The company's revenue increased more than doubled in 2022, and domestic business developed on a large scale. The company achieved revenue of HK$1.44 billion in 2022, an increase of 110.1% over the previous year, mainly due to the continued growth of the company's US business and the expansion of its business in mainland China driven by strategic business cooperation. Domestic business achieved rapid growth, with domestic business revenue increasing 319.8% year-on-year to HK$697 million in 2022. The foreign business was dominated by the US region, which achieved business revenue of HK$740 million, accounting for 51.3% of total revenue; the company achieved net profit of HK$42 million to its mother in 2022, reversing a loss to profit over the previous year. In 2022, the company's gross profit increased 69.34% year on year to HK$591 million. Since Particle Technology's gross margin was lower than other businesses, the company's gross margin fell from 50.8% in 2021 to 40.9% in 2022; the company's sales and marketing expenses in 2022 were HK$152 million, an increase of 55.10% over the previous year, mainly due to the company's enhanced sales and marketing activities during the year; the company's R&D expenditure in 2022 was HK$133 million, an increase of 18.75% over the previous year, and R&D investment continued to increase.

The subscription service product matrix is constantly being improved, and value-added services have opened up room for incremental revenue. On the one hand, the company provides content recognition and filtering services to online video website platforms through self-developed core patent technology for film and television genetic digital fingerprinting and watermarking. Furthermore, by increasing the coverage of customer content assets, the company continues to expand the scope of value-added services and derives revenue from more channels. Since 2021, Fubo has added API services to create a Chinese-specific copyright protection implementation model. This model helps the company rapidly expand local business, expand service coverage, and reach out to more content owners. Furthermore, as traditional content-side customers are transitioning to streaming platforms, Fubo has developed a customized DTC platform protection solution to meet the increasing demand for copyright protection. Along with the expansion of partnerships with customers, value-added services have also opened up room for incremental revenue. In 2022, Fubo's subscription service revenue and value-added service revenue reached HK$550 million and HK$890 million respectively, up 166.8% and 85.6% year-on-year.

In line with the new trend of Web3.0 & AI development, particle technology empowers product innovation. While mastering core patented technologies such as digital fingerprinting and watermarking for film and television, Fubo conforms to the development trends of Web 3.0 and AI, and actively explores application opportunities in new scenarios for digital content authorization, digital content asset protection and trading. (1) On the technical side, Fubo and Particle Technology integrated technical capabilities to gradually build platform capabilities and industry solutions for the field of cultural digitalization, further improving and developing product matrices to comprehensively enhance product competitiveness; (2) In terms of content, the company reached cooperation with leading Internet video platforms and radio and television operators to connect more unique content aimed at young people in the Z era; (3) On the product side, they launched “Mingjing Cloud” integrated video cloud products and carried out in-depth cooperation with large telecom operators and other customers to further enrich the company's product line and enhance the competitiveness of integrated video services. We believe that with the rapid development of China's digital culture industry, the demand for verification, circulation and trading of digital assets is becoming more and more strong. Combined with the extensive application of Particle Technology's media management technology products in Fubo's business, Fubo will maintain a leading position in the Web3.0 & AI development trend.

Profit forecasting and valuation analysis. We expect the company's revenue for 2023-2025 to be HK$2.009, 27.76 and HK$3.729 billion, respectively. Referring to comparable companies, we gave the company 7.0 times PS in 2023, corresponding to the target price of HK$6.30 per share, and gave it a “better than the market” rating.

Risk warning. The application process of watermarking technology has fallen short of expectations, and content policy regulation is uncertain.