Interpretation of new stocks on the US stock market | Although the gross profit margin is as high as 90%, it is still questionable whether ZDYM.US can break free from intense competition.

2023 will be the first year in which the consumer industry stabilizes and recovers after the elimination of the epidemic's impact. However, based on the current situation, the market's recovery has not been the explosive rebound that everyone expected. There is a noticeable division among industries, while the hotel industry has experienced a comprehensive recovery. According to data from the Ministry of Culture and Tourism, the total number of domestic tourists in the first half of 2023 was 2.384 billion, a year-on-year increase of 63.9%, and domestic tourism revenue was 2.3 trillion yuan, a year-on-year increase of 95.9%. While tourism has significantly recovered, hotel search popularity in the domestic market in the first half of this year reached 300% of the same period in 2022, and overall hotel supply increased by 14%. The hotel industry is showing a clear trend of recovery. During the industry's recovery, ZDYM, a direct booking platform that is facilitating the digital transformation of the hotel industry, has started its journey to go public in the US. It was reported that on August 8th, ZDYM submitted a prospectus to the SEC, applying to be listed on the Nasdaq under the ticker symbol "ZDYM", with an expected initial offering price of $5 per share, but the number of shares to be issued has not been disclosed. According to the prospectus, ZDYM is a digital hotel chain brand management company that owns multiple hotel brands, including Yue Landa, Fanyue Oriental, Zhe Mansion, and Laibo, covering three types of economy, high-end, and specialty. At the same time, ZDYM can provide hotels with a one-stop e-commerce marketing management solution through its direct booking cloud platform SaaS system, which includes a comprehensive brand standardization system, intelligent hotel decoration solution, online marketing service system, high-quality member ecosystem, hotel supply chain, comprehensive operational guidance, and multi-channel promotion. ZDYM's SaaS services can create new non-room revenue channels for hotels, help partners quickly implement smart hotel products, reduce operating costs, and improve operational efficiency through technological empowerment, thus promoting the development of hotel brands. However, from a financial perspective, ZDYM's disclosure is relatively brief, only revealing its performance data for 2022. In the reporting period, ZDYM's revenue was $8.47 million, gross profit was $7.7069 million, and net profit was $2.43 million, corresponding to gross profit margin and net profit margin of 90.99% and 28.69%, respectively. Although only one year of performance cannot indicate the trend of ZDYM's business operations, and the prospectus did not disclose specific revenue data for its SaaS services, the high profitability of ZDYM's operation of branded hotels under a light-asset model can be seen from its gross profit margin and net profit margin. At the same time, the company's asset structure is relatively healthy. According to the prospectus, as of December 31, 2022, ZDYM's total assets were $4.2793 million, total liabilities were $1.8131 million, and the asset-liability ratio was 42.3%. In terms of industry trends, ZDYM will benefit from the hotel industry's recovery in the short term. Both the publicly available tourism data and relevant indicators of the hotel industry indicate that the hotel industry has achieved a comprehensive recovery this year, and ZDYM will benefit from this. In the long term, ZDYM will benefit from the increase in the penetration rate of chain hotels. Data shows that from 2016 to 2021, the total number of rooms provided by China's chain hotels has continued to grow at a compound annual growth rate of 14.5%. However, as of 2021, the chain penetration rate of the hotel market in China was still at 34.4%, far below the average chain hotel penetration rate of 42.7% in the global market, and there is still significant room for improvement compared to the mature US market with a penetration rate of 73%. The increase in the penetration rate of chain brand hotels will undoubtedly increase the demand for branded hotel operations and services, which is conducive to the long-term development of ZDYM. However, ZDYM's business operations also face challenges from the industry itself. It is well known that due to the relatively low barriers to entry in the hotel industry, there are currently many hotel brands in China, resulting in intense competition and low brand concentration, especially in the middle and high-end segments. At the same time, the upgrading of consumer consumption and the shift in consumer preferences also pose higher requirements for hotel operations. With the continuous upgrading of consumption, consumers require hotels to provide creative, elegant, and approachable services that meet their expectations in a personalized manner. This trend will prompt more customers to choose leading hotel brands, as top brands can provide various eye-catching products and services in scene-based shopping, entertainment, culture, food, and other lifestyle areas. Whether the branded hotels operated by ZDYM can demonstrate stronger competitiveness in the market remains to be further observed as the company's current scale is relatively small. To seize industry opportunities and face competition challenges from the market, ZDYM stated that it will further expand its hotel network in China, strengthen its hotel brand portfolio, and intensify its retail products while continuously focusing on its B2B business. It will strengthen its IT infrastructure and technology, including digital operation systems and data analysis, to further enhance customer experience and operational efficiency. The remaining funds will be used for general expenses and working capital. Although the IPO is a new beginning for ZDYM, given the industry opportunities and potential challenges, the future road for ZDYM will still be challenging, and its ability to break through the fierce competition in the market remains uncertain.