Core view
Excluding regulatory impact and macro consumption factors, We believe that the core problem at present is mainly the slowdown in the growth of China’s existing forms of consumer Internet (from the perspective of users, duration and penetration), the industry is in the late stage of mobile Internet, that is, innovation weakens and the homogeneity of products and commercialization increases. In the future, the industry will compete for efficiency under compliance policies rather than scale. At this stage, we believe that the 22 years will still be in a two-dimensional flat period of growth investment, and the industry direction will be determined (predictability) and market space, combined with the combination of investability, are divided into three main lines, which are optimistic in turn: 1) the global sea of China’s Internet, 2) the vertical track with improved local penetration in China, and 3) pay attention to the future form of Internet in the early stage of development.
China’s Internet is going to the sea all over the world, and the advantageous formats are expected to form a deterministic breakthrough. China’s Internet goes to sea, evolving from tool product output to product / technology / business model output. Overall industry judgment, Certainty (medium) and space (medium). We believe that China has formed diversified advantages in the multi-directional product end of mobile Internet (including technology + business model) by virtue of the advantages of Internet population scale and unified demand, and efficient iteration is stronger than overseas (especially for products with strong scale effect, the advantages of business formats are more prominent), and the advantageous business formats can be exported overseas, including short video / e-commerce / games. The basic flow pool has been built, and the focus will be on commercialization in the next 1-2 years.
From a Chinese perspective, We prefer the track with growth space (overall sag) for the existing traffic, and seize the opportunity of local permeability improvement. Overall industry judgment, certainty (high) and space (small). 1) from the perspective of space and certainty, the most high-quality track is the service format with low penetration rate, and the space is the most considerable. However, long-term integration is difficult and takes a long time, which requires the team’s long-term accumulation capacity; 2) Secondly, e-commerce vertical opportunities mainly rely on a) the improvement of scene and channel efficiency to drive category expansion, and b) user sinking; 3) Some vertical platforms (such as Zhihu, xiaohongshu, B station, etc.) still have room for user scale growth, and it can be expected that the commercial value will gradually increase.
Yuan universe, the possibility of the future Internet. We believe that the meta universe can be understood as the “pronoun” of the new Internet way, representing a possible form of the Internet in the future. Judging from the overall industry, certainty (low) & space (large), the industry is still in the primary stage. It is necessary to observe the large-scale logic of equipment, support the continuous expansion of content and the active participation of UGC, and continue to pay attention to the substantive progress.
Financial forecast and investment suggestions
The overall development of the Internet has entered a mature stage. The opportunities identified next year mainly come from the multi-mode sea of the global Internet, followed by the improvement of China’s stock penetration. In addition, pay attention to the progress of the industry. 1) It is suggested to focus on the game field, such as Tencent Holdings (00700, buy), netease-s (09999, buy), Perfect World Co.Ltd(002624) (002624, buy), Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (002555, not rated), G-Bits Network Technology(Xiamen)Co.Ltd(603444) (603444, not rated), etc; Short video and electric business in the sea, we should pay attention to -W (01024, buy), byte beating (unlisted), SEA (SE.N, not rating), and Shein of the industry (unlisted); 2) China’s Kwai class permeability improvement is the main line. We suggest that we pay close attention to local life group -W (03690, buy), BOSS direct hire (BZ.O, buy), sink, category upgrade platform -SW -SW (09988, buy), Alibaba. JD group – SW (09618, buy), pinduoduo (PDD. O, buy), content platform commercialization BiliBili (Bili. O, Unrated), Zhihu (zh. N, Unrated), Beijing Zhidemai Technology Co.Ltd(300785) (300785, buy), xiaohongshu (unlisted), etc. and domain name excellence products involved in tide game content (MnSO. N, overweight).
Risk statement
Meta cosmic policy supervision risk; Uncertainty risk of industrial structure; Valuation risk; Sea going policy risk; Competition pattern risk; Changes in assumptions affect the calculation results.
