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1、 See the last page for disclaimer Page 1 of 24 Equity Research Equity Research Report Company Report 股股票票研研究究 公公司司報報告告 證證券券研研究究報報告告 傳播文化行業傳播文化行業 Media&Culture Sector 樂享集團樂享集團 Joy Spreader(06988 HK)Company Report:Joy Spreader(06988 HK)Teddy Lin 林榮葉(86755)2397 6692 公司報告：樂享集團(06988 HK).hk 20 September

2、2022 A New Era of Overseas Ecommerce Platforms With Rapidly Advancing Algorithms;Initiate With Buy 借助“歷久常新”的算法技術，開辟海外電商的新天地，首予“買入”評級 We use SOTP method to evaluate Joy Spreader and initiate with a target price of HK$2.73 and rating of Buy.We calculate reasonable market value of the Company to be HK$

3、6,469 mn.We forecast net profit of HK$127.3 mn,HK$150.2 mn and HK$225.4 mn for 2022-2024,respectively,for the Company,representing YoY growth of-48.0%,18.0%and 50.1%,respectively.Niche products and long-tail user traffic in e-commerce are highly dispersed,but there is a new market emerging with the

4、development of the e-commerce industry and productivity and logistics upgrades.As one of the earliest performance-based marketing service providers on the WeChat platform,Joy Spreader has developed advanced algorithms for matching products and user traffic.We expect Joy Spreaders overseas e-commerce

5、 business and unique algorithm technology to exceed the markets expectations.We believe that Joy Spreaders competitive advantage comes primarily from its core algorithmic technology rather than from its platform partnerships,which will drive high long-term growth in overseas e-commerce markets.Catal

6、ysts:The increasing market size of overseas e-commerce generated from short videos;the global craze for short videos started by TikTok.Risk:Higher-than-expected additional fixed costs associated with the development of overseas e-commerce platforms;political uncertainty affecting cross-border e-comm

7、erce.我們采用我們采用分部加總估值法分部加總估值法對對樂享樂享進行進行估值估值，首次覆蓋首次覆蓋目標價為目標價為 2.73 港元，港元，投資投資評級為評級為“買買入入”。我們測算公司的合理市值為 64.69 億港元。我們預測樂享在 2022-2024 年的凈利潤分別為 1.273 億港元、1.502 億港元和 2.254 億港元，分別同比增長-48.0%、18.0%和 50.1%。電子商務中的小眾產品和長尾用戶流量高度分散，但隨著電商產業的發展和生產力、物流的升級，形成了巨大的潛在市場。作為微信中最早的效果類營銷服務提供商之一，樂享樂享開發了先進開發了先進的算法的算法，可以為產品和可以為產

8、品和用戶流量帶來精確匹配用戶流量帶來精確匹配。我們我們預計預計樂享樂享的海外電商業務和獨特的算法技術的海外電商業務和獨特的算法技術有望有望帶來帶來超預期超預期的的表現。表現。我們認為，樂享的競爭優勢主要來自于其核心算法技術，而非平臺合作關系，其技術將保證公司海外電商業務長期的高速成長。催化催化劑劑：海外短視頻電商市場規模不斷擴大；由抖音引發的全球短視頻熱潮。風險風險提示：提示：海外電商平臺發展所產生的額外固定開支高于預期；跨境電商的政策不確定性。Rating:Buy Initial 評級：買入買入 (首次覆蓋)6-18m TP 目標價:HK$2.73 Share price 股價:HK$1.2

9、10 Stock performance 股價表現 (60.0)(40.0)(20.0)0.020.040.060.080.0Sep-21Dec-21Mar-22Jun-22Sep-22%of returnHSIBILIBILI Change in Share Price 股價變動 1 M 1 個月 3 M 3 個月 1 Y 1 年 Abs.%絕對變動%0.9 (49.3)(49.6)Rel.%to HS Index 相對恒指變動%6.5 (38.1)(25.1)Avg.Share price(HK$)平均股價（港元）1.0 1.2 1.3 Source:Bloomberg,Guotai Ju

10、nan International.Table_Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年結 收入 股東凈利 每股凈利 每股凈利變動 市盈率 每股凈資產 市凈率 每股股息 股息率 凈資產收益率 12/31(HK$000)(HK$000)(HK$Cent)(%)(x)(HK$)(x)(HK$)(%)(%)2020A 923,916 138,679 7.782 60.7 15.5 1.211 1.0 0.000 0.0 6.4 2021A 1,395,894 244,642 11.304 45.3 10.7 1.

11、071 1.1 0.000 0.0 10.9 2022F 3,739,815 127,275 5.586(50.6)21.7 1.333 0.9 0.000 0.0 4.8 2023F 5,480,619 150,163 6.331 13.3 19.1 1.344 0.9 0.000 0.0 4.8 2024F 7,422,043 225,351 9.501 50.1 12.7 1.439 0.8 0.000 0.0 6.8 Shares in issue(m)總股數(m)2,371.9 Major shareholder 大股東 Zhu Zinan 35.1%Market cap.(HK$m

12、)市值(HK$m)2,870.0 Free float(%)自由流通比率(%)43.9%3 month average vol.3 個月平均成交股數(000)34,870.8 FY22 Net gearing(%)FY22 凈負債/股東資金(%)Net cash 52 Weeks high/low(HK$)52 周高/低(HK$)3.650/0.920 FY22 Est.NAV(HK$)FY22 每股估值（港元）3.0 Source:the Company,Guotai Junan International.Company Report See the last page for discl

13、aimer Page 2 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)TABLE OF CONTENTS Earnings Forecasts.4 Valuation&Investment Rating.5 1)SOTP Valuation.5 2)DCF Valuation.6 Investment Rating.6 Industry Analysis.7 Short Video E-Commerce Becomes the Main Marketing F

14、orce.7 Douyins Platform Economy has Formed Symbiotic Relationships with Many Enterprises.9 Does the E-Commerce Economy Generated by Douyin Still Have Room For Growth?.10 Douyins Competitive Advantages in E-commerce.11 Development of the E-Commerce Industry has Reshaped the Landscape.11 The Pairing o

15、f Long-Tail Products and Long-Tail User Traffic Creates New Markets.12 Advertisement Links Have Become the Best Entry Point to Niche Markets.13 Company Analysis.14 Company Profile.14 Business Overview.14 Financial Analysis.18 Revenue Analysis.18 Gross Margin Analysis.20 Operating Expenses Analysis.2

16、1 WYVW1UYZ2UtRnP6MbP9PmOqQmOnPlOqQxOkPsQrQ6MqRqQwMqQoNvPrQmN Company Report See the last page for disclaimer Page 3 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Investment Thesis Investment Thesis:The Covid-19 pandemic has reshaped the e-commerce and inte

17、rnet advertising industry landscape,at a time when the short-video platform Douyin has been expanding.With the development of Douyins e-commerce ecology,the pairing of its niche market and long-tail user traffic has formed huge potential value.However,since niche markets and long-tail user traffic a

18、re highly dispersed,a special algorithm technology and rich data accumulation basis is needed to effectively utilize long-tail user traffic of niche products in e-commerce.As one of the earliest performance-based marketing service providers on WeChat and Douyin platforms,Joy Spreader(the Company)is

19、a marketing service provider that has been deeply involved in the internet media industry for a long time and has its own algorithm technology,industry experience and data accumulation,which can bring accurate matching for niche products and medium-tail to long-tail user traffic and charge commissio

20、n fees primarily on the basis of performance-based billing models.We expect Joy Spreaders overseas e-commerce business and unique algorithm technology to exceed the markets expectations.The general market view is that in the e-commerce ecosystem which is formed around platforms with massive user tra

21、ffic,such as Douyin,bargaining power/market size of relevant service providers is limited by the level of cooperation with internet platforms.We believe that Joy Spreaders competitive advantage comes primarily from its core algorithmic technology rather than from its platform partnerships.Joy Spread

22、ers own strong algorithm ability drives long-term cooperation with big platforms.Before the Company entered the Douyin platform,the main business of Joy Spreader was marketing services for interactive entertainment and digital products;the Company was one of the first performance-based marketing ser

23、vice providers active on the WeChat public account platform.More recently,with the development of the e-commerce segment of Douyin,the Company began to lay out the marketing business of short video e-commerce in 2019,and achieved remarkable results within two years.Therefore,we believe that the Comp

24、anys business innovation ability and its strong algorithm ability are the core values of the Company.Catalyst for investment:Live streaming on overseas the short-video platform TikTok has caused a global craze and the Companys derived revenue and earnings from overseas markets will exceed market exp

25、ectations.Risk:1).Higher-than-expected additional fixed costs associated with the development of overseas e-commerce platforms:Overseas e-commerce is capital-intensive for the Company,and the Company needs to bear relevant costs of logistics,warehousing and payment of the e-commerce platform.If the

26、turnover and profit rate are not as expected,it will have a significant negative impact on the Companys profitability.2).Policy risks of cross-border e-commerce:New regulations on cross-border e-commerce may still be issued,which has certain policy risks for businesses.Company Report See the last pa

27、ge for disclaimer Page 4 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Earnings Forecasts Based on the industry and the Companys situation,we make the following assumptions about Joy Spreaders profitability in the next three years:Assumption 1:With the Cov

28、id-19 pandemic coming under control,budgets for performance-based marketing advertising of medium-and long-tail product merchants on the Douyin platform in China will recover to the previous level of growth.With growth of the entire market size,marketing revenue of performance-based advertising on t

29、he Douyin platform will recover from 1H22.At the same time,we expect the Companys take rate of performance-based marketing to increase due to the increase of GMV of daily chemical products.We forecast that marketing revenue from domestic e-commerce marketing will grow by-13.7%,23.6%and 20.0%in 2022-

30、2024,respectively.Assumption 2:With the rapid development of overseas short video e-commerce,there is a huge niche market to be exploited and content creators are eager to monetize user traffic.Relying on the algorithm ability of the Company,we believe that the Companys overseas e-commerce business

31、can maintain a high growth rate in the next three years.We forecast growth of GMV in overseas e-commerce sales to be 1,822.1%,55.0%and 40.0%in 2022-2024,respectively.Assumption 3:As commission costs of daily chemical products are relatively higher than that of electronic products,and electronic prod

32、uct sales in the first half of 2022 being severely affected,we expect that the Companys 2022 gross margin in domestic e-commerce marketing will decline.Given that the Covid-19 pandemic is under control and business activity has returned to normal,we estimate gross margin to return to close to the le

33、vel of 2021 levels in 2024.We forecast that the Companys gross margin for domestic e-commerce marketing will be 48%,50%and 51%in 2022-2024,respectively.Assumption 4:The gross margin of overseas e-commerce was relatively low in the initial stages.However,with the expansion of the Companys overseas e-

34、commerce and the scale effect,we expect the gross margin of oversea e-commerce to improve steadily.We estimate overseas e-commerce gross margin to be 7.0%,8.5%and 9.5%in 2022-2024,respectively.Table-1:Key Assumptions for Earnings Forecasts 2020A 2021A 2022F 2023F 2024F GMV(HK$mn)Domestic E-commerce

35、products marketing 593.6 1,041.3 706.8 1,024.8 1,229.8 YoY 353.9%75.4%(32.1%)45.0%20.0%Revenue/GMV 20.0%27.7%35.2%30.0%30.0%Overseas sales of E-commerce goods 0.0 147.9 2,842.2 4,405.4 6,167.5 YoY n.a.n.a.1822.1%55.0%40.0%Revenue(HK$mn)Marketing of interactive entertainment and other digital product

36、s 803.5 959.7 648.9 767.8 885.6 YoY 57.6%19.4%(32.4%)18.3%15.3%Marketing revenue from domestic E-commerce products 118.7 288.4 248.7 307.5 368.9 YoY 353.9%142.9%(13.7%)23.6%20.0%Sales revenue from overseas E-commerce goods 0.0 147.9 2,842.2 4,405.4 6,167.5 YoY n.a.n.a.1822.1%55.0%40.0%Revenue from o

37、ther products 1.7 0.0 1.8 0.0 0.0 YoY n.a.n.a.n.a.n.a.n.a.Total revenue 923.9 1,395.9 3,739.8 5,480.6 7,422.0 YoY 71.7%51.1%167.9%46.5%35.4%Gross margin Interactive entertainment and other digital products 25.7%30.3%31.0%31.0%31.0%Domestic E-commerce products marketing 80.0%52.7%47.0%48.0%51.0%Sales

38、 of overseas E-commerce goods 0.0%6.2%7.0%8.5%9.5%Overall 32.6%32.4%13.8%13.9%14.1%Net ptofit(HK$mn)138.7 244.6 127.3 150.2 225.4 YoY 81.2%76.4%-48.0%18.0%50.1%Note:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 5 of 24 20 September 2022 Joy Spreader 樂享集團

39、(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Valuation&Investment Rating 1)SOTP Valuation Due to resurgences of the Covid-19 pandemic in 2022,the entire marketing services market was severely negatively impacted;we expect volatility on the profitability level across the entire industry.Given tha

40、t the local Covid-19 epidemic is under control,we expect the whole industry to experience high certainty profit growth in 2023.At the same time,the Company fully deployed its overseas e-commerce business in 2022,which will lead to the profit margin fluctuating greatly in 2022;this will not reflect t

41、he true valuation and long-term growth of the Company.Therefore,we use SOTP(sum-of-the parts)method to evaluate the Company.We have selected a total of 11 companies as comparable companies,and we used Bloomberg consensus estimates as a reference.In the valuation of the Companys domestic e-commerce m

42、arketing business,we selected 8 companies for comparison,all of which are marketing service providers in China.The current average PE of the Companys peers from Bloomberg for 2023 is 15.0 x.We forecast that the net profit attributable to shareholders of the Companys domestic business in 2023 will be

43、 HK$208.6 mn,and we give a P/E ratio of 12x.Accordingly,we give the Companys domestic business in 2023 at fair value of HK$2,504 mn.Table-2:Peers Valuation Hong Kong Listed Marketing Solutions Services Companies Company Stock Code Currency Last price PE(fiscal year)PB ROE(%)PS Market Cap 21A 22F 23F

44、 24F 22F 22F 22F HKD mil Marketing Services Companies Mobvista Inc 01860 HK HKD 4.750 n.a.118.2 39.1 8.4 2.7 2.8 0.9 7,558 Joy Spreader Group Inc 06988 HK HKD 1.150 10.7 15.3 11.3 8.9 1.0 6.7 1.0 2,870 Uju Holding Ltd 01948 HK HKD 2.870 4.9 n.a.n.a.n.a.n.a.n.a.n.a.1,836 Hypebeast Ltd 00150 HK HKD 0.

45、810 22.2 15.8 n.a.n.a.3.3 23.9 1.8 1,582 Pico Far East Holdings Ltd 00752 HK HKD 1.130 10.3 n.a.n.a.n.a.n.a.n.a.n.a.1,412 Netjoy Holdings Ltd 02131 HK HKD 1.310 7.1 6.1 4.6 3.7 0.5 8.8 0.2 1,003 Duiba Group Ltd 01753 HK HKD 0.770 n.a.n.a.n.a.n.a.n.a.n.a.n.a.818 Activation Group Holdings 09919 HK HKD

46、 1.000 6.6 10.9 4.7 3.9 1.2 12.8 1.0 745 Simple Average 10.3 33.2 14.9 6.2 1.7 11.0 1.0 Weighted Average 10.7 71.0 27.6 7.8 2.2 7.0 1.0 Source:Bloomberg,Guotai Junan International Note:Above valuations and ROE are based on Bloomberg consensus forecasts.Market cap and last price are as at 19 Septembe

47、r 2022.For the overseas e-commerce business of Joy Spreader,we selected three companies as its peers,which are all technology companies that rely on information technology to provide SaaS and engage in marketing services.Although the marketing fields involved in these three technology companies are

48、quite different,they have one thing in common.They all use their own unique information technology to help customers or carry out their own marketing activities.They all monetize their own information technology through marketing activities,so we think they are very comparable.Among the three compan

49、ies,we think Bairong(06608 HK)is particularly similar to Joy Spreader.Although Bairong mainly serves the financial industry,it also uses artificial intelligence(AI)and big data technology to differentiate users based on multi-dimensional profiles,and charge marketing service fees based on successful

50、 recommendations.The Bloomberg weighted average PS of the Companys peers for 2023 is 1.5X.Since Joy Spreaders overseas business is currently in its infancy,we give a discount,and value the business at a price-to-sales ratio of 0.9X in 2023.Accordingly,we give the Companys overseas business in 2023 w

51、ith fair value of HK$3,965 mn.To sum up,we calculate the reasonable market value of the Company to be HK$6,469 mn.Based on the latest number of issued shares,we calculate the corresponding fair value is HK$2.73/share.Table-3:Peers Valuation Hong Kong Listed Company with SaaS Technology for Marketing

52、 Activities Company Stock Code Currency Last price PS(fiscal year)PE PB ROE(%)Market Cap 21A 22F 23F 24F 22F 22F 22F HKD mil Marketing Services Companies Yeahka Ltd 09923 HK HKD 18.560 2.9 2.0 1.6 1.3 25.1 8.4 2.0 8,387 Bairong Inc 06608 HK HKD 8.450 2.1 1.9 1.5 1.2 29.2 3.0 0.9 4,348 China Youzan L

53、td 08083 HK HKD 0.112 4.8 1.5 1.0 1.1 n.a.(28.6)0.1 2,063 Simple Average 3.3 1.8 1.4 1.2 27.2 (5.7)1.0 Weighted Average 2.9 1.9 1.5 1.2 22.8 1.7 1.4 Source:Bloomberg,Guotai Junan International Note:Above valuations and ROE are based on Bloomberg consensus forecasts.Market cap and last price are as a

54、t 19 September 2022.Company Report See the last page for disclaimer Page 6 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)2)DCF Valuation Our DCF analysis suggests a valuation between HK$6,036 mn and HK$8,764 mn,representing 47.4x-68.9x 2022 PER,40.2x-58.4x

55、 2023 PER and 26.8x-28.9x 2024 PER.The midpoint of the valuation range is HK$7,168 mn,representing 56.3x 2022 PER,47.7x 2022 PER and 31.8x 2023 PER.Our DCF assumptions are as follows:With reference to 10-year HK Exchange Fund Notes,we set the risk-free interest rate at 2.9%;We assume a market risk p

56、remium of 3.1%and apply a beta of 1.3.As a result,the Companys cost of equity is 6.9%.After tax cost of debt is estimated to be 4.4%.With the assumption of equity/enterprise value of 99.3%for the Company,the weighted average cost of capital(“WACC”)is 6.3%;Long-term free cash flow(“FCF”)growth rate i

57、s assumed to be 1.0%.Table-4:DCF Valuation Table WACC Calculation DCF Calculation(HKD m)g=1.0%Risk-free rate 2.9%PV of FCFE(2022-2030)(HKD mn)617 Market risk premium 3.1%PV of Terminal Value(HKD mn)5,949 Beta 1.3 Net(Debt)/Cash(HKD mn)602 Cost of equity 6.9%NAV(HKD mn)7,168 Sensitivity Analysis for

58、NAV(HKD)Perpetual Growth Rate Cost of debt 5.9%0.0%0.5%1.0%1.5%2.0%Effective tax rate 25.0%WACC(%)5.9%7,708 8,336 9,091 10,018 11,182 After tax cost of debt 4.4%6.4%6,922 7,432 8,036 8,764 9,657 E/(E+D)99.3%6.9%6,256 6,676 7,168 7,750 8,451 WACC 6.3%7.4%5,686 6,036 6,441 6,914 7,475 Perpetual growth

59、 rate 1.0%7.9%5,193 5,488 5,825 6,215 6,671 Source:Guotai Junan International.Investment Rating We initiate Joy Spreader with a target price of HK$2.73 and a rating of Buy.The Companys growth points in the future lie in three aspects:1)the Company will continue to cultivate mid-and long-tail product

60、s in short video e-commerce,which is expected to maintain rapid growth;2)the Companys overseas e-commerce operations have begun to reap significant results;3)with the maturity of the Companys overseas e-commerce operations,gross margin will increase steadily after 2023.However,considering the effect

61、s from the Covid-19 pandemic in 2022,we forecast EPS of HK cent 5.59/6.33/9.50 in 2022-2024,respectively.According to the SOTP valuation,we initiate with a target price of HK$2.73 based on the valuation of Joy Spreaders businesses with comparable companies,and give a Buy rating.Company Report See th

62、e last page for disclaimer Page 7 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Industry Analysis Short Video E-Commerce Becomes the Main Marketing Force The Covid-19 pandemic has reshaped the e-commerce industry and Internet advertising in China.According

63、 to the China Internet Network Information Center(CINC),as at December 2021,the number of online shopping users in China reached 842 mn,an increase of 60 mn from December 2020,accounting for 81.6%of overall domestic internet users.In 2021,Chinas online retail sales reached RMB13.1 trillion,up 14.1%Y

64、oY,among which online retail sales of physical goods accounted for 24.5%of total retail sales of consumer goods.According to forecasts by eMarket and QuestMoble,we expect the future of the advertising market to gradually shift towards the internet advertising market.Due to the Covid-19 pandemic,some

65、 brands have reconfigured their budgets for online advertising,and we expect that the future increase in size of the online advertising market will be mainly driven by short video platform advertising and e-commerce platform advertising.The Covid-19 pandemic has reshaped the composition of media in

66、Chinas online advertising industry,with short video platform advertising becoming the second largest platform type.According to QuestMobile,the share of e-commerce platform advertising and short video platform advertising continued to grow in 2021,attracting more advertising budget.Short video platf

67、orm advertising experienced the most significant growth in advertising.According to QuestMobiles estimations on internet advertising,short video platform advertising and pan-consulting advertising tied for as the second largest platform types in the online advertising market with a market share of 1

68、6.6%,while e-commerce platform advertising continued to be the largest platform type in the online advertising market with a market share of 46.5%.Figure-1:Number of Online Shopping Users in China and Online Shopping Penetration Rate Figure-2:Changes in the Scale of Chinas Advertising Industry 533 6

69、10 710 782 842 62%64%66%68%70%72%74%76%78%80%82%84%0 100 200 300 400 500 600 700 800 900 2017.122018.122019.122020.122021.12Number of online shopping users in ChinaOnline shopping penetration ratemn 867.4 914.4 1,016.8 1,107.0 1,165.9 483.0 543.9 655.0 723.8 792.5 0.0%5.0%10.0%15.0%20.0%25.0%0.0 200

70、.0 400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 20192020E2021E2022E2023EChinese advertising market sizeChinas Internet advertising market sizeYoY growth in Internet advertising marketYoY growth in advertising marketRMB bn Source:CINC,Guotai Junan International.Source:QuestMobile,Guotai Junan Internatio

71、nal.Figure-3:The Composition of Media in Chinas Online Advertising Industry 4.1%2.8%2.8%2.7%2.8%28.7%18.6%16.6%14.6%13.3%11.5%13.1%13.2%13.9%14.2%5.8%4.4%4.3%4.3%4.3%10.3%15.2%16.6%17.3%17.4%39.6%45.9%46.5%47.2%48.0%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%201920202021E2022E2023EE-comm

72、erce ADShort video ADOnline video ADSocial ADPan-consulting ADOther AD Source:QuestMobile,Guotai Junan International.Company Report See the last page for disclaimer Page 8 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)The growth rate of short video adverti

73、sing has been dynamic,becoming the new focus for advertisers.E-commerce platform advertising has a direct link to shopping;this alongside increasing online consumption drove the e-commerce platform advertising market scale to exceed RMB300 billion in 2021,YoY growth of 22.0%,according to QuestMobile

74、.The scale of the e-commerce platform advertising market is very large.We expect that the e-commerce platform advertising market will step into a steady growth period from 2021.Due to the impact from the Covid-19 pandemic on the whole macroeconomy,advertisers cut their overall advertising budgets,am

75、ong which revenue from pan-consulting advertising business was the most affected.After YoY decline of 27.0%in 2020,revenue only recovered to 7.5%growth in 2021,with overall size reaching RMB108.7 billion.Currently,the pan-consulting advertising business can be replaced by other internet and mobile i

76、nternet services at cheaper cost,leading future growth of pan-consulting advertising to be unclear.The social advertising market in China grew 21.3%YoY in 2021,reaching RMB86 billion.Considering that leading social-network platforms(such as WeChat,Weibo,Zhihu,RED,etc.)can continuously provide differ

77、entiated social advertising marketing products to advertisers based on their characteristics and years in operation,we expect that the scale of Chinas social advertising market will continue to steadily grow.From the demand side,short video ads are the new focus of major advertisers.According to a p

78、rediction from QuestMobile,the 2021 YoY growth rate of short video platform advertising(short video ads)revenue reached 31.5%,which was still the brightest among all internet advertising platforms,and the total scale reached RMB108.7 billion.The continuous optimization of content ecology continues t

79、o boost overall user volume and user engagement,becoming the main place for advertisers to grow their marketing.According to QuestMobiles forecasts,short video platform advertising will account for 17.3%of the Internet advertising market in 2022.At the same time,advertising on short video platforms

80、seems to be more likely to influence consumers to consume.According to research data from iiMedia,Chinese consumers have higher trust in celebrity product placements on short video platforms and product placement in platform content recommendations(64.8%and 57.9%respectively),while traditional marke

81、ting models such as TV ads have low influence on consumer purchase desire.Figure-4:Chinas E-Commerce Advertising Market Scale and YoY Growth Figure-5:Chinas Pan-consulting Advertising Market Scale and YoY Growth 191.3 249.7 304.6 346.0 388.5 30.5%22.0%13.6%12.3%0%5%10%15%20%25%30%35%0 50 100 150 200

82、 250 300 350 400 450 20192020E2021E2022E2023EE-commerce advertising market sizeYoY growthRMB bn 138.6 101.2 108.7 108.6 109.8-27.0%7.5%-0.1%1.1%-30%-25%-20%-15%-10%-5%0%5%10%0 20 40 60 80 100 120 140 160 20192020E2021E2022E2023EPan-consulting advertising market sizeYoY growthRMB bn Source:QuestMobil

83、e,Guotai Junan International.Source:QuestMobile,Guotai Junan International.Figure-6:Chinas Short Video Platform Advertising Market Scale and YoY Growth Figure-7:Chinas Social Advertising Market Scale and YoY Growth 49.8 82.7 108.7 125.2 138.0 66.2%31.5%15.2%10.2%0%10%20%30%40%50%60%70%0 20 40 60 80

84、100 120 140 160 20192020E2021E2022E2023EShort video advertising market sizeYoY growthRMB bn 55.6 71.3 86.5 100.6 112.8 28.3%21.3%16.4%12.1%0%5%10%15%20%25%30%0 20 40 60 80 100 120 20192020E2021E2022E2023ESocial advertising market sizeYoY growthRMB bn Source:QuestMobile,Guotai Junan International.Sou

85、rce:QuestMobile,Guotai Junan International.Company Report See the last page for disclaimer Page 9 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Short video e-commerce is the trend of the times in the online advertising market.Considering that social advert

86、ising and short video advertising markets are still growing and e-commerce platform advertising has established a firm position,we believe that short video e-commerce(such as Douyin e-commerce)combined with social attributes in the short video platform will be an irresistible trend of internet adver

87、tising in the future.Therefore,from the perspective of the development of the internet advertising industry,we believe that Douyins e-commerce platform still has huge room for improvement.As one of the earliest performance-based marketing service providers on WeChat and Douyin platforms,Joy Spreader

88、 has formed unique industry barriers in algorithm technology and data precipitation,and is expected to continue to enjoy high growth dividend of short video e-commerce.Douyins Platform Economy has Formed Symbiotic Relationships with Many Enterprises Douyin is a fast growing e-commerce platform with

89、its large user base and active user engagement.The Douyin app has the third highest monthly active users(MAU)in China with 680 mn MAU as of June 2022,according to Quest Mobile.It ranked second among all apps in terms of daily active users in 2Q202 after WeChat,according to MoonFox.Content driven e-c

90、ommerce consumer demand has become a new growth driver in the e-commerce industry.From May 1,2021 to April 30,2022,Douyin e-commerce GMV increased 3.2x YoY with cumulative sales of more than 10 billion goods.Meanwhile,Taobaos Tmall e-commerce GMV decreased in 1H2022.In the e-commerce industry,the di

91、stribution of short video e-commerce revenue is still very low.Douyin has become an important platform for many businesses to drive business growth.Looking back in 2022,there have been a lot of phenomenal top-tier user traffic accounts on Douyin platform,all of which successfully acquired a large am

92、ount of user traffic and successfully monetized their business on the Douyin platform.Oriental Selection(an official account active on Douyin e-commerce platform,built by New Oriental Group)is an example of the success that is occurring on the Douyin platform.First,Oriental Selections live streaming

93、 marketing of agricultural products achieved outstanding results.During the four days from June 10 to June 13 alone,cumulative GMV of their live streaming e-commerce operation reached about RMB73.78 mn.Since then,Oriental Selection has made great achievements in the book selling market.We estimated

94、that Oriental Selection sold over 2 mn books in June on Douyin.The amazing performance of top-tier user traffic marketing accounts seen on short video e-commerce is credited to to the long-term and sustained e-commerce infrastructure built by Douyin.The success of Oriental Selection also reflects a

95、trend that the increasingly competitive e-commerce industry is forcing merchants to find growth through high-quality,differentiated and personalized content marketing in the Douyins new e-commerce platform model.Figure-8:Statistics of Digital Marketing Methods that Arouse Consumption Desire/Trust of

96、 Chinese Consumers in 2021 64.8%57.9%44.9%32.7%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%Short video platform celebrity implantationPlatform content recommendation advertisingSubway,elevator and other community advertisingTelevision Advertising(dial-up buy)Source:iiMedia,Guotai Junan International.Comp

97、any Report See the last page for disclaimer Page 10 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Does the E-Commerce Economy Generated by Douyin Still Have Room For Growth?With Douyins unique and huge pool of users,GMV was initially high when it began e-c

98、ommerce activity.E-commerce growth is mainly dependent on two simple factors:the total amount of user traffic and the conversion rate from total amount of user traffic to consumption.This can be expressed as follows:e-commerce traffic=total user traffic*conversion rate.With the development of the sh

99、ort video industry,the number of users and the average usage time of users are increasing year by year.The short video industry has a large amount of user traffic with high user engagement,and Douyins live streaming e-commerce is helping to convert the conversion of short video traffic on the platfo

100、rm to e-commerce traffic.With a leading content community in the industry,Douyin has seen an explosion of short video traffic transforming into e-commerce traffic under the catalyst of live streaming e-commerce outlets,in which GMV reached hundreds of billions in RMB within a short time from its ent

101、ry into e-commerce.At present,overall user traffic in e-commerce is close to reaching the ceiling.The short video industry is beginning to face the end of demographic dividend caused by a slowdown of user traffic growth.The traffic dividend on the internet turned completely in 2019,and the scale of

102、Chinese internet monthly active users(MAU)stopped growing,and even fell by 1.93 mn in 2Q2019,according to QuestMobile.The growth rate of short video users was 107.0%in 2018,but dropped to 15.2%in 2020,according to iiMedia.There were 813 mn users of WeChat video accounts and 680 mn users of Douyin in

103、 June 2022,with the active penetration rate of Douyin users of WeChat video accounts approaching 60%.There is no doubt that WeChat is at the social traffic ceiling.From the perspective of user traffic,we believe that the current user traffic of Douyin is approaching the ceiling,thus incremental incr

104、ease in user traffic has been unable to support long-term growth of Douyins e-commerce.Maintaining the balance of user traffic on platforms is the biggest challenge to monetization.Whether user traffic of the platform is directed to e-commerce or advertising within the platform,the process of user t

105、raffic monetization will always generate discontent from users.We think that it is very challenging for Douyin to maintain effective distribution of traffic and maintain balance within the platform during the process of monetization.We think that the driver for Douyin is improvement in conversion ra

106、te.We think Douyin can still improve its conversion rate for two reasons.First,Douyins e-commerce model is special and generates new markets in e-commerce,so it does not have direct competition with traditional e-commerce platforms.Douyins interest-driven e-commerce is to break the traditional model

107、 of people actively looking for products,instead to attract users based on their existing patterns of interest,and user patterns based on short videos can be more effective than a user portrait from online shopping habits.Second,we estimate that the current e-commerce penetration rate of Douyin is a

108、round 15%,which still has room for improvement.Figure-9:Chinas Online Advertising Market Scale and YoY Growth Figure-10:Chinas Top 10 Media Platforms in Terms of Online Advertising Revenue in January 2022 8136803900 100 200 300 400 500 600 700 800 900 WeChat videoDouyinKuaishoumn 59.2%30.8%0.0%10.0%

109、20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%DouyinKuaishouTGI 103.5 93.8 Source:QuestMobile,Guotai Junan International.Note:1.Wechat active penetration rate refers to the number of monthly active users of Wechat video number users who start a certain App media divided by the number of monthly active use

110、rs of wechat video number.2.Wechat active penetration TGI refers to the monthly active penetration rate of a certain App media in the Wechat video number user group divided by the monthly active penetration rate of the app media in the whole network*100.Company Report See the last page for disclaime

111、r Page 11 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Douyins Competitive Advantages in E-commerce We expect Douyin to continue to grow as live streaming e-commerce business as a percent of ecommerce business increases.We expect that the penetration rate

112、 of live streaming e-commerce will increase in the next three years.Currently,we estimate that Douyins e-commerce share only accounts for 5%of Chinas total e-commerce market share,but it will increase its market share due to three competitive advantages:1)Douyins e-commerce business is backed by the

113、 huge user traffic pool of the entire ByteDance Group;2)Douyin develops their own interest-driven e-commerce model based on unique traffic attributes;3)Douyin has the ability to create its own logistics and continue to upgrade.Douyins e-commerce business is underpinned by a huge pool of internal use

114、r traffic.In terms of user traffic orientation,Douyins e-commerce model relies on ByteDance Groups large user traffic pool to guide short video traffic to e-commerce traffic.To some extent,Douyins e-commerce user traffic-oriented model is similar to Pinduoduos reliance on WeChat traffic pool to tran

115、sform social traffic into e-commerce traffic.However,different from the cross-platform user traffic orientation between Pinduoduo and WeChat,1)Douyins e-commerce model is internally oriented,and 2)Douyins user traffic is uniquely targeted through interest orientation.Directing user traffic from WeCh

116、at to Pinduoduo is from one platform to another.People enter WeChat to meet social needs,then enter Pinduoduo when they have e-commerce needs,and Pinduoduo mainly attracts user traffic with discounts.The model of user traffic orientation is to transform users from social media consumption to shoppin

117、g consumption,and the final satisfaction of shopping always comes from the cost performance of shopping.We believe that the conversion rate and retention rate are obviously limited in the process of transforming from social media traffic to shopping traffic.The user traffic orientation of Douyins e-

118、commerce model essentially relies on internal distribution of user traffic within the platform,rather than the transference between platforms.The most important difference is that the attribute of transference of user traffic is different from the social demand traffic.Douyins user traffic is video

119、interest demand traffic based on its algorithm,so guided shopping is bound with a certain degree of interest.People still enter Douyin to watch videos and the shopping needs derived from interests are largely attributed to the experience of watching videos.Douyin has opened up interest-driven e-comm

120、erce through the special nature of its user traffic,and guided consumers to create purchases through content.Interest-driven e-commerce stimulates user interest with high-quality content,attracts users to stay and interact,and achieves purchase conversion.Douyins transformation is similar to that of

121、 RED(a lifestyle sharing community platform whose content includes information sharing about beauty,personal care,sports,tourism,home furnishing,hotels and restaurants,and involves many aspects of consumption experience and lifestyle).RED has made many new consumer brands popular,but performance of

122、the e-commerce business on the platform has been poor and consumers have largely remained on mainstream e-commerce platforms.Douyin can however now succeed in keeping consumption within its internal e-commerce platform.Douyin has the ability to self-build a logistics foundation and continually upgra

123、de.Douyin has been investing in logistics services,with the e-commerce company recently testing a new logistics service that allows same-day delivery of goods in one city and next-day delivery in neighboring cities.Logistics are not only the basis of e-commerce,but also a moat.With fierce competitio

124、n in the e-commerce field,imperfect logistics systems have become a common problem faced by the industry.To this end,e-commerce giants are improving the basis of logistics system.On the supply side,Douyin is currently trying to strengthen its logistics and quality of delivery in e-commerce.Although

125、this is something that all major e-commerce companies are investing in,we believe that from the perspective of industry development,Douyin has greater room for improvement than its peers in the process of improvement.The huge user traffic pool,interest-driven purchases and own supply chain are not u

126、nique advantages of Douyin.However,when looking at other e-commerce giants,only Douyin can take advantage of these three factors alone,which form a unique and powerful barrier for Douyin.Development of the E-Commerce Industry has Reshaped the Landscape The short video e-commerce industry provides th

127、e niche market with new development vitality.A long-tail market,also known as a niche market,is defined by Philip Kotler in Marketing Management:a Niche product is a narrower definition of a group,a small market whose needs are not served,or there is a basis for making profits.It is often easier for

128、 customers to buy goods in the main market and to shop around,so there is a lot of competition in this market.Long-tail markets tend to be less common outside of main commodities,with less competition but traditionally relatively high costs of production.At present,the Company Report See the last pa

129、ge for disclaimer Page 12 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)development of the manufacturing industry and internet platform economy(such as Douyin e-commerce)provide technical conditions for enterprises to integrate long-tail demand and maximiz

130、e sales volume.The current market landscape encourages companies to look for long-tail products or markets.The Pairing of Long-Tail Products and Long-Tail User Traffic Is Creating a New Market Productivity and logistics upgrades have made the long-tail market more efficient.In the past,limited by ti

131、me and space,the physical market had limited coverage and business hours,and 20%of the products in the market were best-selling products and 80%were unsaleable products.The top 20%most popular products generate 80%of the profit,and 80%of the long-tail products generate 20%of the profit,which follows

132、 the typical 20 to 80 law.Due to the improvement in production capacity,the production of long-tail products by enterprises can make the products more customized.Consumers tend to choose niche products that conform to their own personalities.A large number of consumers enables producers of niche pro

133、ducts to achieve economies of scale.In short,the Internet has solved the problem of information asymmetry between consumers and producers,enabling enterprises to conduct precise marketing,targeted push advertising,and product flow from point to point and end to end.With the support of modern algorit

134、hms,long-tail user traffic can better achieve monetization by matching long-tail products.Long-tail user traffic refers to online non-target keywords that can also bring search traffic with large overall volume.Although the total market of medium and long-tail traffic accounts for a large proportion

135、 of the overall market and has huge hidden potential,it is difficult for ordinary marketing service companies to scale up and make effective use of it due to the highly fragmented vertical market nature.Short video platforms have brought business opportunities to companies with powerful algorithms b

136、y reducing search costs for producers and consumers,matching costs and trust costs between supply and demand.Performance-based marketing in short video platforms is an attractive business opportunity for small-to medium-sized we-media publishers.We-media accounts are online accounts registered by us

137、ers on websites or apps including social network platforms,news platforms,live streaming platforms and short-form video platforms,and publishes text,picture,audio or video content to the public.We-media publishers are keen to monetize their traffic by providing traffic inventory to marketers.This ha

138、s created a market for we-media marketing,as well as business opportunities for we-media marketing service providers.We-media marketing service providers connect marketers(namely,product providers and merchants)with we-media publishers.Compared to other service providers,we-media marketing service p

139、roviders that are able to provide multiple types of products that we-media publishers can monetize are more favored among we-media publishers.Substantially,all of the performance-based we-media marketing expenditure of marketers is spent on small-to medium-sized we-media publishers.In 2019,small-to

140、medium-sized we-media publishers accounted for approximately 70%of total traffic on we-media platforms.Small-to medium-sized we-media publishers themselves generally do not have the ability to effectively monetize,so companies with strong algorithm matching ability,such as Joy Spreader,has become an

141、 important channel for them to monetize.With the development of the e-commerce industry,the long-tail market has achieved large-scale profitability.According to the research of Journal of Wuhan Business University combined with our analysis,the Pareto consumption law in the e-commerce market has cha

142、nged as follows:Since the new display cost and retrieval cost of goods in virtual space market are close to zero,the search costs for mainstream goods and niche goods tend to be the same.Due to increasing competition and economies of scale,the profit margin of the original 20%best-selling products o

143、r popular products has decreased.At the same time,the original 80%unpopular products or niche products in the virtual space has obtained scale effect.Long-tail user traffic and long-tail products go hand in hand.According to the research of Journal of Wuhan Business University,long-tail consumption

144、of niche products in the e-commerce market has formed huge commercial transaction flow,and a centralized traffic distribution mechanism has been formed under the expansion of markets in lower-tier cities.A large number of niche products continue to increase market share through e-commerce marketing,

145、and even begin to outsell star products.Company Report See the last page for disclaimer Page 13 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Advertisement Links Have Become the Best Entry Point to Niche Markets Advertisement links are most suitable for lo

146、ng-tail products.In the industry chain of e-commerce advertising,the upstream is advertisers.The middle stream is the traffic delivery platform which generally includes large domestic internet companies,such as Tencent,Douyin,Alibaba,etc.,and the downstream is the user.The common marketing models of

147、 e-commerce advertising can be divided into search advertising,display advertising,live streaming advertising and advertisement links.The first three have relatively high cost thresholds for long-tail product merchants.Before scale effects take effect,advertisement links are the best entry point for

148、 long-tail products.Advertisement links on short video platforms is the best carrier of the concept of interest-driven e-commerce.Advertisement links on the Douyin platform mainly analyses user characteristics and interests of short video content through data collection and algorithms,and automatica

149、lly loads product links that meet immediate browsing interests of users.Advertisement links combines user interest and purchasing behavior with data analysis and algorithms,leading to better conversion efficiency compared with live stream advertising.In addition,the user traffic of live streaming wi

150、ll spontaneously focus on the leading host,so it is very difficult for content creators with long-tail user traffic to monetize,and the threshold of advertising through the leading host is also very expensive for advertisers.Advertisement links can realize recommendations based on content,giving the

151、 same monetizing opportunity for leading and mid-and long-tail user traffic.Joy Spreader tries to solve the common problem faced by platforms and merchants.Due to that long-tail user traffic and long-tail products are too dispersed,it is difficult to match consumers with products with ordinary perfo

152、rmance-based advertising on the platform.The powerful algorithmic technology and the large amount of user data accumulation make it possible for Joy Spreader to solve common problems on both sides.Company Report See the last page for disclaimer Page 14 of 24 20 September 2022 Joy Spreader 樂享集團(06988

153、 HK)Table_PageHeader Joy Spreader(06988 HK)Company Analysis Company Profile Joy Spreader is a leading mobile new media performance-based marketing technology company in China.The Company was one of the first companies to launch its performance-based marketing business on WeChats public platform.The

154、Companys technical capabilities,industry experience and business resources allow it to charge marketing customers fees in accordance to agreed performance targets;and charge commission fees primarily on the basis of performance-based billing models such as cost per sale(CPS),cost per action(CPA),and

155、 cost per click(CPC).Unlike brand marketing companies,the performance-based marketing model and the corresponding technical capabilities are distinctive features and strengths of the Companys existing businesses which also provide a solid foundation for it to expand into new business segments in the

156、 future(such as the urrent expansion into overseas e-commerce).The Companys largest shareholder is the Companys founder,who has been working in media and online marketing industries for more than a decade.The Companys largest shareholder,Mr.Zhu Zinan,as the Companys founder,chairman,executive direct

157、or,chief executive officer and the chairman of the Nomination Committee holds a total of 35.14%of the Companys shares.Mr.Zhu Zinan is responsible for the overall management,strategic planning and decision-making of the Company.He has been the chief executive officer at Beijing Joy Spreader since Jun

158、e 2012 and was appointed as an executive director and the chief executive officer at Beijing Wuyou Technology Co,Ltd(伍遊(北京)科技有限公司)in July 2014.Mr.Zhu has over 12 years of experience in the online marketing industry.Figure-11:Shareholder structure Joyspreader(06988 HK)Mr.Zhu100%ZZN.Ltd.Mr.Zhang100%ZZ

159、D.Ltd.Mr.Chen LiangJack Chen.LtdMr.GuoZhiwei100%GZW.Ltd.Mr.Zhu100%Laurence mate.Ltd.BeijingDaoyoudaoShenzhenNanhaiChengzhangtongyingShenzhenNanhaiGrowth31.51%3.07%2.66%1.02%5.11%4.75%100%100%Mr.ZhangDYDHolding.Ltd.100%5.73%100%NantongPinghengChuangyeNT BalanceCapital Ltd.5.46%100%ShanghaiJinjiaSHJJ.

160、Ltd1.20%100%NanjingPinghengCapitalBalanceCapitalGroup Ltd.8.81%100%JiaxingBaozheng1.20%Others3.31%Public26.17%Source:the Company,Guotai Junan International.Business Overview Joy Spreaders business has begun to expand from providing marketing services to developing overseas e-commerce platforms.The C

161、ompanys business can mainly be divided into three segments according to the nature of the business,namely,interactive entertainment and other digital products marketing(interactive entertainment marketing),domestic e-commerce products marketing(domestic e-commerce marketing)and overseas sales of e-c

162、ommerce goods(overseas e-commerce sales).The Companys principal business is to help its marketing customers achieve their performance-based marketing objectives,such as product promotions and sales through the use of internet digital technologies like big data,model algorithms and central platforms

163、on new mobile internet platforms.The Company also helps its maketing customer to achieve high user traffic and high marketing conversion rates,including social media and short video,and to charge its customers commission fees based on marketing performance.In 2021,the Company made a forward-looking

164、plan layout regarding the long-term development of its business,and has started to bear fruit in overseas e-commerce marketing,film and television cultural and entertainment content marketing and other fields.Company Report See the last page for disclaimer Page 15 of 24 20 September 2022 Joy Spreade

165、r 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Customers that Joy Spreader serves consist of online product providers and merchants that promote their consumer goods through the Companys performance-based marketing services.The Companys online product provider customers mainly include app de

166、velopers,online literature providers and mini-program developers.Merchants that the Company serves are expanding from electronic products to daily care and cosmetic products.Joy Spreader is one of the earliest DTC marketing companies in China.Most of the performance-based marketing is Direct-to-Cons

167、umer(DTC)marketing,that is,the algorithm system matches the appropriate advertising materials and content,directly pushes the advertisements to the user,and charges according to facilitated transactions.The Company has accumulated technology over the years and now has a mature intelligent analysis t

168、echnology and algorithm system.The automated data algorithm platform of the Company identifies the product profile of the advertisers product and selects the appropriate platform-based marketing points for the product intelligently.The Companys interest recommendation technology matches the product

169、advertisement with the appropriate media resources,and finally achieves a matching transaction.The knowledge of products and users and the accumulation of data enables the Companys algorithm to accurately match users and products.The basic delivery process of the Companys performance-based marketing

170、 is as follows:1)Advertisers or advertising agents upload the advertisements of digital products or e-commerce products to the demand side platform(DSP);2)the Company matches advertising materials or e-commerce products with appropriate platform-based marketing points(a marketing point is a spot whe

171、re marketing products can be pushed on we-media accounts for internet users who view the accounts to generate paid actions)through automated data algorithm recommendation technology;3)the supply side platform(SSP)displays advertisements or products to target users through marketing points;4)when the

172、 target user makes a billable action(such as click,download and installation,payment,etc.),the users behavioral data will be fed back to the DSP platform.By the end of 1H22,the Company had accumulated 188 self-developed data models.With increasing R&D investment,the Company will continue to optimize

173、 data acquisition,data splitting and algorithm modeling technologies for video content in the future.Figure-12:Flowchart Illustrates the Companys Product and Service Flows Customers:marketersThe CompanyContent creators:We-media publishersonAudience for content(Age,gender,region,browsing interests,at

174、tributes of media content)MerchantsIn the companys SaaS platform,product and content are pairedWeChatOfficial AccountsInformation about marketing products:Interactive Entertainment and Digital ProductsConsumer goodsReceiving basic tag information of the productsOptimizing the matching of synonyms an

175、d long tail keywords of basic tagsCarrying out tag matching with complete product requirements based on the keyword pools accumulated in the Companys systemScreening project products that have high compatibility Providing recommendations with the enhanced qualityRecommend products and match shopping

176、 dealsData for analyzing user profilesShort-formVideo PlatformsSales commission(mainly based on CPS)Performance-based marketing servicesMonetization servicesProduct portfolioCommission(mainly based on CPC,CPM and CPT)Online product providers Source:the Company,Guotai Junan International.Overseas e-c

177、ommerce business has become a new driving force for the Companys future revenue.Interactive entertainment and other digital products marketing business was the Companys largest revenue source in 2021,contributing 68.7%of total revenue.In 1H22,revenue from interactive entertainment marketing declined

178、 53.77%YoY mainly due to tightened regulatory approval of new game licenses and paid literature products in China since the second half of 2021,which led to restrictions in marketing of new product under the business.At the same time,revenue from e-commerce business increased rapidly,and the proport

179、ion of interactive entertainment marketing revenue of total revenue decreased to 16.7%in 1H21.The Companys domestic e-commerce marketing business declined significantly in 2022 due to the negative impact of the Covid-19 pandemic,with its share of total revenue declining from 20.7%in 2021 to 8.5%in 1

180、H22.Overseas e-commerce sales of the Company has expanded rapidly,with its revenue share rising to 74.7%in 1H22 from 10.6%in 2021,in just half a year.Company Report See the last page for disclaimer Page 16 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Tabl

181、e-5:Joy Spreaders Key Operating Metrics 2019 2020 2021 1H21 1H22 Interactive entertainment marketing Number of paid actions(mn)n,a,499.1 447.4 242.2 95.4 Average revenue per paid action(HK$)n,a,1.61 2.14 2.17 2.54 Domestic E-commerce marketing GMV(HK$mn)130.8 593.6 1041.3 647.2 310.7 Overseas E-comm

182、erce sales Sales(HK$mn)-147.9 -1021.3 Sales orders(000)-813.4 Source:the Company,Guotai Junan International.Interactive Entertainment Marketing The revenue structure of interactive entertainment marketing business has changed significantly due to changes in industry regulation.In 2021,marketing for

183、gaming products continued to be the largest contributor to revenue from interactive entertainment and digital products marketing,increasing by 37.3%YoY,accounting for 62.2%of total revenue from interactive entertainment marketing,compared to 54.0%in 2020.The second contributor is marketing for appli

184、cations,applets and others,with YoY growth of 14.0%,contributing 25.6%of total revenue from interactive entertainment marketing,compared with 26.7%in 2020.Marketing for online reading products saw a 23.8%YoY decline in 2021,which accounted for 12.1%of total revenue from interactive entertainment mar

185、keting,compared with 18.9%in 2020.Due to restrictions on new game license approvals and the large proportion of marketing business coming from games,the total revenue from interactive entertainment marketing decreased by 53.8%YoY in 1H22.Figure-13:Joy Spreaders Revenue Breakdown by Business Figure-1

186、4:Joy Spreaders Revenue Composition 509.7 803.5 959.7 495.1 228.9 26.2 118.7 288.4 129.2 115.7 147.9 1,021.3 2.1 1.7 02004006008001,0001,2001,4001,6002019202020211H211H22Other productsOverseas E-commerce salesDomestic E-commerce marketingInteractive entertainment marketingHK$mn 94.7%87.0%68.7%199.3%

187、16.7%4.9%12.9%20.7%52.0%8.5%10.6%74.7%0.4%0%10%20%30%40%50%60%70%80%90%100%2019202020211H211H22Other productsOverseas E-commerce salesDomestic E-commerce marketingInteractive entertainment marketing Source:the Company,Guotai Junan International.Source:the Company,Guotai Junan International.Figure-15

188、:Number of paid actions and ARPA for Interactive Entertainment Marketing Figure-16:Revenue Breakdown for Interactive Entertainment Marketing 372 499 447 110 62 0.005.0010.0015.0020.0025.0030.0001002003004005006002019202020211H211H22Number of paid actionsAverage revenue per paid actionmnHK$0200400600

189、8001,0001,2002019202020211H211H22Apps and othersOnline literatureGamesHK$mn509.7803.5495.1959.7228.9 Source:the Company,Guotai Junan International.Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 17 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)

190、Table_PageHeader Joy Spreader(06988 HK)Domestic E-Commerce Marketing The Companys algorithm application evolved from targeting interactive entertainment products to physical products.Based on the algorithmic techniques and algorithmic models accumulated in the Companys interactive entertainment and

191、digital products marketing business,since 2018,the Company has been offering consumer goods through its performance-based marketing services by launching marketing campaigns for consumer goods of a well-known 3C(Computer,Communication and Consumer Electronics)digital accessories brand on Douyin(the

192、largest short-form video platform in China).Currently the Companys marketing products mainly comprise consumer electronics and daily care and cosmetic products.Product structure optimization has continuously improved the take rate,but the Covid-19 pandemic has led to a temporary decline in GMV.The C

193、ompanys domestic e-commerce products marketing business started to develop rapidly from 2019,and its GMV increased from HK$130.8 mn in 2019 to HK$1041.3 mn in 2021,with a CAGR of 182.2%.There are two main factors driving the revenue from domestic e-commerce marketing:1)the realized gross merchandise

194、 volume(GMV);and 2)the take rate(referred to as the commission rate,which is the ratio of revenue from e-commerce marketing to GMV).The improvement in take rate has also become one of the main driving forces for the Companys revenue growth of domestic e-commerce marketing since 2021,with its take ra

195、te rising from 20%in 2020 to 27.7%in 2021.Driven by the rapid growth of GMV and the improvement in take rate,revenue from domestic e-commerce marketing business increased from HK$26.2 mn in 2019 to HK$288.4 mn in 2021,with a CAGR of 232.0%.Due to the impact of Covid-19 on the domestic economy and co

196、mmercial activities,GMV showed significant decline in 1H22,with a YoY decrease of 52.0%.However,the take rate further improved due to the higher proportion of daily chemical products with higher commission rate,from 20.0%in 1H21 to 37.2%in 1H22.Overall,the Companys revenue from domestic e-commerce m

197、arketing decreased by 10.5%YoY in 1H22.Overseas E-Commerce Sales Overseas e-commerce business is currently the main driver of the Companys revenue growth.The Company develops its own overseas e-commerce platforms,mainly analyzing user traffic within the platform by adapting the existing algorithm mo

198、del of domestic e-commerce performance-based marketing to a famous overseas short video platform(TikTok).However,different from the domestic e-commerce marketing business,the overseas e-commerce business earns revenue from sales of goods on the self-operated e-commerce platform,while the domestic e-

199、commerce marketing business mainly earns commission for promoting customers products in accordance with the model of CPS(cost per sales).Therefore,in the overseas e-commerce business,the Company needs to bear the cost of commodities,building storage and logistics systems and payment channels,and bea

200、r relevant expenditures.At present,the successful progress of overseas e-commerce business has verified that the core competitiveness of the Companys data model and algorithm is also applicable to overseas short video flow.Figure-17:GMV and Take Rate for Domestic E-commerce Marketing Figure-18:Reven

201、ue from Domestic E-commerce Marketing and YoY Growth 131 594 1,041 647 311 0%5%10%15%20%25%30%35%40%02004006008001,0001,2002019202020211H211H22GMV(HK$million)Take ratemnHK$26.2 118.7 288.4 129.2 115.7-50%0%50%100%150%200%250%300%350%400%0.050.0100.0150.0200.0250.0300.0350.02019202020211H211H22Revenu

202、e from domestic E-commerce products marketingYoY growthmnRMB Source:the Company,Guotai Junan International.Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 18 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)O

203、verseas business expanded rapidly,with GMV increasing sixfold in half a year.In 4Q21,the Companys overseas sales of short video e-commerce goods business successfully launched after-business testing,achieving sales of HK$147.9 mn in 2021 and quickly expanded its business to a number of countries,inc

204、luding India,Vietnam,the Philippines and Thailand.In 1H22,overseas e-commerce GMV,or the total revenue from overseas sales of e-commerce goods,reached HK$1021.3 mn.Table-6:Joy Spreaders Financial Performance HK$mn 2019 2020 2021 1H21 1H22 Interactive entertainment and other digital products marketin

205、g 509.7 803.5 959.7 495.1 228.9 YoY growth 57.6%19.4%-53.8%Domestic E-commerce products marketing 26.2 118.7 288.4 129.2 115.7 YoY growth 353.9%142.9%-10.5%Overseas sales of E-commerce goods-147.9 -1,021.3 YoY growth n,a,n,a,n,a,Other products 2.1 1.7 -0.9 YoY growth -21.7%n,a,n,a,Total 538.0 923.9

206、1,395.9 248.4 1,366.7 YoY growth 71.7%51.1%450.1%Source:the Company,Guotai Junan International.Financial Analysis Revenue Analysis Interactive Entertainment and Digital Products Marketing We expect a rebound in the Companys interactive entertainment and digital products marketing in 2023,mainly due

207、to growth of marketing for apps offsetting the decline in online literature.From operational results data,the average revenue achieved by each marketing paid action(ARPA)increased from HK$2.17 in 1H21 to HK$2.54 in 1H22,representing an increase of 17.1%.We expect ARPA to continue its steady improvem

208、ent in 2022-2024 as a result of the Companys efforts in improving marketing efficiency.From the perspective of demand side,we expect that gaming products and other apps are still in the growth stage,especially under the environment of relaxed licensing for new games,driving matching transactions tur

209、nover.However,demand for online literature has shown an obvious downward trend.Overall,we expect the Companys revenue from interactive entertainment marketing to grow by-32.4%YoY,11.8%YoY and 5.2%YoY in 2022-2024,respectively.Figure-19:Joy Spreaders Number of paid actions and ARPA for Interactive En

210、tertainment Marketing Figure-20:Joy Spreaders Revenue Breakdown for Interactive Entertainment Marketing 499 447 260 301 343 0.000.501.001.502.002.503.000100200300400500600202020212022F2023F2024FNumber of paid actionsAverage revenue per paid actionmnHK$54.2%62.3%48.8%51.6%53.6%19.0%12.1%9.6%8.1%7.0%2

211、6.8%25.6%41.7%40.3%39.3%0%10%20%30%40%50%60%70%80%90%100%202020212022F2023F2024FApps and othersOnline literatureGames Source:the Company,Guotai Junan International.Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 19 of 24 20 September 2022 Joy Spread

212、er 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Figure-21:Joy Spreaders Total Revenue from Interactive Entertainment Marketing and YoY Growth 803.5 959.7 648.9 767.8 885.6-40%-30%-20%-10%0%10%20%30%40%50%60%70%020040060080010001200202020212022F2023F2024FRevenue from interactive entertainment

213、 and other digital productsYoY growthmnRMB Source:the Company,Guotai Junan International.Domestic E-Commerce Products Marketing Mainly affected by the Covid-19 pandemic,we forecast 2Q22 domestic e-commerce products marketing business GMV to fall more seriously.In addition,the Company participated in

214、 the 618 shopping festival(618 refers to the day when major online shopping platforms and merchants on the platforms launch various discount promotions,and even launch online promotions and live broadcasts in early June)in 2021 to obtain more user traffic through promotional advertisement on the pla

215、tform.However,the Company did not participate in such promotion activity in 2022.Therefore,GMV is also estimated to decrease for participating companies of the 618 shopping festival in 2022 compared with 2021.We expect GMV of domestic e-commerce products marketing business to decline by 32.1%YoY in

216、2022.However,we expect GMV of domestic e-commerce products marketing business to resume growth in 2023,given that the Covid-19 pandemic has come under relative control,with a YoY growth rate of 45%.Considering that the mobile new media performance-based marketing market in China is in a vigorous upw

217、ard trend and that the Company is the largest mobile new media performance-based marketing service provider in 2021,we estimate that GMV will still maintain a YoY growth rate of 20%in 2024.We expect that the take rate will increase in 2022,but remain at around 30%in 2023-2024.Due to the impact from

218、the Covid-19 pandemic in 2022,sales of 3C products were severely affected in the first half of 2022,while daily care and cosmetic products with relatively higher take rate accounted for a larger proportion,resulting in a relatively high overall take rate of domestic e-commerce products marketing bus

219、iness in 2022.It is estimated that under normal circumstances,the annual GMV of 3C products and daily care and cosmetic products sold by the Companys domestic e-commerce products marketing respectively accounts for about 50%of total products the Company promotes,while the average take rate of 3C pro

220、ducts and daily care and cosmetic products is around 20%and 40%,respectively.Therefore,we estimate that the take rate of overall domestic e-commerce products marketing business will remain at about 30%in 2023-2024.Combining our GMV and take rate forecasts,we expect 2022-2024 revenue from domestic e-

221、commerce products marketing business to grow by-13.7%YoY,23.6%YoY and 20.0%YoY to HK$248.7 mn,HK$307.5 mn and HK$368.9 mn,respectively.Figure-22:Joy Spreaders GMV for Domestic E-commerce Marketing Figure-23:Joy Spreaders Total Revenue from Domestic E-commerce Marketing and YoY Growth 593.6 1,041.3 7

222、06.8 1,024.8 1,229.8 0%5%10%15%20%25%30%35%40%02004006008001,0001,2001,400202020212022F2023F2024FGMV(HK$million)Take ratemn 118.7 288.4 248.7 307.5 368.9-40%-20%0%20%40%60%80%100%120%140%160%050100150200250300350400202020212022F2023F2024FRevenue from domestic E-commerce marketingYoY growthHK$million

223、 Source:the Company,Guotai Junan International.Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 20 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Overseas Sales of E-Commerce Goods We expect overseas e-comme

224、rce revenue to grow at a CAGR 246.8%in 2021-2024.In just half a year after its launch,GMV of the Companys overseas short video e-commerce business increased from HK$147.9 mn in the fourth quarter of 2021 to HK$1,136.9 mn in 1H22.As the overseas e-commerce business was not significantly affected by t

225、he resurgences of Covid-19,we expect it to maintain rapid growth for the rest of 2022,and we estimate a GMV of HK$2,842 mn for the full year of 2022.We forecast the GMV of oversea e-commerce to achieve YoY growth of 35%and 25%in 2023-2024,respectively.Therefore,we estimate that the Companys overseas

226、 sales of e-commerce goods business will achieve HK$2,842.2 mn,HK$4,405.4 mn and HK$6,167.5 mn in 2022-2024,respectively.Figure-24:Joy Spreaders Total Revenue from Oversea E-Commerce Sales and YoY Growth-147.9 2,842.2 4,405.4 6,167.5-40%-20%0%20%40%60%80%100%120%140%160%01000200030004000500060007000

227、202020212022F2023F2024FRevenue from oversea E-commerce salesYoY growthHK$million Source:the Company,Guotai Junan International.Gross Margin Analysis Cost of revenue of the Company is mainly comprised of purchase cost of traffic on project placement platform and purchase cost of goods.For interactive

228、 entertainment marketing and domestic e-commerce marketing business,traffic acquisition cost is the only cost of revenue,representing the commission that the Company pays to agents of we-media platforms and we-media publishers.In order to place marketing products in new media marketing spots for exp

229、osure and display to internet users,the Company purchases traffic from traffic agents of new media platforms.Traffic is usually purchased on the basis of the number of clicks(CPC),cost per mille(CPM),cost per time(CPT)etc.Based on historical traffic acquisition cost,the Companys test system produces

230、 an estimated traffic acquisition cost to be used in its internal performance test for such product.If the internal performance test is successful in achieving performance indicator expectations in the trial period,the Company will accept the service request from the advertisement customer.The Compa

231、ny will adjust its algorithms and parameters in order to improve the testing results during a trial period and renegotiate the marketing budget with the potential advertisement customer before the Company turns down the service request.Therefore,the cost of revenue in interactive entertainment marke

232、ting can be controlled in a relatively stable state by the Company.The gross margin of interactive entertainment marketing increased from 30.1%in 1H21 to 32.4%in 1H22.We forecast the gross margin to remain around 31.0%in 2022-2024.However,the gross profit of domestic e-commerce marketing will also b

233、e affected by the different commission rates paid to agents of we-media platforms and we-media publishers for traffic acquisition.Specifically,the commission rate of daily care and cosmetic products is much higher than that of 3C products.Therefore,as the proportion of daily care and cosmetic produc

234、ts in GMV increased,the gross margin declined from 80.0%in 2020 to 52.7%in 2021.Looking ahead,we project the gross margin of domestic e-commerce marketing in 2022-2024 to be 47.0%,48.0%and 50.0%,respectively.We expect overall gross margin to decline significantly in 2022 due to the rapid expansion o

235、f overseas e-commerce business,but to gradually improve from 2023.The cost of sales in overseas sales of e-commerce goods business mainly consists of purchase cost of goods and related expenses paid to third-party video platforms for performance-based marketing.At the same time,the Company also need

236、s to bear the expenses related to warehousing,logistics systems,online payment channels and other aspects of shopping on the e-commerce platform,so the overall gross margin is relatively low in the early stages,6.2%in 2021 and 5.2%in 1H22.We expect that the Companys expenditure on overseas e-commerc

237、e business will increase significantly with rapid expansion in the short term.However,with the maturity of the business and the improvement in Company Report See the last page for disclaimer Page 21 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)pricing pow

238、er for upstream and downstream brought by economies of scale,we expect the gross margin to gradually increase after 2023.we forecast the gross margin of overseas e-commerce business in 2022-2024 to be 7.0%,8.5%and 9.5%,respectively.We estimate the overall gross margin for 2022-2024 to be 13.8%,13.9%

239、and 14.1%,respectively.Operating Expenses Analysis We expect marketing expenses to rise due to overseas business,but overall selling expenses ratio remained stable.The Company is a non-sales-oriented enterprise with technology as the main driver,and distribution and selling expenses can be controlle

240、d at a lower level.However,the distribution and selling expenses of the Company amounted to approximately HK$41.32 mn in 2021,representing 3.0%of the revenue of the Company in 2021,increased from 0.58%in 2019,which was mainly due to the increase in related selling promotion(618 shopping festival)exp

241、enses of the Companys domestic e-commerce business during the year.We expect that the Company will not participate in selling promotions such as the 618 shopping festival in the near future.Therefore,we expect the distribution and selling expenses in domestic e-commerce products marketing business t

242、o reduce significantly.We believe that the absolute value of marketing expenses in the domestic e-commerce business may increase,but its percentage of related revenue is expected to remain below 2%in 2022-2024.However,we expect that the marketing expenses related to sales of overseas e-commerce busi

243、ness will increase rapidly in the short term.We estimate that the ratio of overseas e-commerce marketing expenses to revenue from sales of overseas e-commerce will be about 4.1%in 2022-2024.Overall,we project distribution and selling expenses of HK$127.3 mn,HK$200.0 mn and HK$272.4 mn for 2022-2024,

244、representing selling expenses ratio of 3.4%,3.6%and 3.7%for 2022-2024,respectively.We expect the administrative expense ratio to increase significantly in 2023.Mainly due to increase in average compensation level and professional service fees as a result of the Companys business expansion upon the C

245、ompanys successful listing,administrative expenses rose rapidly,up 147.3%YoY and 81.7%YoY in 2020 and 2021,respectively.The ratio of administrative expenses in 2020 and 2021 was 4.5%and 5.4%,respectively.In the future,with the strong expansion of business,we believe that administrative expenses will

246、 continue to increase,but the growth rate of administrative expenses related to domestic e-commerce marketing business is expected to be not too large in the future.We expect that the increase of administrative expenses will mainly come from the expansion of overseas e-commerce business.We estimate

247、that the administrative expense ratio of overseas business will further increase in 2023 as the Company will set up overseas e-commerce branches in 2023.Overall,we project administrative expenses of HK$131.0 mn,HK$221.1 mn and HK$282.9 mn for 2022-2024,representing administrative expenses ratio of 3

248、.5%,4.0%and 3.8%,respectively.We expect R&D expenses to rise sharply in the short term,but to gradually be reined in after 2023.R&D expenses of the Company mainly consisted of expenses on data acquisition and algorithm modeling.To ensure strong results,the Company makes investment in R&D based on re

249、quirements of business development.The Companys R&D expenses increased by 254.0%YoY and 162.3%YoY in 2020 and 2021,respectively,representing 3.0%and 5.1%of the revenue of the Company in 2020 and 2021,respectively.We expect that the Companys current domestic e-commerce business is relatively mature,a

250、nd the absolute value of investment in R&D for this business will not increase too much in the future.In view of the Companys layout in the overseas sales of short video e-commerce goods business,we expect that the Company will increase a large amount of R&D in its overseas e-commerce platform in th

251、e short term.We estimate that the ratio of R&D investment in Figure-25:Joy Spreaders Gross Margin by Business Figure-26:Joy Spreaders Gross Profit and YoY Growth 32.6%32.4%13.8%13.9%14.1%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%202020212022F2023F2024FInteractive entertainment and other digit

252、al products marketingDomestic E-commerce products marketingOverseas sales of E-commerce goodsTotal 301.6 451.9 517.0 760.1 1,044.9 127.0%49.8%14.4%47.0%37.5%0%20%40%60%80%100%120%140%02004006008001,0001,200202020212022F2023F2024FGross profitYoY growthHK$million Source:the Company,Guotai Junan Intern

253、ational.Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 22 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)overseas E-commerce business to the related revenue will be 3.2%in 2022,and the ratio is expected to

254、 gradually decline after 2023.On the whole,we project R&D expenses of HK$140.5 mn,HK$191.6 mn and HK$250.4 mn for 2022-2024,representing R&D expense ratio of 3.8%,3.5%and 3.4%,respectively.Figure-27:The Ratios of Joy Spreaders Operating Expenses 0.0%1.0%2.0%3.0%4.0%5.0%6.0%202020212022F2023F2024FMar

255、keting expenses ratioAdministrative expense ratioR&D expense ratio Source:the Company,Guotai Junan International.Company Report See the last page for disclaimer Page 23 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Financial Statements and Ratios Table_Inc

256、omeStatement Income Statement Year ended 31 December(HK$000)2020A 2021A 2022F 2023F 2024F Total Revenue 923,916 1,395,894 3,739,815 5,480,619 7,422,043 Cost of revenues(622,359)(944,041)(3,222,796)(4,720,565)(6,373,434)Gross(loss)/profit 301,557 451,853 517,019 760,053 1,048,610 Impairment losses un

257、der expected credit loss model(12,716)(3,271)0 0 0 Selling and marketing expenses(5,331)(41,320)(127,301)(199,974)(272,422)General and administrative expenses(41,543)(75,468)(130,976)(221,120)(282,880)Research and development expenses(27,366)(71,786)(140,482)(191,600)(250,408)Operating profit 214,60

258、1 260,008 118,261 147,360 242,900 Total other income/(expenses),net(56,012)(17,354)15,000 12,000 12,000 Listing expenses(24,274)0 0 0 0 Share of results of an associate 0 71 75 78 82 Finance costs(958)(1,005)(1,620)(1,857)(2,105)Profit before tax 133,357 241,720 131,715 157,581 252,877 Income tax 5,

259、322 2,922(4,440)(7,417)(27,527)Profit After Tax 138,679 244,642 127,275 150,163 225,351 Non-controlling Interest 0 0 0 0 0 Shareholders Profit/Loss 138,679 244,642 127,275 150,163 225,351 Basic EPS(HK cents)7.782 11.304 5.586 6.331 9.501 Cash Flow Statement Year ended 31 December(HK$000)2020A 2021A

260、2022F 2023F 2024F Profit before taxation 133,357 241,720 131,715 157,581 252,877 Interest income(940)(8,907)0 0 0 Depreciation of PPE 2,195 8,274 6,146 2,890 3,181 Depreciation of property,plant and equipment 2,652 2,477 2,534 2,606 1,800 Depreciation of right-of-use assets 4,945 9,403 6,795 9,765 9

261、,883 Impairment losses,net of reversal 12,716 3,271 0 0 0 Finance costs 958 1,005 0 0 0 Loss on disposal of property,plant and equipment,net 399 198 0 0 0 Other gains and losses 2,510 3,595 189(362)(362)Foreign exchange losses,net 57,741 26,802 0 0 0 Others 0 0(2,009)63(2,003)Change in working capit

262、al(1,038,480)(972,170)(560,971)(997,659)(392,636)Cash from operating activities(821,947)(684,332)(415,601)(825,116)(127,261)Change in PPE(13,816)(38,114)(12,754)(6,346)(7,014)Purchase of intangible assets(68)0(3,000)(3,000)(2,500)Change of FVTPL(5,601)(8,572)0 0 0 Increase in loan receivables(35,412

263、)(18,071)1,835 1,651 1,486 Others 34,359(14,108)(11,812)(11,930)(10,000)Cash from investing activities(20,538)(78,865)(25,731)(19,625)(18,028)Repurchase of shares 0(150,002)0 0 0 Repayment of lease liabilities(2,592)(5,977)(4,487)(5,944)(6,772)Interests paid(958)(1,005)0 0 0 Proceeds from issue of s

264、hares 1,554,214 0 592,300 0 0 Payment of shares issue costs(55,388)(11,755)0 0 0 Cash from financing activities 1,495,276(168,739)587,813(5,944)(6,772)Net changes in cash 652,791(931,936)146,481(850,685)(152,061)Cash at beg of year 146,787 1,210,447 619,036 972,494 533,254 Effect of exchange rate ch

265、anges 0(1,553)0 0 0 Cash at end of year 1,210,447 619,036 972,494 533,254 435,189 Source:the Company,Guotai Junan International.Balance Sheet Year ended 31 December(HK$000)2020A 2021A 2022F 2023F 2024F Property,plant and equipment 20,173 52,005 58,613 62,069 65,902 Right-of-use assets 18,732 11,325

266、19,530 19,765 20,883 Intangible assets 8,722 8,666 9,132 9,526 10,226 Interest in an associate 0 36,764 36,575 36,937 37,299 Deferred tax assets 1,300 4,787 1,567 830 1,241 Rental deposits 2,791 2,931 3,078 3,231 3,393 Equity instruments at fair value 37,862 39,143 40,467 39,658 40,848 Total non-cur

267、rent assets 89,580 155,621 168,961 172,016 179,792 Trade and other receivables 332,345 449,108 701,010 1,030,810 1,265,767 Loan receivables 37,427 18,346 16,511 14,860 13,374 Prepayments 610,854 1,188,931 1,425,611 1,796,671 2,011,061 Financial assets at FVTPL 0 5,383 5,921 6,513 7,165 Investments i

268、n films 0 23,850 35,662 47,592 57,592 Cash&cash equivalents 1,210,447 619,036 972,494 533,254 435,189 Total current assets 2,191,073 2,304,654 3,157,209 3,429,700 3,790,148 Total Assets 2,280,653 2,460,275 3,326,171 3,601,717 3,969,940 Trade and other payables 99,090 122,932 259,166 376,038 506,014

269、Lease liabilities 6,152 14,404 16,615 14,287 10,793 Income tax payable 986 986 986 986 986 Total Current Liabilities 106,228 138,322 276,767 391,310 517,792 Lease liabilities 14,890 2,775 11,077 17,461 25,183 Deferred tax liabilities 573 949 522 4,977 13,646 Total Non-current Liabilities 15,463 3,72

270、4 11,599 22,439 38,829 Total Liabilities 121,691 142,046 288,366 413,749 556,621 Share capital 22 22 22 22 22 Reserves 2,158,940 2,318,207 3,037,782 3,187,946 3,413,296 Total Shareholders Equity 2,158,962 2,318,229 3,037,804 3,187,968 3,413,318 Minority Interest 0 0 0 0 0 Total Equity 2,158,962 2,31

271、8,229 3,037,804 3,187,968 3,413,318 Financial Ratios 2020A 2021A 2022F 2023F 2024F Gross margin(%)32.6 32.4 13.8 13.9 14.1 Cost to revenue(%)67.4 67.6 86.2 86.1 85.9 Selling expense to revenue(%)0.6 3.0 3.4 3.6 3.7 R&D expense to revenue(%)3.0 5.1 3.8 3.5 3.4 Admin expense to revenue(%)4.5 5.4 3.5 4

272、.0 3.8 Operating profit margin(%)23.2 18.6 3.2 2.7 3.3 Net margin(%)15.0 17.5 3.4 2.7 3.0 ROE(%)6.4 10.9 4.8 4.8 6.8 ROA(%)6.1 10.3 4.4 4.3 6.0 Company Report See the last page for disclaimer Page 24 of 24 20 September 2022 Joy Spreader 樂享集團(06988 HK)Table_PageHeader Joy Spreader(06988 HK)Company Ra

273、ting Definition The Benchmark:Hong Kong Hang Seng Index Time Horizon:6 to 18 months Rating Definition Buy 買入 Relative Performance15%;or the fundamental outlook of the company or sector is favorable.Accumulate 收集 Relative Performance is 5%to 15%;or the fundamental outlook of the company or sector is

274、favorable.Neutral 中性 Relative Performance is-5%to 5%;or the fundamental outlook of the company or sector is neutral.Reduce 減持 Relative Performance is-5%to-15%;or the fundamental outlook of the company or sector is unfavorable.Sell 賣出 Relative Performance 5%;or the fundamental outlook of the sector i

275、s favorable.Neutral 中性 Relative Performance is-5%to 5%;or the fundamental outlook of the sector is neutral.Underperform 跑輸大市 Relative Performance-5%;Or the fundamental outlook of the sector is unfavorable.DISCLOSURE OF INTERESTS(1)The Analysts and their associates do not serve as an officer of the i

276、ssuer mentioned in this Research Report.(2)The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.(3)Except for SF REIT(02191 HK),JINSHANG BANK(02558 HK),BANKOFZHENGZHOU(06196 HK),XPENG-W(09868 HK),Guotai Junan and its group

277、companies do not hold equal to or more than 1%of the market capitalization of the issuer mentioned in this Research Report.(4)Guotai Junan and its group companies have had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.(5)Guotai Juna

278、n and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report.(6)Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report.There is no officer of the issu

279、er mentioned in this Research Report associated with Guotai Junan and its group companies.DISCLAIMER This Research Report does not constitute an invitation or offer to acquire,purchase or subscribe for securities by Guotai Junan Securities(Hong Kong)Limited(Guotai Junan).Guotai Junan and its group c

280、ompanies may do business that relates to companies covered in research reports,including investment banking,investment services,etc.(for example,the placing agent,lead manager,sponsor,underwriter or invest proprietarily).Any opinions expressed in this report may differ or be contrary to opinions or

281、investment strategies expressed orally or in written form by sales persons,dealers and other professional executives of Guotai Junan group of companies.Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment bank

282、ing groups of Guotai Junan.Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report,Guotai Junan does not guarantee the accuracy and completeness of the information and data herein.This Research Report may contain some forward-looking esti

283、mates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation,so uncertainty may contain.Investors should understand and comprehend the investment objectives and its related risks,and where necessary consult their

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