Financial Performance - For the year ended December 31, 2024, customer contract revenue reached RMB 5,091.5 million, an increase of 53.9% compared to RMB 3,307.8 million for the year ended December 31, 2023[6]. - Gross profit for the year ended December 31, 2024, was RMB 2,607.7 million, up 51.4% from RMB 1,722.1 million for the previous year[6]. - Adjusted EBITDA for the year ended December 31, 2024, was RMB 963.1 million, reflecting a 42.8% increase from RMB 674.6 million in 2023[6]. - Total revenue for 2024 reached RMB 5,090 million, representing a 53.9% year-over-year growth[9]. - The company reported a net profit of RMB 787.8 million for the year ended December 31, 2024, a 3.6% increase from RMB 760.6 million in 2023[6]. - The total comprehensive income for the year ended December 31, 2024, is RMB 790,678,000, compared to RMB 734,551,000 in 2023, reflecting an increase of approximately 7.6%[92]. Revenue Breakdown - Social business revenue grew to RMB 4,630 million, marking a 58.1% increase year-over-year[9]. - Innovative business revenue amounted to RMB 460 million, showing a 21.3% increase compared to the previous year[9]. - The total revenue from the premium gaming business reached RMB 705 million in 2024, representing a year-on-year growth of 80.4%[16]. - Social business revenue reached approximately RMB 4,631.9 million, up 58.1% from RMB 2,929.0 million in the previous year, driven by improved user experience and the acquisition of Chizicheng Strategy Investment Limited[25]. - Innovative business revenue was approximately RMB 459.6 million, a 21.3% increase from RMB 378.8 million, attributed to the growth of social e-commerce and contributions from premium games[26]. Expenses and Costs - Cost of revenue for the year ended December 31, 2024, was approximately RMB 2,483.9 million, a 56.6% increase from RMB 1,585.7 million in the previous year[28]. - Sales and marketing expenses for the year ended December 31, 2024, were approximately RMB 1,295.1 million, an increase of about 88.1% compared to RMB 688.4 million for the year ended December 31, 2023, primarily due to enhanced promotion efforts for SUGO and TopTop[38]. - Research and development expenses for the year ended December 31, 2024, were approximately RMB 335.4 million, an increase of about 6.6% from RMB 314.5 million for the year ended December 31, 2023, mainly due to increased employee benefits[39]. - General and administrative expenses for the year ended December 31, 2024, were approximately RMB 239.0 million, an increase of about 39.0% from RMB 172.0 million for the year ended December 31, 2023, primarily due to increased employee benefits and share-based compensation expenses[40]. Strategic Initiatives - The company established strong localization barriers in markets such as MENA and Southeast Asia, contributing to revenue growth[9]. - The company continues to leverage AI technology to enhance product experience and operational efficiency[9]. - The company plans to continue its "multi-dimensional matrix" strategy in 2025, focusing on deepening its presence in key markets like the Middle East and North Africa[18]. - The company aims to enhance its AI capabilities to improve product innovation and operational efficiency, focusing on integrating AI into business scenarios[20]. - The company is exploring the establishment of AI labs to support business operations and optimize algorithm models using its global data resources[22]. Acquisitions and Investments - The company completed the acquisition of the remaining shares of NBT Social Networking in December 2024, solidifying its position in the global social entertainment market[10]. - The company completed the acquisition of NBT Social Networking Inc. for a total consideration of approximately HKD 1,983 million, including cash consideration of approximately HKD 994 million and share consideration of approximately HKD 989 million[56]. - The company plans to engage in strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[58]. Cash Flow and Assets - Total assets increased from approximately RMB 2,790.9 million as of December 31, 2023, to approximately RMB 3,583.0 million as of December 31, 2024, while total liabilities increased from approximately RMB 843.4 million to approximately RMB 1,928.1 million during the same period[50]. - As of December 31, 2024, the company's cash and cash equivalents amounted to approximately RMB 2,048.6 million, an increase from RMB 1,386.3 million as of December 31, 2023[51]. - Operating cash flow increased to approximately RMB 1,015.5 million for the year ended December 31, 2024, compared to approximately RMB 738.8 million for the year ended December 31, 2023[51]. - The company repurchased its own shares amounting to RMB 143,275,000 during the year, compared to RMB 27,685,000 in the previous year, indicating a significant increase in share buybacks[92]. Employee and Governance - The company employed a total of 1,573 full-time employees as of December 31, 2024, with 795 employees in R&D, representing 50.54% of the total workforce[63]. - The company has adopted corporate governance principles to ensure compliance with applicable laws and regulations, enhancing transparency and accountability[64]. Future Outlook - The company has set a performance guidance of RMB 1.8 billion in revenue for the next fiscal year, reflecting a 20% growth target[113]. - The board expressed confidence in achieving long-term growth despite market uncertainties, emphasizing a commitment to shareholder value[116]. - Forward-looking statements indicate potential risks and uncertainties that may affect the company's performance and strategic goals[116].

Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - The company is expected to achieve total revenue of approximately 5.0 to 5.2 billion RMB in 2024, representing a year-on-year growth of 51.1% to 57.2%. The net profit attributable to the parent company is projected to be between 460 to 500 million RMB, showing a decline of 10.3% to 2.5%. However, excluding the impact of a 160 million RMB investment income from the acquisition of a subsidiary in Q3 2023, the net profit is expected to grow by 29.9% to 41.2% [1] - The growth is primarily driven by AI technology, which is enhancing the rapid growth of diversified social products, alongside the consolidation of Blue City Brothers and Land of Glory Ltd. starting from Q3 2023 [1] Summary by Sections Social Business - The social business, including diverse social services, is expected to generate revenue of 4.52 to 4.72 billion RMB in 2024, reflecting a growth of approximately 54.3% to 61.1%. The cumulative download volume is projected to reach 780 million [2] - The growth is attributed to AI-driven diversified social products and the consolidation of Blue City Brothers and Land of Glory Ltd. The company focuses on broad audience social services, creating a product matrix represented by MICO, YoHo, TopTop, and SUGO. SUGO's revenue is expected to grow over 200% in 2024, becoming the highest-grossing social product in a single month [2] Innovative Business - The innovative business segment is projected to achieve revenue of 440 to 480 million RMB in 2024, with a growth rate of 16.1% to 26.6%. The "second growth curve" led by premium games and social e-commerce is becoming clearer [3] - The flagship game "Alice's Dream: Merge Games" continues to perform well, achieving approximately 705 million RMB in revenue, an increase of about 80.4% compared to 2023, marking the entry into profitability for this segment [3] AI Applications - AI technology is increasingly applied across business operations, enhancing efficiency from research and development to marketing. The self-developed multi-modal algorithm model Boomiix has been upgraded, significantly improving social efficiency and user willingness to pay. The ARPU value for SUGO at the end of 2024 is expected to increase by over 20% compared to the beginning of the year [4] Profit Forecast and Valuation - The profit forecast for the net profit attributable to the parent company has been adjusted to 483 million RMB for 2024, 776 million RMB for 2025, and 910 million RMB for 2026, reflecting adjustments of 7.13%, 40.91%, and 41.06% respectively. The target price is set at 8.35 HKD, based on a 12X PE for 2025, considering Tencent's valuation premium as an industry leader [5]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 15% relative to the industry index within the next six months [4]. Core Insights - The company has exceeded profit expectations, driven by its self-developed multimodal AI algorithm models that enhance commercialization efficiency [1]. - The social business segment continues to grow rapidly, with significant contributions from products like MICO, YoHo, and SUGO, the latter expected to see over 200% revenue growth in 2024 [2]. - The premium game "Alice's Dream" has entered a profit phase, contributing to the company's second growth curve [3]. - The company has repurchased approximately 43 million shares, reflecting confidence in its operations and market sentiment [3]. Financial Performance Summary - Revenue is projected to grow from 33.08 billion CNY in 2023 to 62.43 billion CNY in 2025, with a compound annual growth rate (CAGR) of approximately 22.5% [1][8]. - Net profit is expected to increase from 4.76 billion CNY in 2024 to 9.86 billion CNY in 2026, with a notable growth rate of 71.6% in 2025 [1][8]. - The company's P/E ratio is forecasted to decrease from 13.1 in 2024 to 6.3 in 2026, indicating improved valuation metrics [1][8]. - The return on equity (ROE) is projected to stabilize around 29% by 2026, reflecting strong profitability [1][8]. Business Strategy and Market Position - The company is committed to its "bush" strategy, focusing on AI empowerment and diversifying its product offerings to cover more segments in the global social entertainment market [8]. - The self-developed multimodal algorithm model Boomiix is expected to enhance operational efficiency across various business functions, significantly improving user engagement and monetization [2]. - The company aims to strengthen its position in the Middle East while exploring growth opportunities in Southeast Asia, Japan, South Korea, and North America [2].

Investment Rating - The report upgrades the investment rating to "Buy" with a target price of HKD 7.05, reflecting a 12x PE for 2025 [4][3]. Core Insights - The company has shown significant growth in its social business, with cumulative downloads reaching approximately 780 million, a 5.7% increase from the previous quarter. Monthly active users reached about 31.74 million, a 9.5% quarter-on-quarter growth. Total revenue from the social business is expected to be between RMB 4.52 billion and RMB 4.72 billion, representing a year-on-year growth of 54.3% to 61.1% [1]. - The innovative business segment, including e-commerce and premium games, is projected to generate revenue between RMB 440 million and RMB 480 million, with a year-on-year growth of 16.1% to 26.6%. The premium game "Alice's Dream" has contributed significantly, achieving a revenue of approximately RMB 705 million, a growth of 80.4% [2]. - The company is focusing on emerging markets, particularly in the Middle East and North Africa, where it has established a strong presence in the app rankings. The application of AI technology is expected to further enhance growth and market share [1]. Summary by Sections Social Business Performance - Cumulative downloads reached approximately 780 million, a 5.7% increase from the previous quarter [1]. - Monthly active users reached about 31.74 million, a 9.5% quarter-on-quarter growth [1]. - Total revenue from social business expected to be between RMB 4.52 billion and RMB 4.72 billion, a year-on-year growth of 54.3% to 61.1% [1]. Innovative Business Growth - Total revenue from innovative business projected to be between RMB 440 million and RMB 480 million, with a year-on-year growth of 16.1% to 26.6% [2]. - Premium game "Alice's Dream" achieved revenue of approximately RMB 705 million, an 80.4% year-on-year growth [2]. Market Expansion Strategy - The company is targeting emerging markets with significant growth potential, particularly in the Middle East and North Africa [1]. - The application of AI technology is expected to drive further growth and enhance market presence [1].

Investment Rating - The report upgrades the investment rating to "Buy" with a target price of HKD 7.05, reflecting an expected relative return of over 20% within the next six months [3][4]. Core Insights - The company has shown impressive growth in its social business, with cumulative downloads reaching approximately 780 million, a 5.7% increase from the previous quarter. Monthly active users reached about 31.74 million, a 9.5% quarter-on-quarter growth. Total revenue from the social business is expected to be between RMB 4.52 billion and RMB 4.72 billion, representing a year-on-year growth of approximately 54.3% to 61.1% [1]. - The company's innovative business segment, which includes e-commerce and premium games, is projected to generate total revenue of RMB 440 million to RMB 480 million, reflecting a year-on-year growth of about 16.1% to 26.6%. The premium game "Alice's Dream" has significantly contributed to this growth, achieving a revenue of approximately RMB 705 million, a year-on-year increase of about 80.4% [2]. Summary by Sections Social Business Performance - The social business has achieved substantial growth, driven by AI technology and strategic acquisitions. The revenue growth trajectory indicates a successful implementation of the company's strategies, with projections showing a significant increase from previous years [1]. Innovative Business Development - The innovative business segment is expanding, with e-commerce and premium games contributing to revenue growth. The focus on emerging markets allows the company to avoid intense competition in mainstream markets while leveraging successful strategies from established players [2]. Financial Projections - Revenue forecasts for FY2024 to FY2026 have been adjusted, with total revenue expected to be RMB 5.08 billion, RMB 5.86 billion, and RMB 6.76 billion respectively. Net profit estimates have also been revised, indicating a strong financial outlook for the company [3].

Key Points Industry or Company Involved - **Company**: The company discussed in the call is engaged in the gaming and social entertainment industry, specifically focusing on mobile gaming and social networking platforms. Core Points and Arguments - **Profitability**: The company has achieved profitability with its first game, and plans to expand its mobile gaming portfolio with one to two new games next year. - **Acquisition**: The company has completed a significant acquisition of a minority stake in a key asset, which will enhance its EPS and long-term binding of core assets and teams. - **Product Performance**: The company's flagship products, Miko, Yoho, Talk Top, and Sugo, have shown strong growth, with TopTop and Sugo experiencing explosive growth in the second half of the year. - **Market Expansion**: The company is expanding into new markets, including Southeast Asia, Japan, Korea, and Europe, following a successful model in the Middle East and North Africa. - **Competitive Landscape**: The company has a competitive advantage in local operations and market understanding, particularly in the Middle East and North Africa, where it has been operating for over eight years. - **Regulatory Changes**: There have been recent regulatory changes affecting the live social entertainment industry, which the company is actively addressing. Other Important Points - **Revenue and Profit Contribution**: Miko has historically contributed over 80% of the company's revenue and over 90% of its profit. - **Product Lifecycle**: The company's products are at different stages of their lifecycle, with Miko and Yoho being mature products and TopTop and Sugo experiencing explosive growth. - **Local Operations**: The company has established strong local teams in various regions, which have contributed to its success in those markets. - **Regulatory Compliance**: The company is proactive in addressing regulatory changes and ensuring compliance with local regulations. - **Future Outlook**: The company expects strong growth in the Middle East and North Africa and Southeast Asia, driven by young populations and secularization trends. References - [1] - [2] - [3] - [4] - [5] - [6] - [7] - [8] - [9] - [10] - [11] - [12] - [13] - [14] - [15] - [16] - [17]

Key Points Industry and Company 1. **Company Overview**: The company has been in the social entertainment industry for over a decade, focusing on the Middle East and North Africa (MENA) region. [doc id='1'] 2. **Business Segments**: The company operates in two main segments: general population social networking and diverse population social networking. [doc id='2'] 3. **Product Portfolio**: The company has a diverse product portfolio, including TopTop, Sugo, and PC. [doc id='2'] 4. **Market Presence**: The company's products are available in over 70 countries globally. [doc id='2'] 5. **Revenue Growth**: The company's general population social networking segment achieved a revenue growth of over 35% in the first half of the year. [doc id='3'] 6. **Game Business**: The company has a growing game business with products like Xtreme and Telesequence. [doc id='9'] 7. **Shareholder Repurchase**: The company has repurchased over 90 million shares, totaling over 200 million USD. [doc id='9'] 8. **Acquisition Strategy**: The company is actively looking for acquisition opportunities in the social networking domain to expand its product portfolio. [doc id='10'] 9. **Market Outlook**: The company believes the social entertainment market in the MENA region has significant potential with a projected growth rate of over 20% in the next five years. [doc id='12] Core Views and Arguments 1. **Strong Growth in Key Products**: The company's TopTop and Sugo products have experienced explosive growth, with Sugo's user growth doubling in the first half of the year. [doc id='6'] 2. **Product Differentiation**: TopTop and Sugo differ from Yara Ludo in their focus on social networking as a core element, with a global product strategy. [doc id='7'] 3. **Game Business Profitability**: The company's game business, particularly Xtreme, is expected to achieve profitability in the fourth quarter of the year. [doc id='8'] 4. **Acquisition Strategy**: The company aims to acquire social networking companies with synergistic value to expand its product portfolio. [doc id='10'] 5. **Market Leadership**: The company aims to become a leader in each vertical market it operates in, with Sugo being a global leader in its category. [doc id='12] Other Important Content 1. **Product Pipeline**: The company plans to launch a new synthetic game next year to enrich its product portfolio. [doc id='9'] 2. **Blue City Brothers**: The company holds approximately 78% of Blue City Brothers, with the remaining shares held by founders and original PE investors. [doc id='10'] 3. **Market Share and Penetration**: The company aims to increase its market share in the MENA region, targeting a 20% growth rate in the overseas market for Blue City Brothers. [doc id='12]

Key Points Company Overview - **Industry**: Entertainment and social media - **Company**: Zhisheng Technology - **Leaders**: Gloria and Naomi - **Market**: Global, with a strong presence in Middle East and Southeast Asia Financial Highlights - **Revenue Guidance**: Approximately 4.5 billion RMB for the year - **Q3 Revenue Growth**: Strong growth, driven by social media business and gaming revenue - **Social Media Business**: TopTop and Sugo products experiencing rapid growth, contributing significantly to revenue - **Gaming Business**: iLive Stream achieving near one million USD in monthly revenue, expected to turn profitable in Q4 Social Media Business - **Revenue Contribution**: Approximately 90% of total revenue - **Growth Rate**: 35% year-on-year growth - **TopTop and Sugo**: Continued strong growth, with a significant impact on overall revenue - **PC Team**: Ongoing integration and brand building efforts in overseas markets, aiming for a healthy growth rate of around 20% Gaming Business - **iLive Stream**: Achieved near one million USD in monthly revenue in May, expected to turn profitable in Q4 - **Product Lifecycle**: Aim to maintain a long lifecycle of at least three to five years, with potential for even longer - **New Games**: Plans to develop more products in the same genre to strengthen the market position Marketing and Acquisition - **Buy-Volume Costs**: Increasing costs, but internal strategies to control costs and optimize ROI - **Buy-Volume Platforms**: Utilizing multiple platforms, including Apple, Facebook, and Google, with varying ROI and efficiency - **Acquisition Plans**: Actively seeking external growth opportunities, with several potential deals in discussion Shareholder Returns - **Share Repurchase**: Completed nearly 180 million HKD in share repurchases, demonstrating confidence in the company's fundamentals - **Dividend Policy**: Discussing a formal dividend policy, but no specific timeline provided Market Outlook - **Q4 and 2025**: TopTop and Sugo expected to maintain strong growth, with a focus on overseas market expansion - **Innovation Business**: Aim to achieve break-even or slight profitability in 2025 Other Key Points - **Employee Count**: Approximately 1,200 employees, with a significant presence in Egypt and other Middle Eastern and Southeast Asian countries - **Market Expansion**: Plans to expand into new markets, including Japan, South Korea, Europe, and other regions - **Policy Risks**: Monitoring regulatory changes and potential policy risks in different countries - **New Industry Expansion**: Focused on entertainment and social media, with plans to continue expanding within these areas

Company and Industry Summary Company Overview - The company is a leading global social entertainment firm established in 2009, with over a decade of experience in international expansion since 2013 [3] - The company operates two main business segments: social business and innovative business, with social business accounting for approximately 90% of total revenue [3] Financial Performance - For the first three quarters of 2024, the company reported revenue exceeding 3.5 billion RMB, with social business revenue growing over 60% year-on-year [1] - Innovative business revenue for the same period was approximately 300 to 320 million RMB, reflecting a year-on-year growth of 12.4% to 19.9% [2] - The company's overall revenue growth for the previous year was 18%, with a significant increase in gross profit margin by 14% [11] Social Business Highlights - The social business segment includes two categories: semi-group social and multi-group social, with products like Miko, Yoho, Popo, and Sugo [3] - The semi-group social business is primarily focused on the Middle East and North Africa (MENA) region, which contributes over 50% of social business revenue [2] - The SOHO platform has emerged as the highest revenue-generating social product, following Miko, achieving a monthly revenue of over 10 million USD [1] Market Dynamics - The MENA region is projected to exceed 2.36 billion USD by 2028, with an annual growth rate of over 20% from 2023 to 2028 [5] - The LGBTQ social business segment, acquired through the purchase of BlueCity, has become the second-largest globally, with a user base exceeding 7.43 million MAU [7] Innovative Business Insights - The innovative business focuses on premium games and advertising, with a notable entry into the casual mobile game market [8] - The flagship game, Alice Dream, has achieved a monthly revenue of nearly 10 million USD, ranking among the top 30 Chinese mobile games in overseas revenue [9] - Overall game revenue reached 576 million RMB, with a year-on-year growth of 82.5% [9] Strategic Initiatives - The company aims to cultivate multiple flagship products with monthly revenues exceeding 10 million USD over the next three years [10] - Plans to enhance the commercial capabilities of Alice and introduce new products are in place, with a target for Alice to break even by Q4 2024 [11] - The company is actively repurchasing shares, having bought back approximately 26 million shares for nearly 80 million HKD, reflecting management's confidence in the company's future [13] Future Outlook - The company projects a revenue target of 4.5 billion RMB for 2024 [13] - Continued focus on expanding overseas operations, particularly in Southeast Asia, is planned, with a goal to establish a strong brand presence [10] - The company is also exploring strategic acquisitions to enhance its market position [10] Additional Notes - The company has made significant organizational changes post-acquisition of BlueCity to improve profitability and streamline operations [14] - The acquisition of Miko World is progressing, with expectations to complete the transaction by late Q4 2024 [15]

Investment Rating - The report maintains a "Buy" rating for Chizicheng Technology (09911 HK) [1] Core Views - Chizicheng Technology's Q3 2024 revenue slightly exceeded expectations, with social business maintaining high-quality growth [1] - The company's social business revenue for Q1-Q3 2024 is expected to reach RMB 3 24-3 28 billion, a year-on-year increase of 60 7%-62 7% [1] - The company's innovative business revenue for Q1-Q3 2024 is expected to be RMB 300-320 million, a year-on-year increase of 12 4%-19 9% [1] - The company's self-developed and externally distributed premium game achieved a turnover of approximately RMB 576 million, a year-on-year increase of about 182 5%, but has not yet been reflected in the company's revenue [1] Financial Performance - The company's revenue for 2024E is expected to be RMB 4 773 billion, with a year-on-year growth rate of 44 3% [1] - The company's net profit attributable to the parent company for 2024E is expected to be RMB 383 million, a year-on-year decrease of 25 2% [1] - The company's ROE for 2024E is expected to be 25 5% [1] - The company's EPS for 2024E is expected to be RMB 0 32 [1] - The company's P/E ratio for 2024E is expected to be 10 3x [1] Social Business - The company's social business revenue for Q1-Q3 2024 is expected to reach RMB 3 24-3 28 billion, a year-on-year increase of 60 7%-62 7% [2] - The company's social business revenue for Q3 2024 is expected to be RMB 1 17-1 21 billion, a significant increase compared to the same period last year [2] - The company's social business growth is driven by the expansion of the pan-population social business in the Middle East and North Africa, with the SUGO platform achieving a monthly turnover of over USD 10 million [2] - The company's acquisition of BlueCity in August 2023 has contributed to the growth of social business revenue [2] - The company's new products, such as SUGO, TopTop, and HeeSay, are expected to contribute to the growth of social business revenue [2] Innovative Business - The company's innovative business revenue for Q1-Q3 2024 is expected to be RMB 300-320 million, a year-on-year increase of 12 4%-19 9% [5] - The growth of innovative business is driven by the steady development of social e-commerce business [5] - The company's flagship game, "Alice's Dream: Merge Games," achieved a turnover of approximately RMB 576 million, a year-on-year increase of about 182 5% [5] Acquisition of NBT Minority Stake - The company plans to acquire a minority stake in its subsidiary NBT Social Networking [3] - NBT's net profit after tax for 2022, 2023, and Q1 2024 were RMB 440 million, RMB 660 million, and RMB 170 million, respectively [3] - The acquisition is expected to be completed by the end of 2024 and will increase the company's net profit attributable to the parent company [3] Investment Recommendation - The report recommends maintaining a "Buy" rating for Chizicheng Technology [5] - The report expects the company's revenue for 2024-2026 to be RMB 4 773 billion, RMB 5 395 billion, and RMB 6 028 billion, respectively [5] - The report expects the company's net profit attributable to the parent company for 2024-2026 to be RMB 383 million, RMB 729 million, and RMB 844 million, respectively [5] - The report expects the company's P/E ratio for 2024-2026 to be 10 3x, 6 4x, and 5 5x, respectively [5]