Guosheng Securities issued a research report on Activation Group (9919.HK) at “Buy” with a target price of HK$2.8, on a net profit assumption of RMB 67/153/190 million from 2022-2024. The report highlights that, given multiple international premium brands have increased their investment in the PRC, along with the rising influence of domestic brands, Activation Group could be one of the key beneficiaries with its established long-term relationships with premium brands.
Backed by an experienced team, a solid customer base, as well as its comprehensive online and offline marketing strategies, Guosheng Securities believes thepan-fashion interactive data performance marketing grouphas a clear differentiation from its peers especially in premium and luxury brands marketing. On the backdrop of digitalization and growing yet diversifying industry needs, Activation Group is also likely to leverage its brands connection and talent pool, and further invest in Metaverse and new IPs, allowing it to strengthen its closed-loop ecosystem and lay a solid foundation for future growth.
Looking into the second half of the year, as the pandemic situation among top-tier cities became increasingly under control, Guosheng Securities predicts an across-the-board recovery for its operating segments. Specifically, Activation Group has resumed its experiential marketing business with exhibitions such as Van Cleef & Arpels and "Museum of Ice Cream". Its digital marketing business also seen a gradual recovery, with newly engaged celebrities expected to contribute to its livestreaming e-commerce business in the near future. Together with the rising investment in digitalization and innovation, multiple growth drivers are expected in the second half, including: 1) joint venture withBeijing Weikuai Technology Co., Ltd to create amulti-dimensional ecosystem encompassing the Metaverse, 2) exclusive rightsto manage the "Shanghai Design Week" IP, in whichActivation Group will befully responsible for IP operation and brand promotion, generating incremental value in the second half of the year.
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