Funzhi Group, China's largest AI interactive terminal network company, officially launched its IPO process today. The price per share does not exceed HK$29.7, with 200 shares per lot, and the IPO period will last until May 22, and it is expected to officially land on the main board of the Hong Kong Stock Exchange on May 27.
It is worth noting that the cornerstone investor Northern Securities' Goldon Fortis Limited Partnership Fund has subscribed for more than HK$78 million, demonstrating the market's firm confidence in Quzhi Group. Before the IPO, Quzhi has successfully attracted 9 rounds of financing, with the latest pre-investment valuation of 4.159 billion yuan, including Yuandu Venture Capital, BPC, Legend Capital, C&D Emerging Investment, SAIF Capital, Hongzhang Investment, Eagle Capital, etc. The participation of many professional investment institutions is not only a recognition of the current investment value of Quzhi, but also reflects the optimistic expectation of its future development prospects.
Source: Prospectus
As an AI marketing technology company, Quzhi Group is currently in a period of rapid growth and has achieved commercial profitability. From 2021 to 2023, the company's revenue will grow at a compound annual growth rate of 41.6%, and adjusted net profit will grow at a compound annual growth rate of 95.9%.
In 2023, the company will achieve a phased leap, achieving annual revenue of RMB 1.01 billion, a significant increase of 81.8% compared with 2022; Core marketing revenue grew nearly 100% to RMB810 million, and full-year adjusted profit was RMB200 million, up 157% year-on-year. The company's financial data performance is very impressive.
As the "first stock of AI interactive marketing", Quzhi Group will undoubtedly set an important benchmark for the subsequent listing of domestic AI companies in Hong Kong.
What about the company's long-term opportunities? The author will interpret the value of the company from three perspectives: its unique business model, industry market space, and excellent financial performance.
1. China's largest AI interactive terminal network company
The rapid development of AI technology has driven the intelligent upgrading of enterprises and brought unprecedented development opportunities to many industries. In order for AI technology to be truly implemented and industrialized, it is particularly important to combine it with appropriate carriers.
Quzhi Group is the first enterprise in China to provide AIoT marketing solutions with experiential intelligent terminals, and it is also the marketing service provider of the largest AI interactive terminal network in China.
AIoT, or "Artificial Intelligence Internet of Things", is a combination of artificial intelligence (AI) technology and Internet of Things (IoT) infrastructure carrier, enterprises use AI data analysis and decision-making capabilities (brain) and IoT device intelligent connectivity (nerves) to improve data collection, analysis and automatic processing capabilities, so as to achieve intelligent decision-making of terminals, improve human-computer interaction, improve the efficiency of the Internet of Things, and enable enterprises to have stronger enterprise data management and analysis capabilities.
Since its establishment in 2013, Quzhi Group has been at the forefront of the industry, using AIoT technology to develop a multi-sensory AI interactive terminal integrating vision, hearing, touch, smell and action interaction, and has built an offline marketing terminal network platform all over the country - "Quna". As of December 31, 2023, Quzhi Group has operated a total of 7,543 AI interactive terminals, covering 22 cities in China, including all first-tier cities and most of the new first-tier cities. Its terminals are mainly deployed in commercial properties with a high user return rate, such as office buildings, long-term rental apartments and shopping malls, to attract young consumer groups and the middle class.
At the same time, Quzhi Group also uses offline AI interactive terminals to attract consumers to visit and convert them into users on online platforms ("Funna" APP, WeChat Mini Program), promoting customer brands and products to consumers in an online and offline integrated mode, and obtaining consumer data and feedback. In 2023, the number of registered users of Quzhi Group's online platform "Quna" will exceed 50 million, achieving a 35% increase compared to 2021.
This multi-channel, one-stop, closed-loop marketing method uses the intelligent analysis and interaction capabilities of AI and the extensive access points of IoT devices to provide FMCG brands with more personalized and efficient marketing strategies, achieve more accurate user positioning and advertising, and greatly improve the effectiveness and efficiency of marketing.
Source: Prospectus
It is worth mentioning that the terminal core hardware modules and embedded software of Quzhi Group are independently developed by the company, and the manufacturing part is outsourced to third-party manufacturers - this not only achieves independent and controllable technology, but also realizes the lightweight operation.
What kind of black technology does this AI interactive terminal have, and what kind of value can it bring to consumers and brand enterprises?
The consumer industry has undergone some significant changes in recent years: the supply side is gradually moving closer to consumer demand, and consumers are increasingly inclined to pursue novelty and variability; At the same time, the consumption trend is also changing from material consumption to spiritual consumption, and new brands are emerging one after another. At the same time, the challenges faced by brand enterprises in marketing are becoming increasingly prominent: the cost of traditional offline marketing is high, the online traffic dividend is gradually peaking, and it is becoming more and more difficult to capture the attention of users.....
How to attract and occupy the minds of consumers has become a key issue in brand development.
In this context, the AI interactive marketing model pioneered by Quzhi Group shows its unique competitive advantages.
The interactive sense of human-computer interaction not only brings consumers a new shopping experience, but also through this innovative marketing, it can also reach the brand's target audience more accurately, provide them with personalized services, and convey product information and brand image to consumers in a more vivid way.
First of all, in terms of function, compared with ordinary machines, this multi-sensory AI interactive terminal integrates AI technology to achieve a variety of sensory experiences such as vision, hearing, touch, smell and action interaction, creating a highly interactive, interesting and innovative shopping environment for users, so as to immerse users in it, and also make brand and product information deeply rooted in the hearts of the people.
Secondly, in terms of technology, through the deep combination of big data and AI algorithms, product information and brand image can be reached to the target audience in an interesting, vivid and accurate way, and at the same time, the information display can be adjusted and brand decision-making can be optimized according to the feedback data, so as to achieve "thousands of machines, thousands of faces" and "thousands of products", and significantly improve the advertising reach rate and the marketing conversion rate of brand customers.
Finally, in terms of scenarios, Quzhi Group's AI interaction combines online and offline multi-consumption scenarios, helping brands to penetrate consumers' minds in all hours, scenes, and aspects, so as to truly attract and profoundly influence consumers.
Imagine that you are standing in front of an offline terminal, its appearance is unique and eye-catching, various products and brands on the screen are displayed in static or dynamic form, as you get closer, it can also play music, can release the fragrance of products, can interact with you in various ways, can also act as a smart shopping guide, recommend products according to your needs and preferences, and during specific festivals or events, it can also create a shopping atmosphere through lighting effects to stimulate your desire to buy.
When you are deeply attracted by this multi-sensory shopping experience, you can't help but scan the code, you can also experience the purchase online again, and at the same time, you can also tell the experience through the questionnaire, which not only brings you a novel, interesting and intelligent shopping experience, but also helps the brand to achieve excellent marketing results and collect valuable user feedback data.
To sum up, Quzhi Group's AI interactive marketing system is a solution based on the current pain points of brand enterprises in marketing. With a strong sense of interactivity and experience as the starting point, it has successfully attracted the attention of users, realized precision marketing and intelligent decision-making through AI, big data and other technical means, and expanded online and offline multiple scenarios to maximize marketing effects.
Second, the shovel seller in the 10 trillion market, the domestic growth rate is the first
From 2021 to 2023, Quzhi Group relied on its AI interactive terminal network to provide about 1,400 SKUs of FMCG marketing solutions to 472 brand customers, covering major FMCG industries such as beverages, food, beauty, and daily necessities. Among the top 100 emerging brands in China in the beverage, food and daily necessities industry, 74 of them are customers of Quzhi Group.
Based on the innovative practice of AI interactive marketing, the company provides new marketing solutions for brand enterprises, which is essentially a business of "selling shovels".
With the recovery of consumption certainty and the rapid development of the FMCG industry, the company's role as a "shovel seller" is expected to be the first to benefit.
According to data from CIC, China, one of the world's largest consumer markets, has reached 47.2 trillion yuan in 2023 and is expected to continue to expand. This figure is expected to reach 60 trillion yuan by 2028, with a compound annual growth rate of 4.9%.
In this $10 trillion market, FMCG brands are also increasing their marketing and sales expenses to further seize more market share in the fierce market competition. The size of China's FMCG marketing market has also increased from 540.1 billion yuan in 2019 to 648.6 billion yuan in 2023, with a compound annual growth rate of 4.7%. The market is expected to grow at a CAGR of 6.9% from 2023 to 2028.
Source: Prospectus
According to the data of CIC Consulting, the market share of Quzhi Group has increased rapidly in recent years, and its position in the industry has become increasingly prominent. Based on the revenue growth of marketing solutions from 2021 to 2023, the compound annual growth rate is as high as 46.5%, which is 29 times the average growth rate of the market.
3. Rapid growth in revenue and adjusted net profit, and sufficient growth momentum in the future
The high growth rate leads the peers, fully demonstrating the company's strong growth momentum in recent years. From 2021 to 2023, the company will achieve revenue of 502 million, 554 million and 1.007 billion respectively, with a compound annual growth rate of 41.6%; In terms of profitability, the company's adjusted profit in 2023 will exceed 200 million yuan, with a compound annual growth rate of 95.9%.
Source: Compiled according to the prospectus
The company's business mainly includes marketing services, commodity sales and other services, and the substantial increase in revenue is mainly due to the marketing service business, which contributes about 8% of the group's revenue.
Source: Prospectus
In terms of segmentation, marketing services include two categories: standardized marketing services and value-added marketing services, of which standardized marketing services include marketing activity services, multi-channel media promotion, and FMCG promotion; Value-added marketing services include AI interaction and data strategy services.
As the company's core business, standardized marketing services have grown steadily in recent years, with revenue of 343 million, 349 million, and 692 million respectively from 2021 to 2023, with a compound annual growth rate of 42%.
As a high-growth business segment, value-added marketing services have strong profitability. From 2021 to 2023, it will achieve revenue of 34 million, 56 million, and 116 million respectively, with a compound annual growth rate of 85%; The gross profit margins were 84.3%, 78.9% and 85.3%, respectively.
In terms of customer coverage, the number of brand customers has increased from 174 in 2021 to 291 in 2023, and the number of large customers has increased from 27 to 47.
Source: Compiled according to the prospectus
As the company's second largest source of revenue, commodity sales have formed a good synergy with the marketing business, and its reported revenue scale has also increased steadily, from 105 million in 2021 to 144 million in 2023.
According to the company's development strategy and the use of raised funds, the future growth momentum is sufficient. It mainly includes further expanding the network layout of AI interactive terminals to improve effective reach to consumers; Continuously broaden and enrich marketing services, expand brand customer base, and create benchmark cases of new product marketing in multiple industries; Increase investment in technology research and development to improve user experience and operational efficiency; Selectively pursue strategic partnerships, investments and acquisitions to achieve the company's long-term development.
epilogue
The listing of Quzhi Group at this time is also a good opportunity to accurately grasp the recovery of the Hong Kong stock capital market and the resumption of the listing boom in Hong Kong. As a pioneer in providing AIoT marketing solutions based on experiential intelligent terminals and a marketing service provider with the largest AI interactive terminal network in China, the company has successfully stood out in the fierce market competition and achieved significant growth in performance by virtue of its unique marketing model and years of industry accumulation.
Looking ahead, Quzhi Group's strategic planning and the use of funds raised from this listing are focused on enhancing its core competitiveness. This means that the company's revenue is expected to grow even faster, further strengthening its market position and improving profitability, and unlocking its long-term potential as the global consumer market grows.