IReader Technology(SH:603533) Shanghai Securities·2024-02-21 16:00Investment Rating - The report initiates coverage with a "Buy" rating for the company [127][129]. Core Viewpoints - The company has demonstrated robust growth in its main business, showcasing resilience and maintaining its leading position in the digital reading industry. It has established a comprehensive digital reading platform that integrates a vast array of books, advanced technology, copyright protection, and multi-terminal operations, serving users in over 150 countries [127][129]. - The free reading business has become a major growth driver, significantly boosting user traffic and revenue. The company has successfully transitioned from relying on terminal pre-installation for traffic acquisition to leveraging internet marketing strategies [25][54][129]. - The company is actively expanding its IP derivative industry chain and enhancing AI model applications in digital reading, aiming to create innovative content production and interaction paradigms [129]. Summary by Sections Business Overview - The company has been deeply engaged in the digital reading sector for fifteen years, aiming to be the most professional reading platform globally. It has built strong partnerships with numerous publishers and literary websites, ensuring a rich content library [121][127]. - In 2022, the company achieved a record revenue of 25.82 billion yuan, a year-on-year increase of 24.71%, although its net profit decreased by 61.77% to 0.58 billion yuan [127][128]. Revenue and Profit Forecast - The company expects to see continued growth in revenue, with projections of 29.53 billion yuan in 2023, 33.93 billion yuan in 2024, and 39.16 billion yuan in 2025. The net profit is forecasted to be 0.58 billion yuan in 2023, 1.13 billion yuan in 2024, and 1.45 billion yuan in 2025 [12][90][129]. Digital Reading Strategy - The company has developed two free reading apps, "Dejian" and "Qidu," which have significantly increased monthly active users to 170 million by the end of 2022, up from 150 million in 2021. This growth is attributed to effective marketing strategies and user engagement initiatives [25][112][129]. - The company is also focusing on enhancing its content production capabilities through AI technologies, including the launch of the AI chat-based reading platform "Yue Ai Liao," which aims to provide innovative user experiences [129][128]. IP Development and Innovation - The company is actively exploring the IP derivative industry, including adaptations of literary works into short dramas and animations, which have gained significant viewership and engagement [60][63][129]. - The integration of AI in content creation processes is expected to improve efficiency and quality, further enhancing user engagement and satisfaction [82][129].