LSR(SZ:002858) Huaxin Securities·2024-07-23 10:02Investment Rating - The report maintains a "Buy" investment rating for the company [22][115]. Core Viewpoints - The company is positioned as a leader in China's fitness and digital sports sectors, focusing on the promotion and operation of motorsport while exploring future trends in the sports industry [19][34]. - The company aims to enhance its core competitiveness through strategic investments, including a proposed capital increase for a new energy vehicle experience center in Hainan, which is expected to significantly boost revenue and profit [21][54]. - The company has faced short-term profit pressure due to goodwill impairment but is expected to recover in 2024, with projected revenues of 5.08 billion, 5.85 billion, and 6.6 billion yuan for 2024, 2025, and 2026 respectively [23][115]. Company Overview and Business Model - The company, originally established in 2002, has evolved through various stages, including a name change to "Lisheng Yun Dong (Shanghai) Sports Technology Co., Ltd." in 2022, reflecting its strategic upgrade [3][25]. - The business is segmented into three main areas: space business, IP business, and digital business, with a focus on creating a digital platform for fitness services [4][34]. - The company has made significant investments in digital sports, including acquiring a 25% stake in Yuedong Tianxia for 1.77 billion yuan [4][26]. Financial Performance - The company reported a revenue of 405 million yuan in 2023, with a projected growth rate of 56.9% for that year [23][31]. - The net profit for 2023 was a loss of 193 million yuan, primarily due to goodwill impairment, but is expected to turn profitable in 2024 with a net profit of 55 million yuan [23][38]. - The company anticipates a gradual recovery in profitability, with net profits projected to reach 130 million yuan by 2026 [23][115]. Industry Analysis and Competitive Strength - The report highlights the growing sports market in China, with the total sports industry output reaching 33,008 billion yuan in 2022, indicating a robust growth trajectory [96]. - The company is strategically positioned to benefit from the national "14th Five-Year Plan" for sports development, which aims to significantly increase the scale and impact of the sports industry [42][53]. - The company is leveraging AI and digital technologies to enhance its service offerings and operational efficiency, aligning with broader industry trends towards digitalization [107][118].