Zhitong Special Supply | Xiaohongshu A-share concept stocks have surged, are Hong Kong stocks brewing?

A large number of "TikTok refugees" are flooding into Xiaohongshu, causing a significant surge in Xiaohongshu-related stocks in the A-share market, with several small-cap stocks such as Onechance and Yaowang Technology hitting the daily limit. However, related concept stocks in the Hong Kong market have performed relatively flat due to a lack of trading volume.

According to Zhitong Finance APP, the "Xiaohongshu incident" is influenced by the TikTok ban, which is a measure taken by the U.S. government that requires TikTok's parent company, ByteDance, to divest TikTok by January 19, or face a ban under the guise of national security. This has led to a wave of "immense wealth" for Xiaohongshu, which has topped the Apple App Store download charts, resulting in a large amount of English content appearing on the platform.

The concept stocks related to Xiaohongshu have been directly ignited, but the sectors involved are diverse, covering e-commerce service providers, MCN institutions, marketing agencies, and brand partners. The overflow of traffic from Douyin has primarily benefited traffic operation participants, making the data marketing sector a hotspot for speculative trading.

So why has Xiaohongshu exploded in popularity, and do its concept stocks have sustainability?

Xiaohongshu is the largest lifestyle sharing community in China and an e-commerce platform based on UGC (User Generated Content) social networking. Its main business model combines self-operated e-commerce with UGC innovative marketing, similar to many platforms like Douyin and Kuaishou.

With the TikTok ban approaching, some American TikTok users are looking for a Chinese alternative to TikTok, and Xiaohongshu has unique advantages. In recent years, Xiaohongshu has been increasing its overseas market presence, solidifying its leading position in the Hong Kong market, and establishing a foothold in Southeast Asia and the U.S. market. Additionally, Xiaohongshu supports global mobile phone number registration, providing excellent entry conditions for TikTok refugees compared to domestic platforms like Douyin and Kuaishou.

Data shows that in 2023, Xiaohongshu had 312 million monthly active users, while TikTok had 170 million users in the U.S. If the TikTok ban takes effect, this immense "traffic" could potentially flow into Xiaohongshu, creating another "TikTok."

However, this may not be achievable. Compared to Douyin and Kuaishou, Xiaohongshu's industry is relatively focused, which may reduce its appeal to some American users. According to QianGua data, Xiaohongshu has seven major popular industries: beauty and personal care, clothing and accessories, food and beverages, maternal and child care, home and decoration, sports and outdoor, and pets. Among these, beauty and personal care, as well as clothing and accessories, are core categories, resulting in a predominantly female and younger user base, with those born in the 1990s being the most active users on the platform.

Taking beauty and personal care as an example, QianGua data shows that the estimated monthly interaction volume exceeds 100 million, with a growth of over 47% in commercial notes, and an estimated monthly interaction volume of over 65 million. In terms of category notes, makeup accounts for as much as 61.03%, dominating both interaction volume and note count on the platform. TikTok refugees have different demographic profiles, and based on the videos recommended by Xiaohongshu, the strong "Douyin" vibe is more about sharing life, which may make it less compatible with a "focused platform." This surge in traffic may not be sustainable in the long term, leading to the loss of new overseas usersIn the short to medium term, visible traffic will continue to feedback into the secondary market, and the concept stocks related to Xiaohongshu will also welcome short-term investment opportunities. Currently, the main focus is on A-shares speculation, while there are no signs of speculation in Hong Kong stocks, with very few highly volatile targets and a lack of capital participation. Tiger Vision Media (01163) saw an increase of 14% on January 15, but the trading volume was only HKD 7,000.

Data marketing is the leading area for A-share concept stocks, primarily empowering brand owners and platforms in their marketing efforts. In terms of Hong Kong stock targets, there are no publicly available data indicating any cooperation with Xiaohongshu, but industry-related targets mainly include Mobvista (01860), Duiba (01753), and Tiger Vision Media.

Mobvista focuses on digital marketing in the gaming sector but is also actively expanding into verticals such as e-commerce and social media. Its Mintegral platform derives 30% of its revenue from non-gaming categories. Mintegral has successfully connected with overseas stores of brands including Xiaomi, OPPO, and vivo. The company's revenue sources include advertising technology and marketing technology services, with strong performance, maintaining double-digit revenue growth over the past three years, and a revenue growth rate of 36.01% in the first three quarters of 2024.

Duiba is a leading user operation software as a service (SaaS) provider and internet advertising platform operator in China. It launched its internet advertising business in 2015, aggregating traffic from different APP scenarios, systematically operating activity content, and achieving large-scale traffic monetization through advertising. As of June 2024, the company had 531 paying customers, including 170 from the financial industry. Its revenue sources include internet advertising and user operation SaaS platform services, with poor performance in recent years, as revenue declined by more than 30% in both 2023 and the first half of 2024.

Tiger Vision Media is the closest to the Xiaohongshu concept. The company provides digital marketing solutions based on big data and algorithms, meeting promotional needs across various scenarios such as e-commerce, gaming, APPs, and general entertainment. It started its digital marketing business in 2020 and has become a media agent for platforms like Douyin, Kuaishou, and Phoenix. Currently, its traffic ecosystem is quite comprehensive, covering mainstream platforms both domestically and internationally. The company's marketing business is divided into live marketing and influencer marketing, with poor performance, as revenue declined in both 2023 and 2024, and it is also in a loss state.

In addition to the data marketing field, brand partners that cooperate with Xiaohongshu are also a focus of market attention. As mentioned above, in the popular industries on Xiaohongshu, beauty and personal care, as well as clothing and accessories, dominate. In terms of Hong Kong stock targets, for example, the concept stock Anta (02020) partnered with Xiaohongshu in 2022 for a strategic collaboration to explore a new era of women's sports and understand women's needs; Li Ning (02331) launched a lively "Everyone's Sports Meeting" in June 2024 in collaboration with Xiaohongshu at the Shanghai Oriental Pearl City Square, themed "I am the protagonist of sports."

Of course, there are also some brand partners, such as XPeng, which was reported to recruit Xiaohongshu and Douyin influencers for promotion at the beginning of 2024, with a budget of HKD 350-400 for Xiaohongshu influencers with 1-100,000 followers, HKD 350 for Douyin influencers with 100,000-500,000 followers, and HKD 850 for Douyin influencers with over 500,000 followers. BAIC Blue Valley responded to investors, stating that its brands are continuously expanding their online social media presence, creating a comprehensive online marketing matrix on popular channels such as Douyin, Xiaohongshu, WeChat, Weibo, and BilibiliXiaohongshu is an important position in the new media marketing strategy.

Overall, Xiaohongshu's recent explosive popularity has led to a significant influx of short-term traffic, positively impacting platform users, including brands and data marketing companies. However, its sustainability is questionable, as the platform's focused nature may lead to the loss of "outlier" new users, and there are certain difficulties in monetizing overseas users, which may only result in a traffic effect. For Xiaohongshu's platform and users, this represents variable traffic, but for the A-share market, it is merely a hype for speculation.

Hong Kong stock investors are relatively rational, but the TikTok ban will still affect the movement of TikTok refugees in the short term. The Xiaohongshu concept may remain active repeatedly, and the A-share data marketing sector is strong, with several stocks experiencing two consecutive trading limits. Based on the order volume, they are expected to rise further, while related stocks in the Hong Kong market are likely to receive capital response, especially those with excellent performance, such as HuiLiang Technology. At the same time, brand cooperation targets, including Anta and Li Ning, will also attract capital attention