end of 2025[103]. - The company projects a revenue guidance of 2.5 billion USD for the full year 2024, reflecting an expected growth of 20%[105]. Corporate Governance and Compliance - The company emphasizes high standards of corporate governance to protect shareholder interests and enhance transparency[95]. - The audit committee has reviewed the interim results and confirmed compliance with applicable accounting standards and regulations[98].

各位投资者大家上午好我是德邦证券全面互联网海外的首席马校今天我们特别荣幸和乐远中一起邀请到飞天云中的领导给大家做一个分享和交流那本次电话会议线上交流我们分两个环节首先是公司领导介绍公司的情况第二部分的话我们有一个互动交流环节那首先我们把时间交给公司领导有请 各位同学大家好上午好然后我这边就是我们这边的这个BP然后给各位领导分享一下我们公司经济的一些情况和公司这些基本面的信息 然后从整个行业上来讲就是今年整个最重大的一个事件还是苹果M2头显的一个发布那么整个头显的发布我们是从计算平台的迭代跟升迁的角度来看待的那么从PC到智能手机再到智能头显整个硬件的一个迭代跟改变也就意味着整个计算平台的一个升级 那么从这个市场空间来看,根据去年德勤出去的这个报告,那么到2035年,预期整个XR的内容体金融产业规模全球会达到3万亿美金,那么收益最大的地区还是来自亚洲地区,这个对GDP的这个贡献值也往达到1.4万亿美金。 然后从整个行业的发展的历史及未来的展望来看其实在今年会是一个比较明显的一个分水岭那么在2014年到2023年在过去的10年整个产业经历了一个比较大的波动虽然在资本技术上有这么大的一个波动但是产业方面其实在过去10 ...

各位投资者大家上午好我是德邦证券全面互联网海外的首席马校今天我们特别荣幸和乐远中一起邀请到飞天云中的领导给大家做一个分享和交流那本次电话会议线上交流我们分两个环节首先是公司领导介绍公司的情况第二部分的话我们有一个互动交流环节那首先我们把时间交给公司领导有请 各位同学大家好上午好然后我这边就是我们这边的这个VP然后给各位领导分享一下我们公司近期的一些情况和公司这些基本面的信息 然后从整个行业上来讲今年整个最重大的一个事件还是苹果M2头衔的发布那么整个头衔的发布我们是从计算平台的迭代跟升迁的角度来看待的那么从PC到智能手机再到智能头衔整个硬件的迭代跟改变也意味着整个计算平台的升级 那么从这个市场空间来看,根据去年德勤出去的这个报告,那么到2035年,预期整个XR的内容体金融产业规模全球会达到3万亿美金。那么收益最大的地区还是来自亚洲地区,整个对GDP的这个贡献值以往达到1.4万亿美金。 然后从整个行业的发展的历史及未来的展望来看其实在今年会是一个比较明显的一个分水岭那么在2014年到2023年在过去的十年整个产业经历了一个比较大的波动虽然在资本市场有这么大的一个波动但是产业方面其实在过去十年 发展的还是比较扎实的 ...

Company and Industry Summary Company Overview - The company is focusing on dynamic adjustments to its content delivery channels, aiming for a more rational and practical monetization approach. This indicates a strategic shift towards optimizing the adaptability of its content across various platforms [1]. Core Business Segments - The company has identified three main business segments that are currently prioritized, although specific details about these segments are not provided in the excerpt [1]. Strategic Focus - The emphasis on rational and practical monetization suggests a potential shift in strategy that may impact revenue generation and market positioning. This could indicate a response to changing market conditions or consumer preferences [1]. Additional Insights - The mention of adapting content to different terminals implies a focus on technology and user experience, which could be crucial for maintaining competitive advantage in the industry [1].

Financial Performance - Revenue for 2023 reached RMB 1,244,723 thousand, representing a 16.7% increase from RMB 1,066,157 thousand in 2022[26] - Adjusted net profit for 2023 was RMB 273,971 thousand, up 6.3% from RMB 257,711 thousand in 2022[26] - Gross profit for the year was RMB 420,717 thousand, reflecting a 12.5% increase compared to RMB 373,995 thousand in the previous year[26] - The net profit for 2023 reached RMB 263.9 million, reflecting an 11.6% year-on-year growth[33] - The company's revenue increased by 16.7% from RMB 1,066.2 million in 2022 to RMB 1,244.7 million in 2023, primarily driven by growth in AR/VR marketing services[50] - Revenue from AR/VR marketing services rose by 24.0% from RMB 681.8 million in 2022 to RMB 845.1 million in 2023, despite a slight decline in the number of advertising clients[52] - Revenue from the tourism industry grew from RMB 109.5 million in 2022 to RMB 132.2 million in 2023, while e-commerce revenue increased from RMB 77.1 million to RMB 84.0 million[54] - Revenue from AR/VR content slightly decreased by 0.6% from RMB 336.2 million in 2022 to RMB 334.0 million in 2023, attributed to a decline in average project prices[55] - Revenue from AR/VR SaaS services increased by 31.7% from RMB 43.7 million in 2022 to RMB 57.6 million in 2023, due to a rise in the number of clients subscribing to customized projects[57] - Other business revenue surged by 80.1% from RMB 4.5 million in 2022 to RMB 8.0 million in 2023, driven by new business explorations[58] Business Expansion and Strategy - The company expanded its business into overseas markets, marking the first step in its international strategy[30] - The company aims to strengthen its core AR/VR content and services while exploring new business directions and overseas markets[30] - The company expanded its AR/VR marketing services to overseas markets, generating RMB 99.6 million in revenue from 4 overseas advertising agencies[36] - In 2023, the company expanded into digital human development and operation services, accumulating nearly 5 million fans and over 20 million likes across its digital human virtual image matrix[44] - The company plans to leverage new hardware platforms to enhance C-end content demand, focusing on high-quality digital human live streaming solutions[47] - The company aims to explore the Web3.0 domain through investments in various sectors, including public chains and decentralized finance[49] - The company plans to establish a metaverse industry fund in collaboration with local governments and other listed companies to invest in promising early-stage enterprises in the AR/VR content and service sectors[49] Research and Development - The company increased its R&D investment, focusing on the application of AI technologies in digital content production[30] - The company will continue to develop its AI capabilities, utilizing generative AI models to enhance content production efficiency and reduce costs[47] - R&D expenses rose by 5.6% from RMB 48.5 million for the year ended December 31, 2022, to RMB 51.2 million for the year ended December 31, 2023, driven by higher employee costs and outsourced R&D expenses related to the development of the Flying Sky Metaverse platform[75] Assets and Liabilities - Non-current assets decreased to RMB 228,621 thousand from RMB 248,823 thousand in 2022[29] - Current assets rose to RMB 1,492,653 thousand, up from RMB 1,278,627 thousand in the previous year[29] - The net asset value increased to RMB 1,452,232 thousand from RMB 1,225,405 thousand in 2022[29] - Trade receivables rose from RMB 375.5 million as of December 31, 2022, to RMB 561.5 million as of December 31, 2023, in line with business growth[85] - Prepayments increased from RMB 485.5 million as of December 31, 2022, to RMB 594.0 million as of December 31, 2023, primarily due to higher prepayments for advertising traffic related to AR/VR marketing services[87] - Bank borrowings rose from RMB 80.0 million as of December 31, 2022, to RMB 95.0 million as of December 31, 2023, driven by operational funding needs due to business expansion[92] Employee and Management - As of December 31, 2023, the group has 142 full-time employees, all located in China[102] - The group emphasizes competitive compensation and a supportive environment to attract and retain qualified personnel[102] - Employee compensation includes base salary, bonuses, and performance-related incentives, with regular reviews based on qualifications and market conditions[102] - The executive team includes experienced individuals with over 18 years in internet technology and software engineering[103][104] - The group has adopted an employee stock option plan to align employee compensation with overall performance[102] Corporate Governance - The company is committed to high standards of corporate governance to ensure sustainable returns for shareholders[198] - The board has adopted principles and provisions of the corporate governance code as the foundation of its governance practices[198] - The board consists of a balanced mix of executive and independent non-executive directors, ensuring strong independent judgment[200] - The governance framework is designed to enhance transparency and accountability within the company[198] Risks and Compliance - The company has identified several key risks, including the ability to maintain operational performance and manage growth effectively[157] - The company faces uncertainties related to compliance with privacy and data protection laws in China[157] - The company has established a family trust for estate planning purposes, with Vistra Trust (Singapore) Pte. Limited acting as the trustee[155] - The company believes that the contractual arrangements are crucial for its legal structure and business operations[172] Shareholder Information - The company reported no final dividend for the fiscal year ending December 31, 2023[114] - The company has maintained at least 25% of its shares held by the public, complying with the minimum public holding requirement[188] - The total number of shares available for issuance under the post-IPO share option plan is capped at 181,000,000 shares, representing 10% of the total shares issued as of the report date[133]

Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company achieved a revenue of 1.245 billion yuan in 2023, representing a year-on-year growth of 16.7%, and a net profit attributable to shareholders of 264 million yuan, up 11.5% year-on-year [2][3]. - The main business segments are performing well, with AR/VR marketing services generating 845 million yuan in revenue (up 24.0% year-on-year) and AR/VR SaaS business achieving 59 million yuan (up 31.7% year-on-year) [3]. - The company is expanding its business footprint internationally, having served four overseas advertising agencies and reaching 374 overseas media outlets, generating 100 million yuan in revenue [3]. - The company is exploring new development directions by launching digital human development and operation services, accumulating nearly 5 million followers and over 20 million likes for its virtual characters [3]. - The report anticipates significant growth in the AR/VR content and marketing market, driven by new device launches, with projected revenues of 1.43 billion yuan, 1.65 billion yuan, and 1.92 billion yuan for 2024, 2025, and 2026 respectively [3]. Financial Summary - For 2023, the company reported a revenue of 1.245 billion yuan and a net profit of 264 million yuan, with growth rates of 17% and 11% respectively [9]. - The projected earnings per share (EPS) for 2024, 2025, and 2026 are 0.18 yuan, 0.20 yuan, and 0.24 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 3, 3, and 2 [9].

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company has demonstrated steady revenue growth, achieving an operating income of 1.245 billion HKD in 2023, a year-on-year increase of 16.7%, and a net profit of 264 million HKD, up 11.5% year-on-year. The growth is driven by the expansion of AR/VR marketing services and the increase in average spending by advertisers [5] - The company is focusing on the development of C-end digital humans and XR content, which is expected to drive future growth. The digital human matrix has accumulated over 5 million fans, indicating potential for monetization through various channels [6] - The collaboration with Lanting Digital to produce XR content and the development of AI models are expected to create a second growth curve for the company, particularly with the anticipated demand for MR content in the C-end market [7] Summary by Relevant Sections Financial Performance - In 2023, the company reported an operating income of 1.245 billion HKD, with a year-on-year growth of 16.7%. The net profit was 264 million HKD, reflecting an 11.5% increase. The AR/VR marketing services revenue reached 845 million HKD, up 24% year-on-year, while AR/VR content revenue slightly decreased by 0.65% to 334 million HKD. The AR/VR SaaS service revenue grew by 31.7% to 58 million HKD, driven by a 103% increase in paid users [5][8] - The projected net profits for 2024, 2025, and 2026 are estimated at 332 million HKD, 397 million HKD, and 464 million HKD respectively, with corresponding EPS of 0.18, 0.22, and 0.26 HKD [5] Business Development - The company has expanded its digital human development and operation services, creating virtual personas and providing comprehensive solutions to various industry clients. This initiative has led to a significant fan base, which is expected to facilitate monetization through fan economy and commercial partnerships [6] - The partnership with Lanting Digital for the XR version of a popular concert and the ongoing development of AI models are anticipated to enhance operational efficiency and drive growth in XR content [7]

Financial Performance - The company achieved a revenue of RMB 1,244.7 million for the year ended December 31, 2023, representing a year-on-year growth of 16.7% compared to RMB 1,066.2 million in 2022[2]. - Gross profit for the year was RMB 420.7 million, an increase of 12.5% from RMB 374.0 million in the previous year[2]. - The company's net profit for the year reached RMB 263.9 million, reflecting an 11.6% increase from RMB 236.6 million in 2022[2]. - Revenue from AR/VR marketing services was RMB 845.1 million, showing a significant growth of 24.0% year-on-year[4]. - Revenue from AR/VR content business was RMB 334.0 million, with the number of clients increasing by 29% to 75[8]. - The company's revenue increased by 16.7% from RMB 1,066.2 million in 2022 to RMB 1,244.7 million in 2023, primarily driven by growth in AR/VR marketing services[19]. - Revenue from AR/VR marketing services rose by 24.0% from RMB 681.8 million in 2022 to RMB 845.1 million in 2023, despite a slight decline in the number of advertising clients[21]. - Revenue from AR/VR SaaS services grew by 31.7% from RMB 43.7 million in 2022 to RMB 57.6 million in 2023, due to an increase in the number of clients subscribing to customized AR/VR SaaS projects[26]. - The company's total revenue for the year ended December 31, 2023, was RMB 1,244,723 thousand, representing an increase from RMB 1,066,157 thousand in 2022, which is approximately 16.7% growth[104]. Client and Market Expansion - Domestic marketing revenue increased by 9% to RMB 745.6 million, while the number of advertising clients decreased from 27 to 24[6]. - The company expanded its AR/VR marketing services to overseas markets, generating RMB 99.6 million in revenue from 4 overseas advertising clients[5]. - The number of AR/VR marketing service clients increased, with the average payment per channel rising by 68.7% to RMB 51.9 million[21]. - The company expanded its overseas AR/VR marketing services, serving 4 overseas advertising agencies and reaching 374 overseas media outlets[21]. - The company is actively exploring new business directions, including digital human development and operation services, to capture emerging market opportunities[14]. - The company plans to leverage new hardware platforms to expand its C-end XR content offerings, anticipating explosive growth in content demand[17]. User Engagement and Growth - The number of paid users for the AR/VR SaaS platform increased by 103% year-on-year to 9,283[12]. - The registered user count for AR/VR SaaS services reached 41,880, up 75% from 23,991 in 2022[13]. - The average monthly active users rose by 21% to 10,028 compared to 8,288 in the previous year[13]. - The total number of end media increased from 4,378 in 2022 to 4,780 in 2023, representing a growth of 9.2%[5]. Cost and Expenses - Cost of revenue rose by 19.0% from RMB 692.2 million in 2022 to RMB 824.0 million in 2023, primarily due to increased traffic acquisition costs associated with AR/VR marketing services[28]. - Distribution and selling expenses rose by 42.0% from RMB 136 million in 2022 to RMB 193 million in 2023, driven by increased employee costs and promotional expenses[42]. - Administrative expenses increased by 49.4% from RMB 332 million in 2022 to RMB 496 million in 2023, mainly due to higher employee costs and increased office space rental[43]. - Research and development expenses grew by 5.6% from RMB 485 million in 2022 to RMB 512 million in 2023, reflecting higher personnel costs and outsourced R&D expenses[44]. Profitability and Margins - Gross profit increased by 12.5% from RMB 374.0 million in 2022 to RMB 420.7 million in 2023, while gross margin decreased from 35.1% to 33.8%[34]. - The gross margin for AR/VR marketing services slightly decreased to 22.5% in 2023 from 22.8% in 2022, attributed to increased traffic costs[36]. - The gross margin for AR/VR content improved to 57.5% in 2023 from 55.9% in 2022, due to enhanced content production efficiency[36]. - The gross margin for AR/VR SaaS increased significantly to 79.3% in 2023 from 68.3% in 2022, benefiting from economies of scale[36]. - Net profit increased by 11.6% from RMB 236 million in 2022 to RMB 264 million in 2023, while the net profit margin decreased from 22.2% to 21.2%[47]. Assets and Liabilities - Trade receivables rose from RMB 375.5 million in 2022 to RMB 561.5 million in 2023, consistent with business growth[53]. - Intangible assets increased significantly from RMB 479 million in 2022 to RMB 950 million in 2023, primarily due to the acquisition of adaptation rights and software to support AR/VR SaaS business development[50]. - Trade and other payables increased from RMB 139.6 million as of December 31, 2022, to RMB 148.1 million as of December 31, 2023, driven by higher employee compensation and tax liabilities[57]. - Total liabilities decreased to RMB 268,142 thousand in 2023 from RMB 300,525 thousand in 2022, representing a reduction of about 10.7%[71]. Corporate Governance and Compliance - The audit committee, consisting of three independent non-executive directors, reviewed the financial reporting process and internal control systems, confirming compliance with applicable accounting standards[142]. - The company has committed to high standards of corporate governance to protect shareholder interests and enhance transparency[140]. - The company has maintained the required public float as per listing rules as of the announcement date[146]. - The board believes that the combination of the roles of chairman and CEO is beneficial for management[140]. Future Outlook and Investments - The company plans to enhance its R&D capabilities and improve services and products, allocating approximately HKD 53.2 million (10.0% of net proceeds) for this purpose by the end of 2024[137]. - The company intends to develop and optimize its AR/VR development engine, with an allocation of HKD 42.6 million (8.0% of net proceeds) by the end of 2024[137]. - A total of HKD 79.8 million (15.0% of net proceeds) is earmarked for selected mergers, acquisitions, and strategic investments by the end of 2024[137].