On August 3, China Galaxy International Financial Holdings Limited released a new report and reiterated its “Overweight” rating on Joy Spreader Group Inc. (6988.HK, “Joy Spreader” or the “Company”). The rating firm lowered the target price to HK$2.41 based on a 20x 2022 P/E ratio. The ratio is lower than the average of 26x since the IPO. Based on a new assessment of Joy Spreader’s gross margins, China Galaxy International downgraded its estimates for the Chinese tech firm’s net profits for 2022, 2023 and 2024 by 2.9%, 3.1% and 3.5%, respectively.
The marketing technology firm’s share price fell by more than 50% in the past two days, nevertheless, the rating firm stated that they could find nothing in the company’s actions to cause the decline.
Despite the challenging industry environment, China Galaxy International still expects Joy Spreader to achieve notable revenue growth. The international e-commerce business is expected to become a new revenue growth driver for the group as it will bring revenue up to an entirely new scale while raising the quality of the business overall. The new business will also serve to limit the size of any losses. In the first half of the year 2022, Joy Spreader’s overall net profit was impacted by the rising contribution from the lower margin e-commerce business, however, this was a short-term event and somewhat in line with expectations. For the full year 2022, as China’s online game license approval process has been normalized and the impact of pandemic prevention procedures on e-commerce logistics is on track to be mitigated in the second half of the year, the domestic business is expected to achieve positive year-on-year growth. The group’s growth in 2022-2024 will be driven by the recovery of domestic business, the expansion of the overseas e-commerce business, and margin recovery.
As a leading new media commercialization technology company in China, Joy Spreader is committed to using its digital business intelligence capabilities to enable customers from e-commerce, interactive entertainment and other sectors to improve their results and the efficiency of their business activities (e-commerce sales, interactive entertainment product distribution, and marketing campaigns) on global mobile new media platforms, while helping clients achieve direct access to their products for consumers.
SOURCE Joy Spreader Group Inc.