Ready to grow after a major hiccup
? Joy Spreader’s 2021 results were negatively impacted by policy, which was the reason
for the lower-than-expected results
? The Company’s growth in 2022–2024 will be driven by expanding its interactive
entertainment customer base, overseas e-commerce, and margin recovery.
? Joy Spreader’s business can be divided into two main segments: interactive
entertainment and digital products marketing and e-commerce-related business. We
still expect Joy Spreader to deliver good growth despite the challenging market
environment.
? Gross profit margin improvement and improving cash flow are the two major medium-term re-rating catalysts.
? We reiterate our ADD rating and lower our target price of HK$3.10 (based on 23x 2022
P/E, lower than average of 26x since listing). The dow nw ard revision in the target price
is due to: a) lower net profit forecasts and b) a reduction in target P/E from 30x to 23x