(Report Producer/Author: GF Securities, Dai Chuan, Ji Wenxin, Pu Mingqi)
1. Overseas exhibitions: help enterprises go overseas, and build strong profitability with excellent business models
Overseas exhibitions are an important window for a country's enterprises to "go global". Overseas exhibitions refer to the economic and trade exhibitions organized by mainland exhibition organizers to hold economic and trade exhibitions abroad or to participate in economic and trade exhibitions held by overseas exhibition organizers abroad, which plays a decisive role in a country's international commercial trade. Overseas exhibitions are an important window for mainland enterprises to communicate with the international economy, and have a strong role in stimulating the export trade of enterprises. According to Xinhuanet Zhejiang, 70% of the orders of foreign trade export enterprises in Zhejiang Province in mainland China originate from overseas participation in exhibitions, which has a strong economic driving effect. Overseas exhibitions belong to the rigid consumption of export enterprises. For exporters, in addition to obtaining export orders, their main objectives of participating in different stages of the brand life cycle are different. For emerging companies, they mainly hope to target overseas target markets through the exhibition, better understand the needs of overseas customers and improve their products. For mature enterprises, they mainly want to maintain their original overseas customer relationships through exhibitions, and at the same time understand the new trends in the international market.
Help enterprises "go global", pre-exhibition research and matchmaking and in-exhibition matchmaking as the core service link of overseas exhibitions. In the process of holding overseas exhibitions, due to regional differences, exhibitors do not know much about the needs of overseas customers, local industry policies, economic conditions, etc., so exhibition organizers need to conduct research on the target market and exhibition industry before the opening of the exhibition project. Before the exhibition, for customers with potential purchase needs, docking can be realized in advance. In the process of exhibition operation, exhibition organizers need to rely on their own overseas exhibition experience and understanding of the target country's market to match exhibitors with participating products. Different from the traditional domestic exhibition situation, in the process of overseas exhibition, exhibition enterprises need to avoid the communication cost caused by negotiation habits, business models and language differences as much as possible in the process of exhibition operation, so as to improve the success rate of on-site trade at the exhibition.
The high-leverage business model opens the ceiling of gross profit margin of the exhibition. As far as overseas exhibitions are concerned, their income is mainly related to the number of exhibitions, the number of booths and the unit price of booths, of which the number of exhibitions mainly depends on the brand power of the exhibition enterprises to develop new exhibition countries and industries, and the number of booths is mainly promoted and sold through the exhibition enterprises. Overseas self-organized exhibitions usually do not charge admission fees in order to attract more visitors. As far as overseas exhibitions are concerned, there are four main cost components: the cost of leasing the exhibition hall and the cost of publicity and promotion are relatively fixed, and the operating cost and the cost of air tickets are variable costs.
(1) Pavilion leasing cost: The leasing cost is mainly proportional to the leased area, and the cost is relatively fixed under the condition that the total number of saleable booths remains unchanged. (2) Publicity and promotion costs: mainly to enhance the influence of the exhibition, attract high-quality buyers to participate in the exhibition to improve the efficiency of the exhibition, the cost is relatively fixed. (3) operating costs: mainly including decoration, exhibition leasing, security and other businesses, which mainly change with the number of booths, decoration and decoration area changes, we calculate according to the data disclosed in the prospectus, a single booth is about 3000-4000 yuan (4) air ticket ground cost: refers to the air ticket cost of overseas exhibition attendants, ground costs, etc., which has a linear relationship with the number of exhibitors. The elasticity of the gross profit margin of the exhibition industry is highly correlated with the number of booths sold in a single exhibition, mainly due to the following reasons: (1) When holding an exhibition, the leasing area of the exhibition enterprise is large, and it usually contracts most of the area of an exhibition hall, so part of the cost is relatively fixed. (2) The cost of publicity and promotion generally occurs in the middle and early stage of the sales booth of the exhibition enterprise, which can be regarded as the fixed expenditure of the exhibition enterprise for each exhibition, and the correlation with the number of booth sales in the later stage is low.
Second, the Belt and Road + RCEP two-wheel drive, overseas exhibitions are in full swing
(1) Exhibitors go overseas and have smooth business access: Economic globalization promotes the expansion of global exhibitions
The scale of the global exhibition market has grown steadily, and China has become the country with the largest exhibition hall area in the world. Global exhibitions provide a platform for exhibitors to promote their products and services to a large number of potential customers, and are an important channel for foreign trade in countries around the world. With the continuous growth of global trade volume and the deepening trend of economic globalization, the scale of the global exhibition market has grown steadily. According to the Miao Exhibition prospectus, from 2013 to 2018, the scale of the global market exhibition industry increased from 27.58 billion US dollars to 35.52 billion US dollars, with a compound annual growth rate of 5.2%. In terms of exhibition hall area, according to UFI's "2022 Global Convention and Exhibition Map", China currently occupies the first place in the world with a total exhibition venue area of 10.217 million square meters, significantly ahead of the second place United States, which fully reflects the rapid development of foreign trade in recent years and the increasing importance of the exhibition industry.
The area and number of exhibition halls have increased, and the number of pavilions in the Asia-Pacific region has increased significantly. According to UFI's 2022 Global Exhibition Map, the total indoor exhibition area in 2022 reached 40.6 million square meters, an increase of 17.34% over 2017, with a CAGR of 3.25%, and the number of exhibition halls of 5,000 square meters and above was 1,358, an increase of 12.05% over 2017. The expansion of cross-border trade promotion and exhibition areas has become a popular area for the development of the exhibition industry in the Asia-Pacific region and China-Africa. According to UFI data quoted by the exhibition reference official account, from 2011 to 2022, the exhibition industry in the Asia-Pacific region and Central Africa has developed rapidly, and the number of exhibition halls has increased from 184/25 in 2011 to 316/111 in 2022, an increase of 72%/344% respectively. The convention and exhibition industry in North America is relatively mature, with a large number of exhibition halls, and the number of exhibition halls decreased slightly from 2011 to 2022 due to the impact of the epidemic.
The negative impact is about to be cleared, and a full recovery of overseas exhibitions is expected in 2023. Overseas exhibitions were greatly affected during the epidemic, and almost all overseas exhibitions were suspended in 2020. According to the data of the China Council for the Promotion of International Trade, in 2020, nearly 1,700 exhibition projects have been approved but not implemented due to the cancellation of overseas exhibitions, with a damaged area of nearly 900,000 square meters, and about 60,000 enterprises have been prevented from participating in overseas exhibitions. With the gradual clearing of the impact of the epidemic in 2022, the operating income of global exhibition companies has recovered to 77% of the pre-epidemic level, and according to UFI's forecast, the operating income of global exhibition companies in 2023 is expected to further recover to 91% of the level in 2019. With the gradual recovery of foreign trade and economic exchanges between various countries, we believe that the prosperity of the global exhibition industry is expected to recover in an all-round way.
(2) The Belt and Road Initiative + RCEP jointly drives Chinese manufacturing to go overseas, and the mainland's overseas exhibition market ushers in new opportunities
The development of export trade has accelerated, and the mainland's foreign economic and trade development has ushered in new opportunities. According to the National Bureau of Statistics, in the past decade, China's import and export volume of goods trade has reached a new high, and in 2013, the mainland's trade in goods surpassed the United States for the first time, ranking first in the world. Since then, except for 2016, when the mainland's total import and export of goods denominated in US dollars was surpassed by the United States due to the appreciation of the US dollar, the mainland has ranked first in the world in the rest of the years. Foreign trade is an important driving force for the economic development of the mainland and drives the development of overseas exhibition markets. According to Wind, the CAGR of the mainland's foreign exports reached 6.88% in 2012-22, and the total value of exports accounted for a high proportion of the annual GDP, which has remained at about 18% in recent years, while the proportion of the United States' merchandise exports to GDP in 2019/20/21 was 7.74%/6.80%/7.55% respectively.
Before the epidemic, the "Belt and Road" exhibition was more popular, and after the epidemic, there will be more room for development. According to the 2019 China Exhibition Data Statistical Report of the China Convention and Exhibition Economy Research Association, 61 of the 79 self-hosted exhibitions outside China in 2019 were held in countries along the "Belt and Road", accounting for 77.21%, and the total exhibition area reached 406,700 square meters, accounting for 77.03% of the total exhibition area of self-organized exhibitions outside China.
The area of exhibitions organized by the Belt and Road Initiative has increased, and the number of projects and enterprises participating in exhibitions has decreased slightly. According to the China Council for the Promotion of International Trade's Report on the Development of China's Exhibition Economy (2019), in 2019, China's participation in exhibitions in countries along the "Belt and Road" will no longer pursue quantity, but pay more attention to centralized participation or holding large-scale exhibitions, and pay more attention to high-quality exhibitions. In 2019, 77 exhibition organizers across the country went to 30 countries along the "Belt and Road" to organize and participate in 697 exhibitions, accounting for 39.5% of the total number of exhibition projects, a year-on-year decrease of 2.9%, a total exhibition area of 410,000 square meters, accounting for 44.5% of the total area of exhibitions, a year-on-year increase of 8.7%, and 26,000 participating enterprises, accounting for 42.3% of the total number of participating exhibition enterprises, a year-on-year decrease of 1.7%.
The participating exhibition industries are mainly mechanical and comprehensive, and the mechanical exhibition ranks first. According to the China Council for the Promotion of International Trade's Report on the Development of China's Exhibition Economy (2019), in 2019, China's participation in exhibitions in countries along the "Belt and Road" was mainly dominated by mechanical and comprehensive exhibitions, and the number of mechanical exhibition projects exceeded that of comprehensive and ranked first. Among them, in all industry classifications, the number of mechanical exhibition projects is the largest, reaching 133, accounting for 19.1% of the total number of exhibition projects in countries along the "Belt and Road", followed by comprehensive exhibitions, a total of 92 items, accounting for 13.2% of the total number of exhibition projects in countries along the "Belt and Road".
The RCEP Free Trade Area is currently the largest, most dynamic and most promising free trade area. On January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP), signed by China, Japan, the Republic of Korea, Australia, New Zealand and 15 member states of the 10 ASEAN countries, came into force. The RCEP member countries have a large overall economic volume, and each has its own unique economic and resource advantages, and the economic development of the member countries has become a complementary relationship, which is of great significance to the mainland's foreign economic relations and trade. According to the statistics of the General Administration of Customs, in 2022, the total import and export trade of the mainland to other RECP member countries reached 1.87 trillion US dollars, a year-on-year increase of 3.9%, of which the total import and export trade to the Southeast Asian Association reached 975.3 billion US dollars, a year-on-year increase of 11.06%. The high demand for trade under favorable policies will drive RCEP member countries to gradually become the focus of exhibitions.
In 2022, the Belt and Road Initiative and RCEP will continue to be popular venues for exhibitions, and are expected to contribute to the development of self-organized exhibitions outside the mainland. According to the "2022 China Exhibition Data Statistical Report" of the China Convention and Exhibition Economy Research Association, 13 of the 24 exhibitions hosted by China's overseas self-organized exhibitions in 2022 were held in countries along the "Belt and Road", accounting for 54.17%, a year-on-year increase of 160%. At the same time, in 2022, the mainland held four overseas self-organized exhibitions in the "BRICS" countries, including Russia, Brazil, India and South Africa, and eight overseas self-organized exhibitions in RCEP member countries, accounting for 33.33% of the total number of overseas self-organized exhibitions, which were held in Japan, Indonesia and Vietnam. We believe that with the post-epidemic recovery of the mainland's foreign trade, the Belt and Road Initiative and RCEP member countries will continue to be the main regions of choice for the mainland's overseas self-organized exhibitions, and the mainland exhibition enterprises will also actively expand their exhibition territory. According to the 2022 China Exhibition Data Statistical Report, the mainland outreach industry is expected to recover to the level of 2019 from the second half of 2023 to the first half of 2024.
3. International giants lead the industry trend, and specialization + digitalization has become the mainstream of the transformation of the exhibition industry
(1) Consider the outside and the inside: what makes the giant?
M&A extension is the preferred expansion method for international exhibition enterprises. The exhibition industry has the characteristics of strong regional and industry thresholds, and at the same time, an exhibition enterprise that wants to establish its brand advantage in a specific region and industry usually needs to invest a large amount of time and capital costs. Therefore, in order to drive the growth of the company, large-scale exhibition enterprises usually expand the exhibition ability circle through cross-regional and cross-industry mergers and acquisitions, and at the same time carry out a number of resource integration.
1. Reed Exhibitions: Horizontally expand the region, vertically expand the industry, and create a global exhibition giant with cooperation strategy + localized operation
Reed Exhibitions: Backed by the RELX Group, Reed Exhibitions' exhibition business has developed rapidly. Reed Exhibitions entered the exhibition industry in the 90s of the 20th century, and according to the company's official website, the number of industries covered by its exhibitions has reached 43 so far, and it has hosted more than 400 exhibitions across 22 countries. At present, the company has seven major industry clusters, namely automobile manufacturing, electronic manufacturing and assembly, gifts and retail, medical and health, printing and packaging, catering and entertainment, and intelligent manufacturing, covering a wide range of industries. As a member of RELX, Reed Exhibitions can fully benefit from the synergies of its parent company's data and information analysis, and transform its parent company's resources into the core competitiveness of its exhibition business. In 2019, the company's exhibition business revenue reached 1.486 billion euros.
We reviewed Reed's M&A process from 2002 to 2022, and we can find that Reed's overall business expansion has both horizontal country and regional expansion and vertical vertical industry expansion. Among them, we believe that Reed's M&A and business expansion journey in Greater China is highly representative, and the main strategy of Reed Exhibitions is to first enter specific countries through acquisitions or wholly-owned exhibitions, and then expand the local business scope through cooperation strategy and localized operation through industry extension mergers and acquisitions. (1) 2002: Shanghai Lixin Exhibition Co., Ltd. was established, which focuses on the field of machinery and metal processing, and owns the world's third and China's largest machine tool exhibition - China International Machine Tool Exhibition. Shanghai Reed Exhibitions is a wholly-owned enterprise of Reed Exhibitions, marking Reed Exhibitions' official entry into the exhibition industry in Greater China. (2) 2006: Reed Exhibitions and China National Pharmaceutical Group Corporation established a joint venture Reed Exhibitions Sinopharm Exhibitions Co., Ltd., which is the first cooperation between Reed Exhibitions and China's official state enterprises, and also marks the deepening of Reed Exhibitions' business development in China. (3) 2007-2012: Reed Exhibitions has successively established joint ventures or carried out extended mergers and acquisitions with Shenzhen Huabo Exhibition (Furniture Exhibition), Qunxue Expo (Gift Exhibition), Guangzhou Qiya Exhibition (Golf Exhibition), Zhongbai Convention Exhibition (Department Store) and other vertical exhibition companies, and gradually expanded Reed's exhibition business influence in Greater China from the perspective of vertical industry depth. The industry has expanded rapidly, and Reed's exhibition business in Greater China has developed rapidly. Reed Exhibitions has rapidly expanded its presence in Greater China through frequent outbound acquisitions and local partnerships. According to the company's official website, in 2021, Reed Exhibitions China had a total booth area of 2.3 million square meters, bringing together more than 30,000 exhibitors and more than 1.3 million visitors from China and around the world. At the same time, Reed Exhibitions has expanded to 12 professional fields in China, covering a wide range of industries.
2. Informa Markets Group: the world's first conference and exhibition organizer, industry consulting expert in subdivided fields
Informa Markets is one of the world's largest suppliers of trade fairs and trade shows. From 2018 to 2021, the global exhibition industry strategy consulting company AMR International released the ranking of exhibition organizers, and ranked first in the exhibition organizer rankings, and has been the world's largest exhibition organizer for many consecutive years. According to Informa Markets' official account, Informa Markets organizes more than 550 international B2B exhibitions and brand events every year, covering agriculture, aerospace, beauty and medicine, art, design and home, fashion, energy, engineering and other fields, including Asia, Europe, the Middle East and Africa, South America and North America. Looking back at Informa Markets' development path, mergers and acquisitions are the main driving forces for its expansion and market share. In 2007, the company acquired Datamonitor to lay the foundation for data and information technology in the field of exhibitions, and in 2012, it acquired MMPI, a Canadian exhibition company, and officially entered the exhibition industry. In the following ten years, Informa Markets acquired exhibition companies in Canada, the United States and China, quickly achieving multi-field coverage of vertical markets and expanding overseas markets. In 2018, the company acquired UBM, the organizer of B2B exhibitions and the world's second-largest exhibition company, and became the world's No. 1 exhibition company, according to the company's financial report, Informa Markets' exhibition business revenue in 2018 reached 921 million pounds, becoming the world's largest exhibition company.
With a clear strategy and clear goals, digital empowerment is the focus of Informa Markets' future development. In 2014 and 2021, Informa Markets developed a three-year growth plan, GAP I and GAP II. GAP I and GAP II have six main development strategies, but they have different priorities. GAP I's focus is on the company's rapid expansion and internal lean management benefits. GAPII. focused on the company's specialization, and emphasized the need for Informa Markets to make full use of digital tools to empower its exhibition business, with information construction and data services as its development focus.
3. Munich Exhibition & Hannover Exhibition: an international professional exhibition leader from Germany, with a strong brand effect as the foundation of its business expansion
The development path of professional exhibition enterprises is different from that of traditional exhibition enterprises, and the key to the expansion of its territory is to mark the brand label in a specific field. For professional exhibitions, exhibitors usually have specific industry restrictions, and the audience customers are usually professionals in the industry, so the professionalism of professional exhibitions and the brand effect in specific industries are significantly stronger than those of comprehensive exhibitions. We reviewed the development history of the international trade fair leaders Munich Messe and Hannover Messe, and their common characteristics are to first create their own brand advantages in a specific industry, and then expand their business territory through extended cooperation or acquisitions into overseas markets. Munich Exhibition: As one of the world's largest professional exhibition companies, Munich Exhibition has many internationally leading professional exhibitions. The expansion process of Munich Exhibition can be roughly divided into two stages: (1) Comprehensive business expansion period (1964-1979): Messe München was founded in 1964, and then held a number of professional exhibitions in Germany, including IFAT, Industrial Equipment Exhibition (Bauma Exhibition), Munich Fashion Week, Interbrau (Beverage Exhibition), Inhorgenta (Jewellery & Watches Exhibition), Productronica, Heim+Handwerk and Ceramitec. The company has rapidly expanded a number of industry professional exhibitions through independent holding and mergers and acquisitions, and quickly established its brand awareness. (2) International expansion period (1980-2016): The company acquired International Exhibition Company and Australasia Exhibition Company in 1980 to start its international expansion. In the decades that followed, the company established or acquired subsidiaries in China, India, Africa and Russia, expanding its business to many regions around the world.
Hannover Messe: Hannover Messe was founded in 1947, when Germany was in the post-war economic reconstruction stage, in order to get international support and demonstrate the economic potential of German industry, the predecessor of Hannover Messe, the German Exhibition Company, was established and held the first Hannover Messe. According to Hannover's website, the exhibition is still regarded as a landmark event in the history of German industry, attracting more than 730,000 visitors from 53 countries and generating a turnover of $32 million. In the following decades, the company focused on the holding of exhibitions in the industrial field, from which several sub-industry exhibitions were split. Hannover Messe opened its first partner country in Brazil in 1980 and has entered China, the United States and Indonesia in the following decades.
(2) Demand matching to industry experts, professional exhibitions conform to industry trends
The comprehensive exhibition covers a wide range of areas, is large-scale, and the undertaker is usually a government enterprise. According to the content of the exhibition, the exhibition can be divided into comprehensive exhibition and professional exhibition. Comprehensive exhibitions usually invite enterprises from multiple industries to participate in the exhibition, and the scale of such exhibitions is usually larger, and a number of industry exhibition areas are often arranged within the exhibition, involving a wide range. For example, the Canton Fair, the mainland's largest comprehensive international trade exhibition, is jointly sponsored by the Ministry of Commerce and the Guangdong Provincial People's Government. The competition is fierce, the audience relevance is low, and it is difficult to expand the brand power of the comprehensive exhibition. Comprehensive exhibitions occupied a leading position before the 20th century, but with the increasing number of industry segments and market capacity, comprehensive exhibitions are difficult to produce strong brand power due to the lack of clear positioning and sense of hierarchy. Comprehensive exhibitions with strong brand power in the mainland, such as the Canton Fair and the Shanghai Fair, are supported by the government. At the same time, although there are many exhibits in comprehensive exhibitions, the lack of correlation between the exhibits reduces the efficiency of the exhibition to a certain extent.
The professionalism and verticality of professional exhibitions are higher, which is a better way to establish the brand power of exhibitions, and it is easier to produce scale effects. Professional exhibition exhibitors have a specific industry limit, display a certain industry or even a certain product, exhibitors and visitors are professionals, such as automobile exhibitions, jewelry exhibitions, building materials exhibitions, etc. At present, the world's high-profile professional exhibition in the construction machinery industry - BMW Exhibition, hosted by the international exhibition giant Munich Exhibition, according to the official account of the construction machinery information network, the 2020 BMW China Exhibition brought together more than 3,000 exhibitors from more than 40 countries around the world, with more than 190,000 visitors. The scale effect built by brand power is large. In recent years, international exhibition giants such as Informa, Frankfurt and Munich have shifted their focus to professional exhibitions.
The role of the exhibition has changed from a single place to provide and match buyers and sellers to a professional and vertical integration of industry knowledge. According to the official account of the conference circle, in 2016, Informa Markets acquired Penton in the United States at a price of 10 billion yuan, which made the exhibition industry pay attention to the value and importance of vertical integration of information. Penton's core value is the business data and information accumulated in specific industries, and the timely provision of professional advice and assistance to buyers and sellers in the process of exhibition operation, which improves Penton's customer stickiness and helps exhibition companies reduce their sales and publicity costs to a certain extent. We believe that in the future, exhibition organizers will focus on sub-industry segments, increase their customer stickiness and build brand awareness with industry-specific data and information, so as to promote their booths and customer sales efficiency.
In order to expand the scale effect of a single exhibition, professional exhibitions will become the mainstream of the exhibition industry. For exhibitors, its efficient buyer and seller docking and high focus are conducive to exhibitors to quickly improve their visibility in the industry. For exhibition enterprises, holding professional exhibitions can quickly improve the brand awareness of exhibition enterprises in subdivided fields, and at the same time, it is conducive to exhibition enterprises to more effectively collect and use business data in the industry and provide commercial added value for exhibitors. At the same time, holding professional exhibitions will effectively increase the willingness of enterprises to participate in the exhibition and increase the upper limit of booth sales in a single exhibition.
(3) The epidemic has accelerated the digital transformation of exhibition enterprises, and the empowerment of data tools has become the general trend
Visitors and exhibitors are enthusiastic about digital tools. In June 2020, Reed Exhibitions launched a research campaign titled "Customer Needs and Psychogram Barometer in the Context of the Pandemic", which focused on the global exhibitors' and visitors' interest in the digitalization of the exhibition and their acceptance of various data tools, according to the official account of Reed Exhibitions' International Sales Department. In terms of PAX Online's audience, 77% of viewers would like to see more digital tools available in the future of live events. For the majority of visitors and exhibitors, the most interesting digital trade fair behaviors are visiting virtual digital booths and finding new sales leads and customers through digital tools.
Digitalization and data tools have been the core direction of international exhibition enterprises in recent years. According to Reed Exhibitions' official account, Reed Exhibitions appointed a Chief Digital Product Officer in 2021, and now Reed Exhibitions' International Sales (ISG) has made its digital tools one of the key marketing tools for the exhibition, and recommended that exhibitors' sales teams use the digital tools and apps provided by Reed Exhibitions to improve their participation efficiency. Reed Exhibitions has four digital tools: (1) Preferred Exhibitor List: More than 90% of visitors will give priority to viewing the list of exhibitors and then exhibiting on-site, Reed Exhibitions will divide exhibitors into standard, silver and gold exhibitors through the "Preferred Exhibitor List" function to increase the exposure of preferred exhibitors. (2) Emperia APP: The scanning APP launched by Reed Exhibitions can obtain the information of each potential customer of the booth through the scanning process of less than 1 second, and at the same time, you can also view the potential sales leads of the company in the same exhibition on the APP. (3) Digital incentive gift bags: For exhibitors, it can help exhibitors attract more potential customers by distributing gift bags to registered visitors, which include sales discounts, free samples and other discounts. (4) Exhibition report: Reed Exhibitions will show the data and analysis results required to exhibitors through the information in the exhibition, so that the exhibitors can observe and view the number of customers of the company's products in real time, and provide a summary report of the exhibition after the exhibition. For Informa Markets, digital and data tools are at the heart of its GAP II initiative. The frequency of the word "digital" in the Informa Markets Group's 2020 and 2021 annual reports has grown rapidly from 54 in 2017 to 171 in 2022, reflecting the strong emphasis on digital tools at the Informa Markets Group.
During the epidemic period, the "double line and double exhibition" has achieved remarkable results, solving the "urgent need" of exhibition enterprises. According to the company's annual report, in 2020, the operating income of Miao Exhibition decreased by 77.84% year-on-year, and the operating income of Reed Exhibitions' exhibition business decreased by 73.01% year-on-year. In order to overcome the dilemma of not being able to hold offline exhibitions, global exhibition organizers are actively seeking digital transformation and promoting "dual exhibitions and exhibitions". During the epidemic, Miao Exhibition has successively launched the "Online Exhibition and Trade MAX" and "Online Exhibition and Trade META" products, and has successively realized the online and offline closed loop of the exhibition.
Fourth, the concentration of overseas exhibition markets has steadily increased, and the leading effect is expected to gradually appear
(1) High barriers + market-oriented competition promote the increase in the concentration of overseas exhibition industries
During the epidemic period, the reshuffle was sufficient, and the concentration of overseas exhibition markets increased steadily. According to the China Exhibition Data Statistical Report released by the China Convention and Exhibition Economy Research Association, the number of self-organized exhibitions held outside China increased steadily from 2014 to 2019, from 84 in 2014 to 137 in 2019, an increase of 63.1%, while the number of overseas exhibition organizations in China decreased from 36 in 2014 to 29 in 2019, and the concentration of overseas exhibition industry increased steadily. According to the "2022 China Exhibition Data Statistical Report", there are only 6 overseas exhibition institutions left in 2022, and the number has been significantly reduced.
The concentration of the mainland's overseas self-organized exhibition industry is relatively high, and the leading enterprises rely on a strong brand moat to achieve "the stronger the stronger". Overseas self-organized exhibition channels, sales, databases, brands and other resource barriers are higher, and it is difficult for new entrants to catch up in the short and medium term. Taking 2019 before the epidemic as an example, according to the "2019 China Exhibition Data Statistical Report" released by the China Convention and Exhibition Economy Research Association, among the 24 overseas exhibition institutions in that year, the number of exhibitions CR10 was 81.01%, and the exhibition area CR10 was 83.60%. Leading enterprises have taken advantage of the rapid rise, integrated industry resources, and increased market share against the trend. According to the statistical report on China's exhibition data released by the China Convention and Exhibition Economic Research Association, the proportion of overseas exhibition area of Miao Exhibition has increased year by year since 2016, and has reached 42.50% in 2021, close to half of the total scale of overseas exhibitions organized by mainland exhibition institutions. With the continuous optimization of the epidemic prevention policy, the company is expected to enjoy the two-way improvement dividend of supply and demand, and further seize market resources and continue to increase market share by virtue of solid brand barriers, high-quality services and resources, and strong digital resources.
(2) Miao Exhibition: Significant advantages and ready to go
1. Time + brand compound interest, the scale of the exhibition and the unit price are expected to increase together
With the continuous expansion of the scale of the exhibition, the scale effect will be highlighted. Before the epidemic, the scale effect of the company's major exhibitions such as Dubai Exhibition, Poland Exhibition, and India Exhibition in 2017-2019 has begun to appear. According to the company's prospectus, in 2017, the company's new exhibition achieved a gross profit of 21.44 million yuan, the gross profit of the original exhibition increased by 11.31 million yuan, and the gross profit of the original exhibition increased by 9.41% compared with 2016, and the gross profit of the new exhibition in 2018 was 4.01 million yuan, and the "Iran Exhibition" was suspended, the gross profit of the original exhibition increased by 26.18 million yuan, and the gross profit of the original exhibition increased by 17.93% compared with 2017. According to the scale of single exhibition revenue, the revenue of more than 40 million yuan in 19H1 single exhibition accounted for 76%, with steady growth. Brand power supported the increase in the average price of the company's booths. According to the company's prospectus, the average price of the company's booth has grown steadily, reaching 3916 yuan / square meter in 19H1. Compared with other internationally renowned exhibitions, there is still a large gap between the average unit price of Miao Exhibition booth sales and it, and the average price of booths is expected to continue to increase with the further enhancement of brand power.
2. From a comprehensive exhibition to a vertical exhibition, the scale + brand effect has grown geometrically
Intensive cultivation and theme refinement are the main themes of the development of overseas leading companies. Professional exhibitions are more targeted, the quality of the audience is higher, the exhibition effect is better, the market function is stronger, the European and American exhibition countries have begun to subdivide the industry after the "re-division", the exhibition content is very professional, such as the Milan International Furniture Fair, Cologne International Furniture Fair. The company is transforming from a comprehensive exhibition to a vertical exhibition, and the scale + brand effect is expected to grow geometrically in the future. Miao Exhibition's overseas self-organized exhibitions are subdivided into two series of theme exhibitions, Homelife series exhibitions are mainly for Chinese brand home furnishing industry enterprises, and Machinex series exhibitions are mainly aimed at industrial machinery industry enterprises. At present, the company has planned to subdivide the track of professional exhibitions, such as textiles and garments, household appliances, building materials and hardware, automobile and motorcycle parts, etc., special exhibitions are easier to scale, the brand effect is stronger, and it takes time to accumulate. Actively seek cooperation and join hands with Hannover to increase the layout of professional exhibitions. According to the official account of Miolante, in May 2023, Miao Exhibition signed a cooperation agreement with Hannover Milano Messere. Hannover Milan is a joint venture exhibition company formed by Hannover Messe in Germany and Milan Messe in Italy, and has a number of trade fairs in different industries across the country, and its Hannover Messe brings a strong brand effect to it. Through the cooperation with Hannover Milan Exhibition, Miao Exhibition is expected to fully cooperate with Hannover's strong industrial exhibition resources, promote its Machinex industrial equipment and parts exhibition, and deepen the company's layout in the field of professional exhibitions.
3. From overseas to domestic, M&A + cooperative exhibition form to enter the domestic exhibition industry
The company follows the pace of overseas leaders to open the road of resource integration and market seizure. The company continues to promote the investment and merger business of the exhibition: (1) According to the company's acquisition announcement on March 10, 2022, the company acquired 60% of the equity of China Textile Advertising in March 2022 and entered the Japanese textile and clothing special exhibition track. According to the company's 2022 semi-annual report, the main business of China Textile is to organize textile and garment exhibitions abroad, and the core project is the largest textile and garment OEM exhibition in Japan - AFF Exhibition, with a repurchase rate of more than 60%, and buyers covering almost all mainstream enterprises in the industry. In the past 22 years, China Textile has successfully held 2 double-line and double-exhibition exhibitions in Japan under the empowerment of the company. (2) According to the company's foreign investment announcement on August 11, 2021, the company acquired 51% of the equity of Shenzhen Quam Exhibition Group in August 2021 and entered the domestic education expo and exhibition field. According to the official website of Miolante, Quam Exhibition has a well-known professional national series of exhibitions CEET Creative Education Exhibition, which serves more than 200,000 professional visitors every year, with an annual exhibition area of more than 100,000 square meters.
4. The post-epidemic recovery performance is strong, and the performance is expected to grow rapidly in 2023
2023 is the "first year of outbound exhibitions", and the 24-year exhibition plan shows the company's confidence. According to the company's WeChat official account, in 2023, Miolante will host 17 outbound exhibition projects in Indonesia, Poland, the United Arab Emirates, Vietnam, Mexico, Turkey, South Africa and other countries, with more than 10,000 domestic exhibitors and a total area of nearly 300,000 square meters. According to the company's 23-year semi-annual report and the statistics released by the WeChat public account, a total of 11 exhibitions such as Indonesia, Poland and Germany held by Miao Exhibition from January to December 2023 have a total of 10,944 booths (the rest of the booth sales are not disclosed). According to the company's WeChat public account, in 2024, the company's exhibition brand INTEX International Textile Exhibition plans to hold 8 exhibitions overseas, AFF International Textile Exhibition plans to hold 7 exhibitions overseas, and in 2024, only the company's textile exhibition planning number has reached 15, close to the number of exhibitions held in 23 years, in addition, the company's official website has announced 2 Indonesia exhibitions in March and June 24, as well as Vietnam exhibition in March 24, fully demonstrating the company's confidence in 2024.
The contract liabilities have increased highly, and the sales trend of booth orders is improving. The exhibition industry usually schedules the exhibition one year before the exhibition starts, and makes booth sales reservations two to three quarters in advance, so the contract liabilities of the exhibition industry company can predict the company's sales throughout the year to a certain extent. According to Wind, in Q3 2023, the company's contract liabilities in hand will reach 270 million yuan, a year-on-year increase of 78.7%, and the post-epidemic recovery trend is obvious, and the sales situation is expected to continue to improve in 2024. According to the company's 23-year semi-annual report, the gross profit margin of the company's self-organized exhibitions has recovered to 50.69%.
(This article is for informational purposes only and does not represent any investment advice from us.) To use the information, please refer to the original report. ）
Selected report source: [Future Think Tank]. Future Think Tank - Official Website