Per AI Express, on December 28, 2023, Wanlian** released a research report commenting on Wondershare Technology (300624).
Key elements of the report:
Founded in 2003, Wondershare Technology is the world's leading enterprise in the field of digital creative software. The company completed its listing in 2018, with the mission of "making the world more creative", providing simple and efficient digital creative software, trendy and fashionable creative resources and rich and diversified ecological services for a large number of new generation users around the world. The controlling stake of the company's actual controller is relatively stable, and multiple equity incentives have enhanced employee cohesion. The company's performance has grown steadily, with a revenue CAGR of about 21 from 2018 to 202225%, *The creative category contributes to the company's core revenue. With the company's return to the Chinese market in 2017, the proportion of overseas revenue declined slightly, but still maintained a high proportion of nearly 90%. The company's products cover four product lines: creative ideas, drawing ideas, document creativity, and practical tools, and through endogenous extension, it strategically holds Edraw Software, Ink Knife, and Gexiang Technology, and continues to improve the four major product matrices, and a number of product strengths have been recognized, with users covering more than 200 countries and regions around the world. The company actively transformed the subscription model, and the proportion of subscription revenue and renewal rate continued to increase, improving strong user stickiness.
Investment highlights: The first batch of access to OpenAI and deepening AIGC cooperation with Microsoft. After Microsoft launched the Azure OpenAI commercial service, the company was among the first to connect and open relevant service permissions in China. On April 26, it signed a cloud service framework agreement with Microsoft to deepen cooperation in the field of AIGC. The speed and price reduction of GPT series products reduce the cost of users, which is expected to broaden the company's profitability and help the company's performance growth.
Multi-terminal connectivity, AI empowerment, and value-added services enhance product value. Filmora continues to iteratively upgrade its domestic and foreign versions, complete major version updates, build in AI creation assistant Copilot, implement multiple AI technologies, and improve multi-terminal collaboration capabilities, breaking the boundaries between desktop, mobile, and cloud, and further creating a full-scene creation and collaboration ecosystem. Filmora Library provides users with more than 15 million genuine materials, audio, text, special effects and intelligent templates and other diversified material resource services, meeting the needs of users to quickly and easily produce colorful and personalized works, and empowering Filmora to enhance the value of the company's products.
A variety of products are innovated and upgraded, and new products broaden the customer base. The company has released new versions of a number of products in its four major product lines, added a number of AIGC intelligent functions, expanded the scope of innovative business, and leveraged AI to enhance product capabilities. The company has also launched new AIGC creative products such as Wondershare Broadcast, Wondershare iPainting, Wondershare Performance, Wondershare Kwicut, and Wondershare Virtulook, deepening the layout of the AIGC field. Wondershare Broadcast has broadened the company's customer base to the field of cross-border e-commerce.
Profitability** and investment advice: The company's operating income from 2023 to 2025 is expected to be 1542/19.84/25.1.7 billion yuan;The net profit attributable to the parent company was 097/1.48/2.1.1 billion yuan;The corresponding EPS is 070/1.08/1.53 yuan;The corresponding price PE on December 27, 2023 is 12721/82.76/58.31 times. Referring to the valuation level of comparable companies, it is covered for the first time and gives the company an "overweight" rating.
Risk warning: intensified competition in the industry;The development of new products is not as expected;AI technology research and development is not as expected;Goodwill impairment risk;Exchange rate fluctuation risk.
*: Huibo Investment Research).
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Do so at your own risk.
Edited by Tsang Kin-fai).
National Business Daily.