\u3000\u3 Shengda Resources Co.Ltd(000603) 466 Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) )
Investment summary
The company is a leader in the field of g-end exhibition hall design. According to the company’s announcement, in 2017, the company accounted for more than 50% of the market in the field of urban planning exhibition halls and park halls, and the market share is expected to continue to increase. According to the nature of our business, our main businesses are divided into three categories: engineering construction and architectural decoration, centralized acquisition of hardware and software, and integrated solutions of digital technology and content creativity. Among them, the integrated solution of digital technology and content creativity is the core element of the company’s high competitive advantage, industrial chain status and profitability, which can be further divided into digital technology capability, content creativity and design capability and comprehensive integration capability. At present, the company has a large-scale design and creation team in the industry and cross-border and diversified digital technology application talents, including more than 500 Digital creativity and designers; There are more than 400 digital multimedia technology application talents in digital R & D, interactive technology, CGI visual effect, VR / AR, holographic image and so on.
The demand for digital space construction will increase significantly in the next three years, and the performance of the company’s main business is highly uncertain. Referring to Xiangxin technology, we believe that the development of metauniverse will go through three stages: g-end / b-end large-scale projects and application promotion, BtoC application popularization, C-end application and content popularization. The g-end / b-end project is expected to take the lead in generating large-scale economic benefits. The relevant software, hardware and infrastructure of yuancosmos are in the early stage of development, and the relevant construction costs are high. The g-end / b-end preliminary attempts to embrace new technologies and new business forms, especially the g-end project has a faster landing speed and progress. At present, local governments have successively launched relevant policies to support the development of yuancosmos. The main objectives are: first, the g-end yuancosmos project plays a role of demonstration and guidance, and has low demands for economic returns; second, it can attract large-scale entry of private capital through government investment and promote technological development. Therefore, g-end / b-end large-scale projects are expected to be the first to land and generate large new demand. According to our split model, we expect that the market space for the new construction, renovation and transformation of g-end pavilions (town pavilions, park pavilions and other public institutions pavilions) will be about 60 billion yuan in 2022. As the leader of digital creative design of g-end exhibition hall, the company is expected to significantly benefit from the general trend of meta universe digital space construction supported by policies. It is expected that the demand for new orders will increase significantly in 2022.
The company tries to iterate the business model and explore the possibility of upgrading to a platform company. The company’s traditional main business is expected to maintain strong demand in the foreseeable future. At the same time, the company is also actively exploring the iteration and breakthrough of business model. In the medium term (3-5 years), the company is actively participating in the back-end operation of the digital experience space (flattening income volatility and improving predictability) and the digital twin project of the physical exhibition hall (new additional demand). Among them, the operation “fangyukong” cultural and tourism brand has landed in two projects in Tonglu and Quzhou, Hangzhou; At the same time, the company cooperates with Baidu xirang to undertake 3D virtual architecture or digital twin projects; In the long term (10 years), the company has the potential to be upgraded to a platform company. The company participates in zero mirror mutual entertainment. The two sides will build a yuanyuzhou community platform that breaks through the dimension wall by relying on the 100 million online game registered users accumulated by zero environment mutual entertainment and more than 1300 offline digital experience spaces created by Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) .
Investment advice
The company is a leader in the field of g-end exhibition hall. Its core competence is digital technology, content creative design and its integration ability. In the next three years, it will benefit from the increasing demand for digital creative experience space construction under the support of policies, and its fundamentals are expected to remain excellent. At the same time, the company actively iterates and innovates its business model. There is room for performance flexibility in the medium term and has the potential to be upgraded to a platform company in the long term. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 454 million, RMB 570 million and RMB 775 million respectively, with an increase of 32.5%, 25.7% and 35.8% respectively. The corresponding EPS will be RMB 1.08, RMB 1.35 and RMB 1.84 respectively, and the corresponding valuations will be 20 times, 16 times and 11 times respectively. “Buy” rating is given for the first time.
Risk tips
The development of yuancosmos industry is less than expected, the strength of policy support is less than expected, the intensity of industry competition is intensified, the new orders signed by the company are less than expected, the company’s payment collection is less than expected, and there are more than expected bad debt losses.
