Repeated expansion of the scale of the Mainland equity investment industry: China's equity investment market capitalization increased from RMB 17,889 billion in 2017 to RMB21,583 billion in 2022, a compound annual growth rate of 4.8%, according to Chizeko Startup Data. The Chinese equity investment market has been in a recurring growth phase, with the Mainland economy's stable growth and the rapid development of financial markets, and the market's demand for equity investments continues to increase.
Chi-Tech Startups Enhance Overall Enterprise Value with SaaS Valuation Business: Private-access software for data services provided by Chizeko startup provides integrated data services to customers in the form of a SaaS service base. Charges in the form of monthly fees/annual fees, with the characteristics of high gross interest rates, will increase the Group's overall valuation.
After COVID-19, the number of offline activities of the Group has recovered, bringing the business to a warm up:Due to COVID-19, the Group's profit performance has been dragged down in recent years. HOWEVER, THE GROUP'S DOWNSTREAM ACTIVITY HAS REBOUNDED, WHICH WILL LEAD TO A WARMING OF THE GROUP'S BUSINESS. WE EXPECT THE GROUP'S REVENUE TO INCREASE BY 30.5% YEAR-ON-YEAR TO RMB2.88 BILLION IN 2023, AND SHAREHOLDERS' EARNINGS TO INCREASE BY 32.0% YEAR-ON-YEAR TO RMB2.59 MILLION, AND THE GROUP TO REGAIN GROWTH.
Valuation Rating: Based on the free cash flow valuation model, the target price of HK$1.72 is calculated using a weighted average cost of capital of 16.8%, using a terminal growth rate of 3.0%, equivalent to the forecast market earnings of 18.4/16.2 times in 2023/2024, giving a buy rating.