According to the company's announcement, as of February 16, 2022, the company's controlling shareholder and actual controller Xin Haoying and Li Hui held 28.56% and 27.83% respectively.

(report producer/author: Shanghai Securities, Chen Min)

1.1 Continuously broaden service boundaries, the leader in the field of digital experience space

Fengyuzhu series G end exhibition The leader in the museum field has continued to increase its market share since its establishment. The company has gone through three stages: the first stage was before 2008, and the company was mainly engaged in advertising business. The second stage was after 2008, and the company focused on the exhibition industry and proposed the concept of cross-border general packages, using sound, photoelectric technology. Achieve the best space display experience. The third phase is after 2017. The company further expands its business scope from urban planning exhibition hall and park museum to more G-end businesses such as science and technology museums, museums, memorial halls, party building exhibition halls, big data exhibition halls, science popularization education, etc. Various theme experience halls, school history halls and other special theme halls, as well as high-quality B-end businesses such as corporate halls, etc. According to the company's business classification, urban planning museum and park museum are divided into digital urban experience spaces, other G-end/B-end businesses are divided into cultural and brand digital experience spaces, and digital products and services including special topics. (The original report caliber was a single service). According to the nature of the business, we divide the company's main business into three categories: engineering construction and building decoration (almost no gross profit space), hardware and software procurement (open and transparent, with small gross profit space), and integrated solutions for digital technology and content creativity.

The company's equity structure is stable and relatively concentrated, and the joint actors hold 56.39% of the shares. According to the company's announcement, as of February 16, 2022, the company's controlling shareholder and actual controller Xin Haoying and Li Hui held 28.56% and 27.83% respectively. Xin Haoying and Li Hui are husband and wife, and are joint actors. They hold a total of 56.39% of the shares and have relatively concentrated equity.

According to the annual report, the company's main business is divided into three categories: urban digital experience space, culture and brand digital experience space, digital products and services:

(1) Urban digital experience space business: display urban history and culture through digital technology means The foundation, development history, construction achievements and future planning vision are important windows and platforms for local government reception, investment promotion, planning display and urban image publicity. The main service of this business is local governments;

(2) Culture and Brand digital experience space business: By deeply integrating creativity, design, digital art and immersive experience elements into IP themes, local cultural characteristics and brand image, focusing on creating a new interactive experience space open to the public and consumers. The main service customers of the block business include governments, public institutions, large enterprises, etc.;

(3) Digital product and service business: including special technical services and creative services. The company integrates and uses holographic images, naked-eye 3D, CGI special effects, digital sand table , three-dimensional projection technology , virtual reality, dynamic theater special effects, multimedia interaction technology, and other media forms. Output, create immersive scenarios and digital spaces according to customer requirements.

Company customers are mainly G-end customers such as governments and public institutions (to distinguish between urban museums, park museums and museums, we split the government departments and units disclosed in the annual report into governments and public institutions), and B-end customers account for It is relatively low and mostly large and high-quality customers. Currently, the company has a high market share in the G-end business and is a leading company. According to the company's announcement, from 2015 to 2017, the company's market share in the urban planning exhibition hall and park museum fields was 40%, 43%, and 50%, respectively. According to Blue Whale Finance, in 2018, the China exhibition industry held a total of 3,793 exhibitions, with a total exhibition area of ​​12,949 square meters. The company won a total of 240 solo exhibition contracts, accounting for 6.3%. We expect the company's G-end business to continue to maintain a high market share, with obvious competitive position advantages, and the B-end category share is expected to have little room for improvement, mainly in the B-end category exhibition hall market, with fierce competition, and profit space. Lower; (2) Unlike the mainstream market perception, the ability to collect payments for B-end exhibition hall projects is weaker than that of G-end projects.The G-end exhibition hall is a core project of the publicity portal, and the company has a high market share and has strong bargaining power. The collection pressure is smaller and the collection progress is faster. The B-end customers have higher requirements and higher bargaining status. (Supply side competition is fierce), the demand for advances is high, and the progress of collection is slow.

1.2 Profits maintain a high growth rate, cash flow and reimbursement are relatively healthy

Since 2017, the company's operating income and profits have maintained steady growth. According to the 2021 performance report, the company achieved a total operating income of 2.94 billion yuan in 2021, a year-on-year increase of 30.3%, and a net profit attributable to shareholders of 454 million yuan, a year-on-year increase of 32.5%. The company's annual compound growth rate of operating income from 2017 to 2021 was 18.3%, and the annual compound growth rate of net profit was 28.5%, which continued to maintain a relatively high growth rate.

The company's gross profit margin and net profit margin have increased year by year. In 2021Q1-Q3, the company's gross profit margin and net profit margin were 35.9% and 17.4% respectively, and the gross profit margin and net profit margin in 2020 were 34.9% and 15.2% respectively. The company's profitability continues to improve, mainly due to the continuous increase in the proportion of revenue of high gross profit margin culture and brand digital experience space.

company ROE is also continuing to rise. ROE rose from 12.9% in 2017 to 17.4% in 2021, mainly due to the continued increase in net profit margin.

From the perspective of revenue composition, the company's report scope divides its main business into three categories: digital urban experience space, cultural and brand digital experience space, digital products and services (the original report scope is a single service). In 2020, the city's digital experience space was the main source of revenue contribution, with revenue accounting for 64.1%, the revenue of cultural and brand digital experience space accounting for 34.4%, and the digital product business accounted for a low proportion, accounting for about 1.6%; 2021H1, higher The revenue share of cultural and brand digital experience space with gross profit margin surpasses that of urban digital experience space, with revenue accounting for 60.5% and 37.9% respectively.

According to our understanding of the nature of the company's business, we divide the company's main business into three categories: engineering construction and building decoration, hardware and software procurement, digital technology and content creative integrated solutions. Among them, digital technology and content creative integration solutions contribute the main gross profit margin. We believe that the company's continued increase in profitability is mainly due to (1) the company's core capabilities (digital technology and content creative integration solutions) revenue share continues to increase; (2) The company has a high market share in the G-end exhibition hall field, and it is expected that there is still room for improvement, and the company's bargaining power continues to improve.

company's period expense ratio has declined steadily. Among them, the management expense rate has decreased year by year; the sales expense rate remains stable, matching the expansion of revenue scale; the company attaches importance to R&D investment, and R&D expenses have slightly increased; the financial expense rate has been negative for many years. The continued decline in expense ratio during the period is also one of the reasons why the company's profit growth rate is higher than its revenue growth rate.

The company's sales revenue is relatively stable and the collection is good. Before 2020, the company's sales and cash ratio remained above 80%, and the ratio dropped to 70% from 2021Q1-3. The sum of accounts receivable/note receivable and contract assets is the amount that the company should charge from the customer but not collected. The ratio of accounts receivable + contract assets/total assets and accounts receivable + contract assets/operating income increased slightly overall. We believe that the company's accounts receivable are generally well controlled. The company focuses on promoting project progress and collection progress. The proportion has increased slightly mainly because the project cycle exceeds one natural year. With the significant increase in order demand, the accumulation rate of accounts receivable exceeds that of the rate of accumulation of accounts receivable exceeds that of the project cycle. Speed ​​of confirmation of operating income. The company has sufficient monetary reserves, with 800 million and 1.3 billion in Q1-Q3 in 2021 and 2020. Operating cash flow remains healthy, and the free cash flow of the enterprise and net cash flow of the operating are both positive.

We believe that the company's bad debt risk in the future is smaller, mainly because: (1) The company has adopted a more cautious bad debt allocation policy, and the bad debt risk has been fully released; (2) G-end exhibition hall projects are core projects of the publicity portal, and payment is made The willingness is strong, and the possibility of forming a bad debt risk is smaller than that of the B-side.(Report source: Future Think Tank)

2.1 The exhibition industry is a urgent need for cultural consumption, and the government supports it greatly

In a broad sense, the exhibition industry refers to the gathering, exchange and display activities of many people in a specific time and space. , its basic forms include conferences, exhibitions, fairs, trade fairs, trade fairs, exhibitions, etc. In specific applications, the exhibition industry mainly refers to government agencies, public institutions, commercial groups, enterprises and institutions providing exhibitors with efficient, rich and complete display services through exhibitions, making information more intuitive and transparent in commercial activities. Exhibitions are generally divided into economic and trade exhibitions and non-economic and trade exhibitions, among which economic and trade account for the main categories, and others include leisure and fashion art and tourism exhibitions, pharmaceutical, medical and health care exhibitions, etc.

exhibition is a necessity for economic and cultural activities. With the growth of economic scale, the demand for exhibition activities in my country has gradually increased. According to data from Zhiyan Consulting and the China Committee for the Promotion of International Trade, the number of economic and trade exhibitions held in my country increased by 48.6% year-on-year in 2021, and the total exhibition area increased by 27.2% year-on-year; the decline in year-on-year growth rate in 2020 was mainly due to the impact of the epidemic. Economic and trade exhibitions are an important part of the exhibition economy in various regions and have made great contributions to the driving of local economy.

20 Due to the impact of the epidemic in 2020, the number and area of ​​exhibition halls have declined. As the epidemic is effectively controlled, the number and area of ​​exhibition halls have gradually rebounded; in 2021, there were 151 exhibition halls in China, with an indoor rental area of ​​10.34 million square meters, an increase of 2 and 760,000 square meters respectively compared with 2020.

The exhibition industry also has cultural attributes, and the country's support for the cultural industry has effectively promoted the development of the exhibition industry. my country's cultural and tourism expenses have increased significantly in terms of total volume and proportion. From 2011 to 2020, my country's cultural and tourism expenses increased from 39.3 billion yuan to 108.8 billion yuan, with an annual compound growth rate of 12.9%. Compared with 2011, the proportion of cultural and tourism expenses in my country's public finance increased by 0.08 percentage points. Cultural exhibition halls include museums, theme halls, science and technology halls, art galleries and other venues. With the increase in urbanization rate, my country will continue to increase its investment in culture, and it is expected that the demand for construction of cultural venues will gradually increase.

Local governments have issued documents to strengthen the construction of cultural exhibition halls. The Ministry of Culture and Tourism issued the " "14th Five-Year Plan" Cultural and Tourism Development Plan " pointed out that the public cultural service system is more sound, the standardization and equalization level of basic public cultural services has been significantly improved, and service efficiency has been further improved. Various cultural facilities across the country are The number (public libraries, cultural center stations, art galleries, museums, art performance venues) has reached 77,000, and the annual number of cultural facilities has reached 4.8 billion. Local governments have also introduced a series of policies to promote the development of the exhibition industry.

2.2 The meta-universe era, the curatorial model is more diverse

Exhibition industry is a comprehensive and interdisciplinary and interprofessional comprehensive service, and digital cultural display services are systematic projects, integrating creative design, cultural communication, digital technology and decoration. Engineering and other composite businesses. From the perspective of the industrial chain, exhibition service providers/digital digital creative enterprises are in the middle of the industrial chain, providing single or comprehensive overall solutions such as digital technology, content culture, and creative design according to the needs of downstream customers. The upstream of the industrial chain includes multimedia equipment suppliers, model/advertising/art suppliers, decoration and material suppliers, photography/dubbing and other cultural suppliers, software development and integration suppliers, and the downstream of the industrial chain includes design institutions, governments and Public institutions, construction/industrial enterprises, real estate enterprises and other enterprises.

exhibition display industry exhibition formats are diverse, and it has gone through the process from plane to using computer CG to immersion display.Before 2010, the exhibition industry mainly used traditional static display methods such as text, pictures, and models; the touch screen on at the 2010 World Expo was widely used, which started the transformation of the display mode in the display field, from the initially relatively single and passive mode to the diversified, The mode of interaction has changed, especially in the field of digital culture ; after that, the exhibition industry has continuously used new technologies, such as virtual reality, augmented reality and other technologies with stronger interactiveness, to raise the display experience to a new level. At present, the display industry has entered the stage of immersive experience development.

Digital Exhibition uses more interactive technical means, such as naked-eye 3D, holographic images, VR/AR/MR, etc. With the integration and development of digital multimedia technology and digital art, the exhibition form and exhibition content will be further refined and immersed. In the future, the cultural and commercial fields will use interactive technologies such as virtual reality, augmented reality, 5 G+4 K/8 K ultra-high definition, naked-eye 3D, and holographic images to further promote the upgrading of cultural and commercial content to immersive content with stronger interactiveness. , which is conducive to promoting the application innovation of immersive experience in cultural scenarios and consumption fields.

Digital technology and content creativity are the most core part of the exhibition industry, and are also the key to distinguishing the profit margins and competitive position of mid-week service providers (digital startups). According to FantuoScience Prospectus, digital creative industry can be further subdivided into static digital creative products, dynamic digital creative products, and digital integrated solutions. Among them, the entry threshold of static digital creative products and dynamic digital creative products industries is low, the competition is fierce, the average order scale and profit margin are small; the digital integrated solution market concentration is high, and the industry has technical threshold, brand barriers and qualifications Barriers have high requirements for the integrated integration capabilities of participating enterprises, strong bargaining power in the industrial chain, and large profit margins. As a leading company in the digital integrated solution market, Fengyuzhu has more obvious advantages.

(1) Static digital creative products: According to China Economic Vision Consulting (December 13, 2021 FantuoShuchuang Prospectus (Registered Manuscript)), the market size of my country's rendering design in 2020 is approximately 203.8 billion yuan.

static digital creative products industry has been developing for about 25 years. The industry characteristics include: (1) The industry entry threshold is low, the number of competitive practitioners is large, there are a large number of small-scale enterprises, the product price and quality are relatively different, and the competition is extremely fierce. Every year, many small studios and small-scale companies are established and withdrawn. At the same time, with technological progress and computer computing power, new entrants also include some design institutions and digital technology companies. In recent years, with the development of my country's construction industry, customers' requirements for static digital creative products to express their works have become increasingly high, and the demand for high-quality works has grown steadily, which is beneficial to large companies and some small companies that produce high-quality products. At the same time, the increase in labor costs and site rents also puts certain pressure on some smaller companies. Due to the advancement of network technology, communication tools are more convenient, data transmission, video conferencing, etc. are becoming more and more convenient, regional obstacles are gradually broken, and market share is gradually concentrated in companies with a certain brand effect.

The main competitors in the industry include: Fengyuzhu, Fantuo Digital, Silk Road Vision, Shanghai Art Nest, Beijing Fancai, Lifang Digital, Beijing Sieon, Shanghai Aikuang, etc.

(2) Dynamic digital creative products: According to China Economic Vision Consulting (FantuoShuchuang Prospectus), in 2020, the market size of my country's interactive software was approximately 14.09 billion yuan, and the market size of animation promotional films was approximately 258.2 billion yuan.

Dynamic digital creative service market, with a large number of enterprises, low market concentration, and relatively sufficient competition. Small and medium-sized enterprises adopt low-price competition strategies; while large enterprises serve customers with a wide range of customers and have certain brand advantages, and can obtain brand premiums.At the same time, there are many types of three-dimensional videos, including corporate promotional videos, product promotional videos, real estate promotional videos, event promotional videos, image promotional videos, etc.; the production methods are also different, including shooting completion, three-dimensional production, recording completion, etc. ; Since the industry covers all walks of life, the creation forms are diverse and diverse, and the focus of various types of three-dimensional films is different, it is difficult for the market to form a monopoly pattern. In addition, expanding a variety of products from three-dimensional video production has further improved the extension of dynamic digital creative services: the scenarios used by digital interactive software and three-dimensional videos are becoming more and more diverse, including shopping mall operations, store marketing, residential sales, and corporate display , activity application, etc.; at the same time, the expressions of digital interactive software are also diverse, including digital sand tables, three-dimensional imaging, etc. This type of business is more in line with the current social information dissemination form, and the entry threshold for this field is also relatively high, so as to the overall situation The market has a good premium space, providing growth for future development. Due to the low entry threshold for the three-dimensional film industry, the product types are rich and the production methods are diverse, traditional advertising media, film and television production, and long-term and short video production companies are all dynamic digital creative service markets based on their experience in shooting, recording, editing, etc. potential competitors; such as short video shooting companies that have emerged with the popularity of mobile terminals and the acceleration of the network, while expanding the dynamic digital creative service market, they will also become competitors of companies in the industry. In addition, under the trend of combining 3D videos and digital interactive software, some software companies have also entered the dynamic digital creative service market with their software production capabilities and become potential competitors in the industry.

industry major competitors include: Fengyuzhu, FantuoScience, Crystal Stone, Silk Road Vision, Shenzhen Jiaoyang, Beijing May Day Vision, Shenzhen Siwei Technology, etc.

(3) Digital integration solution: According to Zhiyan Consulting (FantuoShuchuang Prospectus), the market size of China's digital display industry in 2020 is approximately RMB 32.7 billion to RMB 39.3 billion, and it is estimated that the digital display system will be in 2027. The industry market size reached about 68.286 billion yuan to 81.969 billion yuan. These include (1) Cultural and technological digital exhibition halls: the main market participants include Feng Yuzhu, Fantuo Shuchuang, Beijing Qingshang, Guangdong Jimei, etc.; (2) Construction planning digital exhibition halls: the main market participants Including Fengyuzhu, Silk Road Vision, Huakai Creative , etc.; (3) Digital exhibition halls and halls of large and medium-sized enterprises: the main market participants include Fengyuzhu, FantuoShuChuang, Shanghai KuanChuang, Jinming International, etc.; ( 4) Display solutions for cultural and sports activities: The main market participants include FantuoShuchuang and Guangzhou Lifeng. Most of the above companies have been in the digital creative industry for many years and have formed a scale of enterprise development in multiple fields and multiple industries, and the bias in the service field has gradually become blurred.

digital integrated solutions have a relatively high market concentration, and the industry has certain technical barriers, brand barriers and qualification barriers. This type of project generally has large initial investment, long project cycle, and multiple professional and technical integration. Customers have high requirements for the creative design of the project, requiring the company to have certain creative capabilities and good resource integration capabilities, and requires division of labor and cooperation among professional teams. Currently, the participants in this field are mainly enterprises with a certain scale and popularity, and the market competition is relatively small. At the same time, with the development of the economy and the improvement of customer maturity, the digital integrated solution market is transforming from extensive to quality, from simple price competition, relationship competition to quality competition, content competition, and service competition. In 2016, the "HTM3 National Strategic Emerging Industry Development Plan for the 13th Five-Year Plan" was released. In 2018, the National Bureau of Statistics of released the "Strategic Emerging Industry Classification (2018)", which clearly included the digital creative industry in strategic emerging industry Industry , the related markets of digital integrated solutions have begun to develop rapidly, and have also attracted companies to actively make arrangements in all aspects of digital integrated solutions.

Since digital integrated solutions are strategic emerging industries, they develop rapidly and have good market prospects, they have attracted more potential competitors; at the same time, because digital integrated projects cover a wide range, including digital content production, hardware procurement and integration , decoration, exhibition and display, etc., related companies involved in the above services may change to digital integration under their strategic guidance and under the circumstances of capital allowance. In addition, since the above-mentioned companies are relatively traditional in the industry and serve only one of the current digital integrated solutions, although they have unique advantages in their respective links (such as the qualifications, funds and engineering project management of decoration companies) ) However, if they want to form a fully closed-loop project capability, they must also have comprehensive capabilities such as digital creativity, overall design, R&D innovation, software integration and project management to break through technical barriers and brands Barriers and qualification barriers. (Report source: Future Think Tank)

Digital technology, content creativity, and G-end customer groups have jointly created core competitive barriers

3.1 Core capabilities are digital technology, content creative design and integrated integration

capabilities according to our business model We will The company's main business is divided into three parts: engineering construction and building decoration, hardware and software procurement, digital technology and content creative integration solutions. Among them, the company's digital technology and content creative integration solutions are the company's leading position in the exhibition hall industry. The core elements can be further divided into digital multimedia technology capabilities and content creative design capabilities. Higher technical capabilities and creative capabilities are the key to ensuring the effect of digital display and immersive experience. The exhibition hall design is a highly non-standard business digital technology professional and creative design talents. The ability level, sustained growth and team stability directly determine the company's future survival and development. The company has a large-scale design creative team and cross-border and diverse digital technology application talents, including more than 500 digital creative and designers of various types; digital R&D, interactive technology, CGI visual effects, VR/AR, holographic images, etc. More than 400 people have applied digital multimedia technology. A high-level team is the backbone of the company's stable development.

company has mastered the application of many high-tech digital display technologies such as digital sand table, stereo projection technology, virtual reality, dynamic theater special effects technology, multimedia interaction technology, holographic imaging technology, naked eye 3D technology, etc. Taking the technical application of film and television animation production in important links of the display experience system as an example: the company uses ultra-high-definition digital shooting, 4K high-definition aerial photography, ultra-high-definition 3D animation rendering and other technologies to produce model sand table general videos; use air-distance interaction technology Combined with three-dimensional animation videos, create space theaters in space; use three-dimensional special effects animation methods to achieve large-scale naked-eye 3D digital space to produce digital sand table videos; use high-definition digital shooting and post-Lea Vinci color tuning system to truly display humanities, history and scenery; Through the rational application of various high-tech digital technologies, the exhibition space can achieve the most ideal display experience effect. According to the 2018 interim report, the company has at least 36 patented technologies and 117 software copyrights. The technical advantages accumulated over the years ensure that the company's advanced design concept can be implemented and allows visitors to have a better exhibition experience.

3.2 Cross-border general package model significantly enhances the company's competitive advantages and industrial chain status

The company provides an integrated comprehensive solution, and its business model is an integrated "cross-border general package". Due to the complexity of digital cultural exhibition projects, it is necessary to integrate multiple links in different fields such as engineering design, construction workwear, software and hardware procurement, digital technology, creative design, and cultural content from the early stage. Therefore, the company's "cross-border general package" covers the The entire process from decoration to decoration to creative design. The company signed a general contract with customers, subcontracting tooling and construction business, and purchasing required hardware and software on the open market. We believe that the company's core grasps the overall process of comprehensive application of digital technology and creative content design, ensuring the overall project's progress and design style. unity and coordination.

We believe that the company's use of the general contracting model to provide services will significantly enhance the company's competitive advantage and industrial chain status. (1) Compared with providing a single service, the general contracting service will help the upstream and downstream of the Datong industrial chain to improve bargaining power; (2) will help the control the overall quality of the project and improve flexibility. When there are small-scale adjustments, instructions can be passed within the enterprise to facilitate adjustment; (3) It helps to ensure the unified quality and cost reduction of creative effects, and focus core capabilities on high-value-added parts such as digital technology and creativity and content design. According to the company's announcement, about 80% of the company's operating income comes from creative design, interactive experience, CGI special effects, VR/AR, holographic imaging and other software and hardware system integration services (including software and hardware procurement), and the decoration part only accounts for revenue. 20% of the structure, and the main gross profit contributions include digital technology and content creative design contributions. Therefore, the company is not a traditional engineering or decoration company recognized in the market, but a company that is comprehensively used in digital technology and content creative design.

Compared with other comparable companies in the industry, the company has an advantage in per capita output value. According to the company's announcement, the average number of Fengyuzhu's people increased year by year from 2018 to 2020, which was 1334, 1472, and 1536 respectively; the per capita output value was 1.2806 million yuan, 1.3795 million yuan and 1.4689 million yuan respectively.

is the leader in the creative display industry, and its revenue scale ranks first in the industry. Comparable companies in the industry include Huakai Creative, Silk Road Vision, Fantuo Digital Creation, Chuangjie Media, etc. The company's business size is ranked first among publicly comparable companies. In the sub-sectors of urban pavilions and park pavilions, the company's winning bids accounted for 50% in 2017 (data source: 2017 company annual report), ranking first in the industry. After listing, the company is more recognized in terms of brand and reputation, and it is expected that the market share of the company's urban pavilions and park pavilions will still be in an upward channel.

The company's excellent projects have brought about a demonstration effect, and the brand, reputation and trust have gradually spread. Since the company transformed into digital creative space design in 2008, it has produced many excellent projects and established deep cooperative relationships with the government and outstanding enterprises. Especially in the business of urban planning museums and park museums, the government will generally give priority to the complete qualifications and experience. Rich enterprises have high barriers to entry. On the enterprise side, the company generally cooperates with high-quality large enterprises such as Huawei and Kweichow Moutai.

4.1 Metaverse G-end/B-end large-scale projects will be implemented first

Current summary of "Metaverse" One of them is representative The definition is: "Metauniverse" is a virtual space parallel to the real world and independent of the real world. It is an online virtual world that maps the real world and is an increasingly real digital virtual world. In March 2021, Roblox was successfully listed on on on the New York Stock Exchange, which is considered to be the starting point of the rise of the meta-universe concept. The metaverse is the product of digital technology construction. In Roblox's prospectus, the company believes that the metaverse should have 8 attributes: identity, friends, immersion, low latency, diversity, anywhere, economic system and civilization.

We believe that the "meta universe" is still in its infancy, far from reaching the level of the meta-universe world described in the movie " No. 1 Player ". Currently on the content side, meta-universe related applications include virtual digital people, NFT digital collections, chain games, etc. Taking virtual digital people as an example, the current production cost of virtual digital people still starts at the order of one million yuan, and the higher the fineness and better the rendering effect (such as the rendering effect of hair), the production cost of virtual digital people will increase rapidly.

Referring to the discussion of the development of the virtual digital human industry by Photocore Technology (QQ), we believe that the development of the metaverse will go through three stages. G-terminal/B-terminal large-scale projects and application promotion, B To C application popularization, C-terminal application and Content popularization:

1, G-end/B-end projects and applications are implemented on a large scale: Metaverse-related software and hardware and infrastructure are in the early stages of development, and related construction costs are relatively high. G-end/B-end initially attempts to embrace new technologies and new business formats, especially The G-end project is implemented faster and progress faster.Mainly (1) Local governments gradually launch relevant documents on supporting the development of the metaverse. The G-terminal Metaverse Project will serve as a demonstration and guiding role, and have a low demand for economic benefits and returns. On the one hand, it will help provide the construction of the metaverse project. Examples. On the other hand, it can also attract large-scale entry of private capital through government investment and promote technological development.

Many local governments in my country have also issued a number of meta-universe policies. There is no clear official policy guidance at the central level of my country, but many local governments have issued relevant support policies for the Metaverse. For example, relevant policy documents of Shanghai, Wuhan, Hefei, , Wuxi, , Beijing and other places all mention the development of the Metaverse. The Central Commission for Discipline Inspection website mentioned in an article that "there is no single technology called the "metauniverse" in the world. The metaverse is a combination and upgrade of various existing technologies, which can be understood as the "3D version of the Internet". Extended reality technology... . Digital twin technology…..” The article demonstrates supportive attitudes towards the underlying technology of the metaverse.

Shanghai: At the Shanghai Municipal Party Committee Economic Work Conference held on December 21, 2021, Shanghai Municipal Party Committee Secretary Li Qiang expressed his intention to guide enterprises to speed up the study of important platforms for the interaction between the virtual world and the real world society in the future, and make timely arrangements. This move is regarded as the first positive statement of the local government in my country on the development of related industries of the Metaverse. Since then, the Metaverse has been written into Shanghai's "14th Five-Year Plan" industrial plan;

Sanya :25 NetEase reached a strategic cooperation with the Sanya Municipal Government to jointly Build NetEase Yuanshi Industrial Base;

Zhejiang: On January 5, 2022, the "Guiding Opinions on the Construction of Future Industrial Pilot Zones in Zhejiang Province" issued by the Office of the Leading Group for Digital Economy Development of Zhejiang Province mentioned that the Yuanshi and artificial intelligence, Blockchain and third-generation semiconductors are parallel to each other, and are one of the layout areas of Zhejiang's key future industrial pilot zones by 2023. We believe that in the future, local governments will successively release support policies and planning plans for new business formats such as the digital economy and the metaverse.

(2) Foreign governments have different attitudes towards the metacosmic, but they are generally optimistic. It is expected that overseas demand for related G-end projects will also be strong, and domestic digital/virtual space construction leaders are expected to expand overseas business.

American companies are ahead of their exploration of the metaverse. Big companies such as Facebook (Meta), Roblox, Apple, Microsoft, Google, Amazon, Disney, etc. have entered the market to make plans. The US government is currently on the wait-and-see attitude and attaches more importance to data security and privacy protection issues. American companies Actively pushing the government to accept this concept;

Europe is highly cautious about the metaverse, showing its tendency through legislation, and paying more attention to the regulatory and rules issues of the metaverse;

Japan seeks to support the metaverse-related industries and establishes new national advantages;

South Korea : The government responded quickly to the metaverse. In May 2021, the Ministry of Science, Technology, Information and Communications of South Korea initiated the establishment of the "Metaverse" alliance, with more than 200 Korean companies joining; in November of the same year, the Seoul government of South Korea issued the "Metaverse, Seoul Five-Year Plan", Create a meta-universal digital city;

Russia: President Putin announced support for technology companies to create applications for the meta-universe and must ensure the safety of individuals' virtual stand-alones in the meta-universe.

(3) In order to demonstrate brand image and strength, large and high-quality B-end enterprises are expected to follow G-end projects to embrace virtual digital space.

2, B To C applications are gradually becoming popular: large-scale G-end/B-end projects promote the development of metacosmic technology, and related costs are gradually reduced. At the same time, consumer habits are gradually forming, metacosmic applications are beginning to show the potential for large-scale commercialization, and have a certain amount of Economic benefits, and manufacturers are beginning to pay attention to the possibility of C-end content and technology monetization. The profitability of B To C projects is gradually improving.

3, C-end applications and content are widely popularized: With the further strengthening of related technologies and commercialization capabilities, C-end users access to the meta-universe channels and terminals are widely popularized, C-end applications and content have the potential for large-scale commercialization. The universe will enter a stage of universal prosperity.

We believe that the metaverse will first generate large-scale demand on large-scale G-end/B-end projects, and demand is expected to maintain sustained high growth, among which virtual exhibitions and digital cities are important implementation scenarios.

(1) Virtual reality technology is an important technology in the metaverse and will bring important changes in the field of display imaging. However, due to the high threshold for commercialization of technology, the government will be an important customer in the early stage, such as virtual people at the Olympic Games, virtual people at the Spring Festival Gala, etc.;

(2) The metaverse is an important application scenario for new infrastructure and can drive the development of various industries such as VR and AR;

(3) From a cultural perspective, local governments attach more importance to public cultural construction, and the main technologies of the metaverse Technologies such as virtual reality will improve the exhibition effect and drive the needs of new construction and renewal of local exhibition halls.

4.2 The construction demand for digital/cultural exhibition halls in the G-end is expected to increase

The company's exhibition hall business can be mainly divided into two categories: (1) Urban planning exhibition halls and industrial parks, and the demand side is mainly the government; (2) The demanding parties are mainly public institutions, and a small number of exhibition halls (enterprise halls) (the demanding parties are large-scale high-quality corporate customers.

1, Urban Planning Museum and Industrial Park:

The demanding parties of this type of venue are mainly the government and the state-owned urban investment enterprises responsible for the operation of the industrial park. The Urban Planning Museum is a promotional card for the city to move forward. Taking Kunming Planning Hall as an example, the venue is a direct unit of the Municipal Natural Resources and Planning Bureau, and belongs to the public welfare category, with full financial allocation. The main responsibilities include (1) responsible for the operation, exhibition and other work of Kunming Planning Hall (including Kunming Urban Planning Exhibition Hall); (2) responsible for urban planning history and development research, responsible for the editing, publishing and distribution of Yunnan Urban Planning magazine, and cooperate with The Municipal Natural Resources and Planning Bureau has completed the public announcement and announcement of Kunming's urban planning; (3) Showcase the city's image, build a government's external exchange platform, and provide effective ways for the public to participate in urban construction.

Industrial Park is the park's external display center and is used to receive external visits. Taking the Suzhou Industrial Park Information Display and Experience Center as an example, the exhibition center is located on the east side of the first floor of Dushu Lake Stadium, covering an area of ​​790 square meters, and displays the park’s information construction results in a panoramic view. It has received more than 1,700 in six years. The batch, with a total of more than 49,000 visitors, is an important publicity window for the park's information construction achievements. According to the China Development Zone Network, in March 2022, there were 2,735 economic development zones in my country, including 230 national-level development zones and 2,070 provincial-level development zones. Assuming that each park is equipped with an average of one park, the market space of parks in my country is expected to exceed 2,700.

2. Museums:

Since 2010, the number of museums in my country has increased for ten consecutive years. According to the National Cultural Heritage Administration, the number of museums in my country increased from 3415 in 2010 to 5788 in 2020, with an annual compound growth rate of 6.29%, and the number of new museums increased by more than 100 each year.

Museums in my country still have a higher growth space than abroad, and the per capita museum ownership rate gap is obvious compared to developed countries. In 2015, the per capita museum ownership rate in my country was about 1/300,000. If the plan is completed in 2020, the ratio should be increased to 1/250,000. The per capita museum ownership rate in the United States reaches 1/09,300. In 2014, the number of museums in the United States was 35,144, three times that of Starbucks stores.

Museums in my country are accelerating the modernization and smart construction. According to China Youth Daily, museums in China are accelerating the promotion and application of new technologies and methods such as big data, cloud computing, and artificial intelligence. The construction of smart museums is in full swing and museums are entering the fast lane of high-quality development. At the same time, the museum's curatorial level has gradually improved, and advanced exhibition methods such as immersive exhibitions and applied live broadcasts are widely adopted.

3. Science and Technology Museum:

Benefiting from the policy promotion, the demand for construction of science and technology museums is expected to continue to increase. According to the "14th Five-Year Plan for the Development of Modern Science and Technology Museum System" issued by the China Association for Science and Technology, China will promote the construction of each prefecture-level city in the next five years, in order to build a "three bases and one platform" in the next five years, my country will promote the construction of each prefecture-level city based on the goal of building a "three bases and one platform" in the future. There is 1 science and technology museum and 5-10 excellent science and technology museums are cultivated.According to my country Business Information Network, in 2021, there will be more than 1,300 science and technology museums in my country, and in total, there will be 293 prefecture-level cities. If calculated based on the 5 science and technology museums in each prefecture-level city, the number of science and technology museums will reach at least 1,500 in 2025, and there will still be a relatively large number of science and technology museums. Large room for growth.

As mentioned earlier, we believe that the development path of the metaverse will go through three stages: G-end/B-end large-scale projects and applications promotion, B To C applications popularization, and C-end applications and content popularization, among which G-end/B-end large-scale projects and Applications are expected to generate greater economic benefits first and fastest. Among them, the demand for exhibition hall-type meta-universe digital space is expected to increase significantly in 2022. At the same time, local governments are also exploring the possibility of building meta-universe digital city space (analogous to Seoul's meta-universe city), and it is expected that the construction of relevant virtual digital experience spaces will be built in the future. Demand will remain strong. As the leader in digital creative design of the G-end exhibition hall, Feng Yuzhu is expected to benefit significantly from the general trend of digital space construction in the metaverse supported by policy, and it is expected that the demand for new orders will increase significantly in 2022.

4.3 G-end exhibition hall market size calculation

(1) Market budget space calculation of urban planning museum and park museum: According to the public information of the bidding website, the general contracting project order for the layout of the Yibin (prefecture-level city) Science and Technology Museum and the design and construction of the decoration project The total amount is 125 million yuan. Assume that each city needs 1 urban planning hall and multiple science and technology halls. Based on the economic strength of local governments, we assume that the total order size of provinces/municipalities is three times that of a single science and technology museum project in Yibin (1 urban planning museum and at least 2 science and technology museums), corresponding to an average budget of about 300 million yuan; orders at prefecture-level cities are The total scale is 1 times that of a single science and technology museum project in Yibin City (1 urban planning museum and at least 1 science and technology museum), corresponding to an average budget of about 100 million yuan; the total order scale of county-level cities is the single science and technology museum project in Yibin City 0.5 times (at least 1 urban planning museum), corresponding to an average budget of about 50 million yuan; according to the public information of the bidding website, the amount of the contract for the smart park-intelligent display center of Jining New Materials Industrial Park is 46.08 million yuan, assuming The average budget of a single park is about 30 million yuan. Assume that there are fixed renewal and renovation cycles for urban planning museums of different levels, among which the average renewal and renovation cycle of urban planning museums at provincial/municipal and prefecture-level cities is 10 years, and the renewal and renovation cycle of urban planning museums at county level is 15 years. Based on this, it can be calculated that The annual average budget demand for urban planning museums at provincial/municipalities, prefecture-level cities and county-level cities is RMB 30 million, RMB 10 million and RMB 3 million, respectively. According to China Development Network, my country has more than 2,700 development parks. Referring to the Urban Planning Museum, we assume that there is one park in each park, with an average budget size of about 30 million yuan and a 15-year renovation cycle. Based on this, it can be calculated that the annual average budget demand for the park is 2 million yuan. We use the concept of average budget to estimate that urban pavilions and park pavilions will add new budget space every year. Although the actual order budget does not increase linearly, the order budget we calculate here belongs to the concept of budget space, and we believe it has a guiding and reference role. . Based on this, we calculated that the annual average annual budget scale of urban planning museums and parks reached 10.61 billion.

(2) Measurement of market budget space of exhibition halls of other public institutions: According to the National Bureau of Statistics, in 2019, the number of museums, public libraries, and art performance venues in my country was 5119, 3196, and 1205 respectively. We do not consider such venues. The possibility of volume growth is based on the calculation method of urban museums and parks mentioned above. Assuming that the number of museums, public libraries and art performance halls in 2021 is 5,600, 3,200, and 1,200, respectively, assuming that the average budget is 60 million yuan and 40 million yuan respectively. , 20 million yuan, and the renovation cycle is 10 years. Based on this, the annual average budget demand for new budgets is 6 million yuan, 4 million yuan and 2 million yuan respectively. With the demand space calculated by the aforementioned urban pavilions and park pavilions, we believe that the market space for G-end exhibition halls in 2021 will be about 60 billion yuan.

5.1 medium-term (3-5 years): to convert from the project system to the operation system, enhance the long-term stable expectations of the company's profits

The company's traditional main business is expected in the foreseeable future Demand continues to remain strong, and the company is also actively exploring iterations and breakthroughs in business models. From a medium-term perspective, the company is actively participating in the back-end operation of the digital experience space (leveling up earnings volatility and improving predictability) and the digital twin project of the physical exhibition hall (adding additional demand); from a long-term perspective, we believe that the meta-universe space is The scale gradually expands, from a smaller exhibition hall-like digital experience space to a medium-sized digital urban space, and finally rises to the height of the universe, covering all meta-universe spaces. At present, the company has participated in the construction of more than 1,300 exhibition halls. If these exhibition hall projects adopt digital twin models and achieve interconnection, the company is expected to be upgraded from a project-based company to a platform company in the future. We believe that the medium-term business model iteration (back-end operation, exhibition hall digital twins, etc.) has certain predictability, and the company is exploring and promoting related projects, which can be used as an important source of performance elasticity; the long-term business model concept has a high level of conception The uncertainty of the company is recommended to be considered only as a consideration for the company's future development potential.

The new business model projects that the company is promoting include:

(1) Back-end operation project "Fanyukong": the company launched the high-end cultural and tourism brand "Fanyukong" in 2018, and the first project is "Fanyukong" in Tonglu, Hangzhou. Xiangsu Cultural and Creative Complex”, the project was opened for operation in August 2019. "Fanyuzhang" brings together works of more than 10 famous domestic and foreign architects and artists. Focusing on the positioning of "IP gathering", it aims to become a "phenomenal complex" in the era of self-media and a "complex and diversified Internet celebrity" destination". "Fangyu Kong" includes multiple independent spaces such as Yanjiyou Capsule Bookstore, Artist B&B, Theme B&B, Cloud Stage, Watchtower, Hot Spring Art Museum, etc., introducing excellent works of architects, implanting cultural and artistic elements to attract traffic to the countryside.

2021 The company's Quzhou Fangyu Air Project was put into operation, opening a new chapter of commercial operation. The company created a new cultural and tourism work "Quzhou Tianwang Tower Immersive Art Museum" is the first Zen art exhibition hall in China with panoramic digital immersion and multi-dimensional exploration-oriented interaction. The exhibition hall is located in the Tianwang Tower site of Shuitingmen, a 5A-level scenic spot in Quzhou City. . Quzhou City has been promoting the digitalization of cultural tourism in recent years. The company undertakes the Tianwang Tower project, which is also a demonstration case for local cities to promote the deep integration of immersive industries and cultural tourism. The project is based on the cooperation model of "government investment, enterprise creation, and joint operation". The company enjoys the operation rights of subsequent projects. This model is expected to increase the company's profit stability and earn the back-end profit of the project. At present, this model is still in the exploration stage. .

(2) Digital twin application of exhibition hall: According to the definition of digital twin by the China Academy of Information and Communications Technology, by digitizing all elements such as people, objects, events in the physical world, a corresponding "virtual world" is created in the cyberspace. This forms a pattern in which the physical world in the physical dimension and the virtual world in the information dimension coexist and coexist, and the integration of virtual and real. That is, create a virtual model for physical objects in digital ways to simulate their behavior in the real environment. The application of

digital twin mainly includes two aspects: smart industry and smart city. Intelligent industry refers to mapping physical machinery to the digital world, and through digital models to realize the simulation of robot debugging, testing, and optimizing operating status in a virtual environment, saving maintenance and debugging costs; or collecting equipment operating conditions and analyzing product performance; smart city It refers to collecting the operating status of urban infrastructure and the allocation status of municipal resources, and simulating the operating status of cities by modeling and simulating the operating status of cities, providing population forecasting, intelligent planning and other capabilities to help build a new pattern in the digital economy era. Among them, the Digital Twin Pavilion project is a digital city pre-application project and is expected to be the first to be implemented before the digital city. At present, the company has started to explore digital twin projects in exhibition halls, including in-depth cooperation with Baidu Xirang, "cross-time and space interview" projects, etc.

Fengyuzhu and Baidu Xirang have reached a metacosmic ecological partnership. As one of the developers of 3D virtual buildings in Baidu Xirang Metaverse, the company undertakes the development and construction of 3D virtual buildings or digital spaces and content operation business. As one of the early applications of the metaverse, virtual art galleries, virtual galleries and virtual exhibition halls help enrich the content ecology of the Xirang metaverse space. The company will build a "Fengyuzhu Digital Art Museum" in the core area of ​​Ghirang. After completion, it will introduce the works of top digital artists at home and abroad to create an open and diverse virtual art world. The company's cooperation with Baidu Xirang fully demonstrates the company's technical capabilities in the creative display of Yuanyu Space.

In terms of virtual space construction, the company has jointly implemented the latest application in the field of media interviews with Baidu Hirang. During the 2022 Two Sessions, Xinhua News Agency will jointly launch a "cross-time and space interview" for the Metaverse Report of the National Two Sessions Metaverse - Beijing, Shanghai, Space, and Metaverse Metaverse Interview, using XR technology + Multi-platform linkage between PC end + mobile end + VR end, and interviews are put into outer space, etc.

Company has enhanced its application capabilities in metacosmic scenarios by investing in related technology companies.

December 2021 The company invested in NFT technology service provider Xingtu Bit, a native digital asset (NFT) issuance technology service company, which has business lines such as brand metaverse marketing NFT issuance, IP NFT digital peripheral retail, and provides metaverse digital goods. When issuing hosting services, the company values ​​its accumulation in the field of blockchain technology, and the two parties will also cooperate in the field of NFT in the future. On December 13, 2021, the company invested in Lingjing Oasis, a subsidiary of Lingjing Interactive Entertainment. Its business lines include game research and development and distribution, original animation IP creation, etc. The company cooperated with Lingjing Interactive Entertainment, hoping to create a main identity system and break the dimension wall. The universe community platform - Lingjing Universe. Currently, the number of users of Zero Realm Interactive Entertainment has reached 100 million. Through the Lingjing Interactive Entertainment user system, online and offline experience can be realized in the virtual system.

The company invests in VeeR to enhance its immersive content reserves. Weikuai Technology was founded in 2016 and is a platform focusing on the creation and distribution of VR film and television content. VeeR, a subsidiary of Weikuai Technology, is a well-known online VR film and television content platform. It officially disclosed that it has tens of millions of users and tens of thousands of VR film and television creators. and the world's largest VR film and television content library. On the VeeR VR video platform, users can upload the captured VR videos to the platform for sharing through the upload functions of the web and mobile terminals.

(3) Strategic cooperation with G-end/B-end customers to jointly explore the construction of the meta-universe virtual/pan-entertainment experience space and digital city. Through foreign investment, the company has reserves for meta-universe application scenarios such as NFT, content, and games. With its own advantages in CG, virtual reality, and creative design, the company has advantages in front-end display in the early stages of the meta-universe and is expected to participate more deeply Metaverse application development.

G terminal meta-universe project exploration: In January 2022, the company signed a strategic agreement on meta-universe related to the People's Government of Deqing County, Zhejiang Province, Zhangjiajie Yuanshi Research Center, and Fengxian New City to jointly explore pilot projects such as city/cultural tourism, and is expected to be Be the first to implement benchmark products.

B End-type meta-universe project exploration: On March 5, 2022, Suning Cinema and Fengyuzhu reached a strategic agreement to cooperate to explore the new pan-entertainment business model of "meta universe + theater + script killing". Suning Cinema has offline entertainment. Space, Feng Yuzhu masters the experience of digital technology applications such as VR/AR virtual reality, digital virtual people, interactive interaction, etc. The two parties will be able to complete the offline physical space to build a meta-universe experience space, and actively carry out digital script killing and immersive light and shadow IP exhibitions. For business, this is the latest business attempt for the company's creativity and technical capabilities.

We believe that the company first cooperates with a small number of G-end/B-end customers to explore the possibility of building a metaverse digital city, metaverse cultural tourism, and pan-entertainment experience space, and the company plans to deeply participate in the back-end operation, that is, the company is expected to go from the traditional " The project system" business model has been upgraded to the "project system + back-end operation" business model.If the company and these customers successfully create a benchmark project for the universe, it is expected to stimulate a large number of related demands. We expect the company to have a large room for performance elasticity in the medium term.

5.2 Long-term (10 years): The digital experience space is expected to be interconnected and has the potential to be upgraded to a platform company in the long run (10 years cycle), and the company has the potential to be upgraded to a platform company in the long run

December 2021, by Zero Mirror The forum on "New Exploration of Interactive Entertainment Industry in the Metaverse Era" initiated by Interactive Entertainment was held in Shanghai. Zero-Mirror Interactive Entertainment announced that its Lingjing Oasis has completed a 10 million yuan financing (invested by Fengyuzhu), and the funds will be used for the incubation of high-quality content in the metaverse ecological environment. Zerojing Interactive Entertainment and Fengyuzhu jointly create a meta-universe community platform "Lingjing Universe" that focuses on identity systems and fully breaks the dimensional wall. The platform will rely on 100 million online game registered users and Feng accumulating by Zerojing Interactive Entertainment. The more than 1,300 offline digital experience spaces created by Yuzhu have created, which enables exhibition hall visitors to customize virtual identity to connect online and offline activity experiences, thereby realizing "real experience dataization" and "realization of digital experience".

6.1 Model assumptions

Core formula 1: N annual income = (N-1 year end of the order + N year new order) X Order amount carry-forward ratio ± net reduction in order amount. Core Formula 2: N-1 year-end order = N-2 year-end order + N-1 year-end order. Therefore, we only need to predict the year-on-year growth rate, order carry-over and net reduction ratio of new orders You can squeeze out the operating income and its growth rate.

Key assumption 1: The assumption logic of the year-on-year growth rate of new orders.

2021: According to the company's annual report forecast, we expect the year-on-year growth rate of new orders in 2021 to be about 20%;

2022: According to the announcement of the bidding website, the total amount of the company's winning orders from January to February 2022 was 430 million yuan, and the total amount of the company's winning orders from January to February 2021 was 295 million yuan, with a year-on-year growth rate of 45.8%. The year-on-year growth rate has increased significantly , We assume that the year-on-year growth rate of new orders in 2022 is about 40%.

2023: Benefiting from policy promotion, we expect that the demand for the construction of the metaverse G-end project will continue to be strong in the next 2-3 years, and under the demonstration effect, we expect The demand for construction of the G-end project in the Metaverse still maintains rapid growth. We assume that the company's new orders will grow by about 35% year-on-year in 2023.

Key Assumption 2: Order carry-over and net reduction in that year.

Net reduction in orders: The project increases and decreases with the actual situation of the order (if an additional requirement is added to a certain project, resulting in the value being a positive value, otherwise), and it should be 0 normally. We assume that the reduction item does not exist from 2021 to 2023.

Order Amount carry-forward ratio: Due to the inconsistent carry-forward cycle of different projects, the project in previous years is a passive calculation result. The operating income confirmed in the year depends on: (1) Received after acceptance of the order items in hand last year or in previous years; (2) Revenue is confirmed after the acceptance of newly signed projects. The completion cycle of most projects exceeds one natural year, and it is expected that the carry-forward ratio of orders in hand in previous years will significantly exceed the carry-forward ratio of orders this year. Therefore, as the company's performance continues to grow, it will be passively caused. The carry-forward ratio continues to increase, especially the increase in the growth rate of new orders in previous years will greatly affect the increase in the proportion of subsequent annual recognized income. In 2020, the year-on-year growth rate of new orders was as high as 48.43%, so it can be expected that the proportion of order carrying-forwards in 2021 and 2022 will continue to increase, and the increase will be more obvious. Based on this, we assume that the order carry-over ratios in that year from 2021 to 2023 will be 32.4%, 35.0% and 37.0% respectively. Under the development trend of the universe, the demand for G-end business is in a high growth state. Therefore, we expect the growth rate of new orders in the next 2-3 years to increase significantly, which is expected to drive the year-on-year growth rate of operating income in the future. The company will be in the next 3 years. Performance is highly certain.

We believe that the company's core capabilities are digital technology, content creative design and its integration capabilities, and the company has a high market share in the G-end exhibition hall business. Therefore, we expect the company's gross profit margin level to be the same as in 2020. Assuming The company's gross profit margins from 2021 to 2023 will be 35% respectively.

company expense ratio remains relatively stable. Assuming that the sales expense ratios in 2021-2023 will be 4.5%, the management expense ratios will be 4.5%, the R&D expense ratios will be 3.75%, the financial expense ratios will be -1%, -0.89%, and - 0.95%.

Company's ratios from 2015 to 2019 (asset impairment loss + credit impairment loss)/operating income were 2.82%, 2.78%, 3.25%, 2.71%, and 2.95%, respectively, and the reform ratio increased to 5.76% in 2020. The company adopts a cautious bad debt handling policy, and we carefully estimate the risk of bad debt impairment, assuming that the ratio is 6% from 2021 to 2023 respectively. We expect the company's net profit attributable to shareholders from 2021 to 2023 will be RMB 454 million, RMB 570 million and RMB 775 million respectively.

6.2 Investment Analysis

is the leader in the G-end exhibition hall field. The core capabilities are digital technology, content creative design and its integrated integration capabilities. In the next three years, we will benefit from the increasing demand for digital creative experience space construction under policy support. Fundamentals are expected to remain excellent. At the same time, the company actively iterates and innovates its business model, with space for performance elasticity in the medium term, and has the potential to be upgraded to a platform company in the long run.

(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)

selected report source: [Future Think Tank].