Zhihu-W (02390.HK) landed on the Hong Kong Stock Exchange, and the "ecology first" strategy helped the cycle to cross

On 22 April, Zhihu, China's largest online Q&A community, was officially listed on the Stock Exchange, becoming the first Chinese-listed Internet company to return to Hong Kong through a dual major listing.

Good content is good business, and the "ecology first" strategy helps to know through the cycle

Standing at a new development node, Zhou Yuan, founder, chairman and CEO of Zhihu, issued an open letter to the outside world, clarifying the development strategy of "ecology first, social value, and rational optimism".

How to understand the "ecological first" that is placed in the first place?

The continuous evolution of hardware and networks has brought about great changes in Internet content production and consumption habits, and the current Internet content has entered a period in which users are the main body of content creation, and various information and content assets circulate and operate at a low cost. At this stage, the platform and content creators are interdependent, and the good platform atmosphere provides a better creative environment for content producers, improves the content dissemination and monetization efficiency of the latter, and massive high-quality content continuously expands the content asset capacity and information density of the platform to meet the differentiated content consumption needs, thereby bringing it endless traffic and creating good economic benefits.

In the words of Zhou Yuan: "Good ecology brings good content, and good content is good business." ”

Since its birth, the high brand tone maintained by Zhihu has surpassed the awareness of the importance of high-quality ecology and content, surpassing the general Internet content platform, and through the continuous improvement of the community ecology, cultivating more "gaining" good content that resonates and needs to be interacted with, Zhihu has effectively enhanced the link between content creators, content consumers, brand customers, etc. and the Zhihu community, and established a harmonious community culture that is both inclusive and professional. By the end of 2021, the cumulative number of content creators on the Zhihu platform has reached 55 million, and the cumulative number of community content is 490 million, covering more than 1,000 vertical fields and 1.8 million sub-topics, showing the vigorous vitality of sustainable content ecology, and the forward-looking strategic decision of "ecology first" is beyond doubt.

In fact, good content that pays attention to healthy development ecology and "sense of gain" is also highly consistent with the current development trend of the content industry. On the one hand, in the context of the peak of Internet traffic, who has a better ecology and better content will have a better chance to retain users and grasp the right to speak. On the other hand, the ecology and content that can drive a virtuous circle are also in line with the high-quality development orientation under the trend of industrial upgrading.

Under the strategy of "ecology first", Zhihu will focus on the creator experience, content acquisition, good community atmosphere, and commercial growth rate that matches the rhythm of community development in the future, which means that on the basis of a large number of existing tools such as "cheese", "toast" and "counting", Zhihu will also increase the resource tilt at the ecological level, continue to reduce the difficulty of creation, and improve the user experience.

In the complex development environment, not relying on external unique community ecology and high-quality content moat may be the fundamental place for Zhihu to maintain the leading position of China's online content community and achieve cycle crossing in long-term development.

A number of authoritative banks are optimistic, and the double listing of Hong Kong has opened a new milestone in development

Looking back on the development process of Zhihu for more than ten years, from the Q&A community of "Discovering the Bigger World", to the multi-attribute content ecological community of "Problems, Knowledge", and then to the vision of building a super community with richer capacity and connotation in the future, Zhihu has always maintained a positive growth momentum, and the company's eye-catching performance since its listing for one year has also been verified.

According to the announcement, in 2021, Zhihu's total revenue reached 2.959 billion yuan (RMB, the same unit below), an increase of 118.9% year-on-year, and the compound growth rate of revenue in the past three years was about 110%. At the same time as revenue growth, the company's business structure is more balanced, and the revenue of Zhihu advertising, paid membership, content commercialization solutions and other businesses will account for 39.2%, 22.6%, 32.9% and 5.3% respectively in 2021.

Compared with the business segments that have been independently divided, vocational education, which has initially emerged and is regarded as an important support for future growth, deserves attention. As an extension of the community ecology, Zhihu layout vocational education has a stronger trust advantage, and a large number of vocational education content laid on the platform can fully match the needs of core user groups aged 18-36. Knowing that it is expected that the proportion of vocational education business in 2022Q1 can exceed 5%, the company is confident that the proportion of revenue in this business will increase to more than 20%.

According to Frost & Sullivan, China's vocational education training market size is 7.4% in terms of revenue, and it is expected to reach 1.1 trillion yuan in 2026. With the market size of the online content community market expected to be 1.7 trillion yuan by 2026, Zhihu has taken root in two trillion-level blue ocean markets.

Out of optimism about the company's future development prospects, many well-known institutions such as Northeast Securities, GF Securities, Tianfeng Securities, Shenwan Hongyuan and other well-known institutions have followed up the report after the company's 2021 performance release, giving a "buy" rating, and the large gap between the target price of major banks and the current stock price also shows that the company's value is seriously undervalued.

(Source: Public Information)

The double listing of the return to Hong Kong can be regarded as the initiative to open a new development cycle, which is expected to bring new opportunities for the company's performance growth and valuation reshaping. First of all, Zhihu returned to the local market where its business and strategic cognition is more real and profound, and the closer and stronger distance of actual users is expected to have a positive impact on the company's business and valuation. At the same time, the dual listing also gave Zhihu the opportunity to be included in important benchmark indices and Hong Kong Stock Connect, which is expected to strengthen the company's exposure and bring about capital inflows.

In fact, with the reform of the system of the Stock Exchange and the optimization of the interconnection mechanism, more and more high-quality Chinese stocks and domestic high-quality leaders have chosen to go to Hong Kong for listing, and the resource aggregation effect of Hong Kong stocks has continued to appear, and the attractiveness of global investors, especially mainland investors, has been enhanced, which is expected to further enhance the overall liquidity of Hong Kong stocks.