Activation Group (9919.HK): 1H23 Revenue Increased by 102.7% YoY to Approx. RMB350.3 million, Net Profit Hit Record High

2023 Interim Results Highlight (For the six months ended 30 June 2023)

• Revenue increased by 102.7% year-over year ("YoY") to RMB350.3 million;
• Net profit hit record high of approximately RMB41.0 million, increased by approximately RMB49.5 million YoY; profit attributable to owners of the parent was approximately RMB38.1 million;
• Gross profit increased by 99.4% YoY to approximately RMB105.1 million; Gross profit margin was 30.0%;
• Earnings per share was RMB 5.11 cent;
• The Group continued to maintain a healthy financial position, with cash and cash equivalent of RMB313.2 million as of 30 June 2023.

HONG KONG, Aug. 17, 2023 /PRNewswire/ -- Activation Group Holdings Limited ("Activation Group" or the "Company", together with its subsidiaries, the "Group") (stock code: 9919.HK), a leading marketing group for pan-fashion brands in Greater China, is pleased to announce its interim results for the six months ended 30 June 2023 ("2023 Interim" or "Period"). According to the research report by China Insights Industry Consultancy, the Group is the largest experiential marketing service provider for mid to high-end fashion brands in Greater China, with a market share of 10.0% in 2022. The Group has served over 550 world-renowned branded clients, including renowned mid to high-end fashion brands, mid to high-end automobile brands, and Chinese local premium brands.

Benefited from its leading market position and professional execution team, the Group was able to seize the opportunities from market recovery during the Period, as a result, lead to a significant improvement in 2023 Interim results performance.

During the Period, the Group achieved both revenue and net profit growth. The Group recorded a revenue of approximately RMB350.3 million, representing an increase of 102.7% YoY; gross profit increased by 99.4% YoY to approximately RMB105.1 million, with gross profit margin remained stable at 30.0%; net profit increased by RMB49.5 million to approximately RMB41.0 million, reached a record high. The Board declares the payment of an interim dividend of HK2.0 cents per ordinary share for 2023, representing a dividend payout ratio of 35%.

Business Review 

Seamless integration of online + offline marketing services to enhance brand influence for clients

As the market leader in experiential marketing services for luxury brands, the Group was able to maintain its leading position in the market, with a 10.0% market share in 2022. The Group is committed to servicing its clients with comprehensive offerings, including creative design, event planning, event management and execution, helping them to enhance brand awareness and strengthen consumer engagement.

The Group consistently insists on providing high-quality and innovative marketing services, possessing profound expertise in the marketing of mid to high-end brands. The group integrates physical events with data interaction services, effectively expanding its reach and enhancing marketing results through innovative content and large-scale online promotions. Past marketing campaigns have demonstrated successful implementation of an 'offline + online' marketing model. These activities have successfully attracted millions to billions of online exposures. It proves the Group's success in combining experiential marketing and digital marketing strategies to further help clients to increase their brand awareness.

During the Period, the Group completed various events for its existing and new clients, including CARTIER "Cartier and Women" special exhibition, DIOR "Autumn 2023 Collection Preview", GUCCI "Gucci Cosmos" exhibition, LORO PIANA "Summer Resort 2023 Collection" pop-up store, LOUIS VUITTON "Women's Pre-Fall 2023 Show". The Group also provided regular digital marketing services and online product launch services to various brands, including BOBBI BROWN, FILA, KENZO, LA PRAIRIE, MAX&CO, NEW BALANCE etc., assisting them to enhance social media promotion and increase exposure, and helps clients to drive their sales.

Cultural IP "Shanghai Design Week" Organizes domestic and overseas design exhibitions; Sports IPs  expects to make a breakthrough in 2024

During the Period, the Group's IP development business continued to make progress, including "18th International Architecture Exhibition La Biennale di Venezia Pavilion of the P.R. China", "AIGC Builders and Creators Conference", "2023 Made in Shanghai Expo" and "Shanghai Design Week –Design Express à Shanghai". Regarding its sports IP, the Group is currently in discussions with five major tourism cities in China for hosting the Le Tour de France races. Given the strong appeal sports of events the Group believes that hosting these events will further enhance its brand recognition and market influence.

In addition, the "West Bund Orbit" exhibition hall, a joint venture of the Group and Hongkong Land situated in the West Bund Financial Hub in Xuhui District, Shanghai, is also progressing well, and expected to officially open to the public by October 2023.

Research Report Coverage

Upon interim results release, Guosheng Securities, Quam Securities, and Founder Securities have all issued updated research reports, highlighting the Group's leading market position in experiential marketing services, comprehensive and integrated channel resources, strong financial position and results that supports consistent dividend, good project pipeline, and high potentials in its IP Development business. In particular, Guosheng Securities and Quam Securities continue to rate the Group at "Buy", with a target price of HK$2.40 and HK$2.18 respectively, representing an 80.5% and 63.9% upside when comparing to the closing price of HK$1.33 on 10 Aug 2023.

Outlook

Looking ahead, the Group remains confident in its future prospect. The Group noticed that there is an increasing demand in one-stop integrated marketing solutions, representing notable market opportunities yet to be captured. The Group will strive to acquire more international renowned brands as well as domestic brands, further accelerating its organic growth while solidifying its market leading position.

Mr. Lau Kam Yiu, Joint-Chairman and Chief Executive Officer of Activation Group, said, "Providing high quality and innovative marketing services are the core values and mission of the Group. Apart from offering experiential marketing services to brands, we also provide digital and communication services, as well as IP development services, to cater to the diversified needs of our clients and their consumers. As a publicly listed company, we look forward to attracting more high-quality global brand enterprises as our clients. Besides organic growth, we will also closely monitor market development, seeking more long-term partners through acquisitions or strategic collaborations. Our goal is to drive growth through both internal and external expansion, continually creating greater value for our shareholders in the future."

SOURCE Activation Group Holdings Limited