New Stock Preview | 40% of revenue comes from new businesses, is online marketing for Quan Shou Bo a sustainable model or just a passing trend?

In recent years, the live streaming industry on the internet has experienced rapid growth and has become the fifth largest online entertainment industry after online games, online literature, online music, and online film and television. As a form of real-time audiovisual communication based on internet platforms, live streaming delivers content to a large number of users through instant interaction. With the continuous expansion of user base, the live streaming content ecosystem is becoming increasingly diverse. In addition to traditional entertainment, gaming, and sports events, emerging content areas such as knowledge sharing, educational training, and lifestyle aesthetics are rapidly rising, becoming important growth points for the industry. At the same time, driven by the rapid development of the digital economy and the wave of consumer upgrading, live streaming has deeply integrated into the e-commerce field, evolving into a new type of marketing channel. Live streaming marketing significantly shortens the path of interaction between products and consumers through scene-based display and instant interaction, significantly improving marketing conversion efficiency. Against this background, the list of companies related to the industry is also expanding. Recently, the live streaming industry SaaS solution provider Hands Up Group Co., Ltd. ("Hands Up") submitted an application for listing on the main board of the Hong Kong Stock Exchange, with Ping An Securities (Hong Kong) as its exclusive sponsor. Online marketing solutions become new growth points According to the prospectus, Hands Up is a comprehensive solution provider located in Guangzhou, China, focusing on providing integrated SaaS solutions to clients in the entertainment and social networking live streaming, precision marketing, and new retail industries. The company's SaaS solutions began in 2020, characterized by industry-specific customization, comprehensive end-to-end coverage, and collaborative ecosystem resource utilization. According to the consultation report, the company ranks tenth in the enterprise live streaming SaaS solution market in China, with a market share of 1.0% by revenue in 2024. To further advance the SaaS solution business, the company launched online marketing solutions in 2024. With the expanding business, the company's revenue has also seen growth. In 2022, 2023, and 2024, Hands Up achieved revenues of approximately RMB 45.098 million, 50.666 million, and 98.951 million respectively, with profits of 32.49 million, 26.45 million, and 38.14 million respectively. The company's SaaS solutions are all customized and strategically serve three key business segments: entertainment and social networking live streaming, precision marketing, and new retail. During the reporting period, revenue generated by this business segment was RMB 45.10 million, 50.666 million, and 63.067 million respectively, with a compound annual growth rate of 18.3%. Historically, entertainment and social networking live streaming has been the main source of the company's revenue. Revenue from the entertainment and social networking live streaming business during the reporting period was RMB 44.792 million, 49.527 million, and 43.723 million respectively. In 2022 and 2023, this business segment accounted for 99.3% and 97.8% of the total revenue respectively. In 2024, with the introduction of online marketing solutions, the contribution of this business segment decreased to only 44.2%, but it still remained the company's primary source of income. On the other hand, precision marketing and new retail business have gradually gained momentum in the past two years. In the reporting period, precision marketing generated revenues of 0.306 million, 0.254 million, and 0.986 million respectively, with revenue contributions increasing to 10% in 2024. New retail business achieved revenues of 0.885 million and 9.48 million in 2023 and 2024 respectively, with revenue contributions reaching 9.6% in 2024. Online marketing solutions serve as accelerators for new business growth. According to the prospectus, Hands Up mainly provides online marketing solutions to advertising partners and direct advertisers such as live streaming and new retail operators. Since the introduction of this business in June 2024, this business has brought in revenue of 35.9 million in just half a year, accounting for 36.5% of the total revenue during that period. It is worth mentioning that the company mainly cooperated with customer H during that period, with customer H accounting for 80% of the revenue from this business. Promising future but with risks It is worth noting that the company has always faced risks related to the dependency on upstream and downstream sources. On the client side, the company has a high concentration of the top five clients. In the fiscal years 2022, 2023, and 2024, the revenue generated by the top five clients accounted for 100%, approximately 90.6%, and 67.7% of the total revenue respectively, with revenue from the largest client accounting for approximately 69.3%, 30.7%, and 30.5% of the total revenue during the same period. It can be seen that the client concentration has been declining in recent years. According to reports, the decline in client concentration is mainly due to the expansion of the client base, with the company generating revenue from 6, 11, and 42 clients during the reporting period respectively. On the supplier side, the company's SaaS solution business suppliers mainly include technology service providers (such as cloud computing and network security services and SDK providers), information technology infrastructure leasing service providers (such as leasing computers and related physical equipment), and agent service subcontractors, while the suppliers of online marketing solutions business are advertisement agencies specializing in traffic acquisition. During the reporting period, purchases from the top five suppliers accounted for approximately 88.5%, 98.2%, and 87.8% of the total purchases respectively, while purchases from the largest supplier accounted for approximately 34.3%, 58.5%, and 66.0% of the total purchases during the period. The company acknowledges its reliance on third-party platforms and services to conduct business, and interruptions or delays caused by malfunctions of these platforms or services, whether due to third parties or the company itself, could potentially harm the user experience of customers. While deeply tied to upstream and downstream sources, the company also faces risks of the industry's growth slowing down. The market for enterprise live streaming services in China grew from 21.46 billion yuan in 2019 to 60.87 billion yuan in 2024, with a compound annual growth rate of 23.2%. This growth is mainly attributed to enterprises utilizing outsourcing live streaming services to meet the increasingly diverse demands of different scale enterprises, policy support from the supply and demand sides, and the expanding demand for high-value highly customized solutions by enterprises. It is expected that this figure will further expand to 114.77 billion yuan by 2029, with a compound annualThe growth rate is 13.5%.In the enterprise live streaming service market, SaaS solutions are the mainstream service form, accounting for the majority of the overall enterprise live streaming service market size. Benefiting from technological advancements, improved customization capabilities, robust security and compliance in line with increasingly stringent regulations, as well as optimized interactive features that can increase user engagement and conversion rates, the market size of Chinese enterprise live streaming SaaS solutions is expected to reach 48.1 billion yuan by 2024, with a compound annual growth rate of 21% from 2019 to 2024, accounting for 79.0% of the overall enterprise live streaming service market. It is projected to reach 85.1 billion yuan by 2029, with a compound annual growth rate of 12.1% from 2024 to 2029, showing a slight slowdown compared to previous years. Against this backdrop, industry competition is also fierce. In terms of revenue, the market share of the top ten enterprise live streaming SaaS solution providers in China in 2024 was 31.8%. "Shoushou Live" ranked tenth in the market with a market share of only 1.0%. Overall, when the main business encounters growth bottlenecks, "Shoushou Live" achieved rapid growth in performance through the development of online marketing solutions as a new business. In the future, as the industry growth rate slows down and market competition intensifies, how can "Shoushou Live", which continues to rely on both upstream and downstream, stand out from the fragmented competitive landscape? At the same time, can the new business that is heavily reliant on a single customer bring sustained performance growth to the company? These are all issues that require further market attention.