China-Thailand International: Technology-driven, let's make friends (01450.HK) operational efficiency improved

$BE FRIENDS HLDG(01450.HK) Since transitioning from traditional broadcasting to e-commerce livestreaming and new media marketing, unlike other MCN agencies, the company has focused on decentralizing top influencers and building brand IPs. It has established a "1+N" vertical livestreaming matrix, spawning sub-category accounts from a main account. To date, the company has deployed over 30 livestreaming rooms, partnered with more than 11,000 brands, and built a team of over 100 influencers. hello Group has successfully achieved cross-platform operations, becoming the first livestreaming agency to expand across Douyin, Taobao, and JD.com. In 2023, its livestreaming followers exceeded 50 million, with GMV surpassing RMB 12 billion, placing it among the top-tier livestreaming e-commerce players.

The company leverages technological innovation to explore BI in e-commerce, independently developing the "Friends Cloud Platform" to automate the entire livestreaming e-commerce workflow. By collecting data and utilizing predictive analytics, the platform helps livestreaming rooms better understand market trends, optimize operations, and enhance customer experience to boost sales. It assists businesses in decision-making across merchant onboarding, hot product recommendations, and product selection, while improving management efficiency. With the platform's support, the company's sales and administrative expenses as a percentage of revenue dropped from 43.0% in 2021 to 40.5% in 2023.

In terms of valuation, the report notes that hello Group (01450.HK) saw FY23 revenue of RMB 1.07 billion, up 152.4% YoY, with net profit of RMB 120 million (adjusted: RMB 180 million) as its livestreaming business scaled. Driven by multi-platform and diversified livestreaming rooms, FY24E GMV is projected at ~RMB 16 billion, with improving GMV conversion rates. Revenue is expected to grow 43.5% YoY to RMB 1.54 billion, with net profit up 45.5% to RMB 170 million. The company currently trades at ~8.6x FY24E P/E, a 14%-55% discount to livestreaming peers.