Exclusive offer from GMTEight | A-shares concept stocks on Xiao Hong Shu are soaring, could Hong Kong stocks be next?

A large number of "TikTok refugees" are flooding into Xiaohongshu (Little Red Book), and A-share Xiaohongshu concept stocks are all soaring. Among them, small-cap stocks such as Hangzhou Onechance Tech Corp. and Foshan Yowant Technology have continuously hit the daily limit, while Hong Kong concept stocks have shown a more subdued performance due to a lack of trading volume. It is understood that this "Little Red Book event" is influenced by the TikTok ban. The TikTok ban was imposed by the US government earlier on national security grounds, requiring ByteDance, the parent company of TikTok, to divest TikTok by January 19th, otherwise facing a ban. This has led to a wave of prosperity for Xiaohongshu, topping the download list on the Apple App Store, with a large amount of English content appearing on the Xiaohongshu platform. Xiaohongshu concept stocks have been directly ignited, however, the areas involved in these concept stocks are diverse, covering e-commerce service providers, MCN agencies, marketing agents, and brand partners. This overflow of traffic from Douyin (Chinese version of TikTok) is benefiting the most from participants in traffic operations, particularly in the field of data marketing, which has become the battleground for speculative funds chasing limit-up trades. Why has Xiaohongshu become so popular this time, and whether its concept stocks have sustainability? Xiaohongshu is the largest lifestyle sharing community in China, and also an e-commerce platform based on UGC (user-generated content) social networking. Its main business model is a self-operated e-commerce model + UGC innovative marketing model, with many platforms similar to Xiaohongshu in terms of business model, such as Douyin and Kuaishou. As the TikTok ban approaches, some American TikTok users are looking for a Chinese app similar to TikTok. Xiaohongshu has a unique advantage in this regard. Xiaohongshu has been expanding into overseas markets in recent years, firmly establishing its leading position in the Hong Kong market, as well as establishing a solid foothold in Southeast Asia and the US markets. Moreover, Xiaohongshu supports registration with global phone numbers. Compared to domestic platforms like Douyin and Kuaishou, it provides excellent conditions for TikTok refugees to settle in. Data shows that Xiaohongshu has 312 million monthly active users in 2023, while TikTok has 170 million users in the US. If the TikTok ban takes effect, the influx of "traffic" from TikTok into Xiaohongshu could create another "TikTok." However, this may not be achievable. Compared to Douyin and Kuaishou, Xiaohongshu's industry focus may reduce its appeal to some American users. According to QG data, Xiaohongshu has seven popular industries, including beauty and personal care, clothing and accessories, food and beverages, maternal and child care, home decoration, sports and outdoor, as well as pets. Among these, beauty and personal care and clothing and accessories are core industries, therefore the platform's user base is predominantly female and young, with post-90s and post-95s being the most active user groups on the platform. Taking beauty and personal care as an example, QG data shows that the estimated monthly interaction volume exceeds 100 million, with a growth of over 47% in commercial notes, and the estimated monthly interaction volume exceeding 65 million, with cosmetics accounting for 61.03% of the category notes, and interaction volume and notes numbers dominate the platform. TikTok refugees have different definitions, according to the videos recommended by Xiaohongshu, the strong "Douyin" atmosphere is more about sharing life, which may not fit well with a "focused platform," and this traffic heat may not be able to last long, resulting in the loss of new overseas users. In the short to medium term, the visible traffic will continue to feedback into the secondary market, and Xiaohongshu concept stocks will also see short-term investment opportunities, mainly in the A-share market, with no signs of speculation in the Hong Kong stock market. Stocks with large fluctuations are rare, with limited participation of funds. ADTIGER CORP (01163) saw an increase of 14% on January 15th, but the trading volume was only 0.7 million Hong Kong dollars. Data marketing is the leading sector in A-share concept stocks, mainly empowering brand owners and platforms in marketing work. As for Hong Kong stocks, there are no stocks that have cooperated with Xiaohongshu based on publicly available information. But related industry stocks mainly include MOBVISTA (01860), DUIBA (01753), and ADTIGER CORP. MOBVISTA focuses on digital marketing in the gaming industry, but is actively expanding into verticals such as e-commerce and social media. Its Mintegral platform generates 30% of its revenue from non-gaming categories. Mintegral has successfully integrated overseas stores of brands like Xiaomi, OPPO, and vivo. The company's revenue comes from advertising technology and marketing technology businesses, with strong performance in recent years, maintaining double-digit revenue growth for the past three years, with a revenue growth rate of 36.01% in the first three quarters of 2024. DUIBA is a leading user operation software as a service (SaaS) provider in China and an internet advertising platform operator. Launched in 2015, it aggregates internet advertising businesses from different APP scenes, conducts systematic operation of campaign content, and achieves large-scale traffic monetization through advertising. As of June 2024, the company has 531 paid customers, including 170 in the finance industry. The company's revenue comes from internet advertising and user operation SaaS platform business, and its performance in recent years has been poor, with revenue declines exceeding 30% in 2023 and the first half of 2024. ADTIGER CORP is the closest to Xiaohongshu's concept, as the company provides digital marketing solutions to enterprises based on big data and algorithms, meeting the promotion needs of various scenarios such as e-commerce, games, apps, and general entertainment. The company started its digital marketing business in 2020 and has become an agent for media such as Douyin, Kuaishou, and Phoenix. Its traffic ecosystem now covers a wide range of platforms, domestically and internationally. The company's marketing business is divided into live marketing and internet celebrity marketing, with poor performance in revenue, with revenue declines in 2023 and the first half of 2024, and is also in a loss-making state. In addition to the data marketing sector, brand owners who have cooperated with Xiaohongshu are also a focus of the market. As mentioned earlier, in the popular industries of Xiaohongshu, beauty and personal care as well as clothing and accessories dominate. Looking at Hong Kong stocks, for example, concept stocks like ANTA (02020) collaborated strategically with Xiaohongshu in 2022 to launch a new era of women's sports, tapping into female needs; LI NING (02331) in June 2024 focused on "Women's Needs" through cooperation with Xiaohongshu. To be continued...Title: "Famous Athletes" Join Hands with Xiaohongshu to Start a Lively "Everyone's Sports Meet" at the Oriental Pearl Group City Plaza in Shanghai.Of course, there are also some brand cooperation clients, such as Xpeng Motors, which recruited influencers on Xiaohongshu and Douyin at the beginning of 2024, with a budget of 350-400 yuan per person for Xiaohongshu with 1-10 million followers, 350 yuan per person for Douyin with 10-50 million followers, and 850 yuan per person for Douyin with 50 million followers. BAIC BluePark New Energy Technology, a company listed on the A-share market, responded to investors, stating that its brands are continuously expanding their presence on online social media platforms. They have created a comprehensive online marketing matrix on popular channels such as Douyin, Xiaohongshu, WeChat, Weibo, and Bilibili, with Xiaohongshu being an important battlefield for their new media marketing strategy. Overall, Xiaohongshu's sudden popularity has brought a large influx of traffic in the short term, which has had a positive impact on platform users, including brands and data marketing companies. However, the sustainability of this trend is in doubt, as the platform's focus may lead to the loss of "unpopular" new users, and there may be difficulties in monetizing overseas users, or it may only result in a traffic effect. For the Xiaohongshu platform and users, this is a fluctuating traffic flow, but for the A-share market, it is just a speculative teaser. Hong Kong investors are relatively rational, but the TikTok ban still affects the flow of TikTok refugees in the short term, and the Xiaohongshu concept may see repeated fluctuations. The A-share data marketing sector is strong, with multiple stocks experiencing two consecutive limit-up days, indicating a further upward trend based on the sealing volume. Industry-related stocks in the Hong Kong market are expected to attract funds, especially those with excellent performance, such as MOBVISTA. At the same time, brand cooperation targets, including Anta and LI NING, will also receive attention from investors.