20180529-广发证券_香港_-Internet_Sector__New_benefits_from_WeChat_user_growth__penetration,_social_sharing,_and_mini-programs_6页_843kb

WeChat Sector Analysis Summary

Core Content

This document provides an analysis of the benefits derived from WeChat user growth and its implications for the internet sector, particularly focusing on monetization models, customer acquisition strategies, and future outlooks. It highlights the evolving role of WeChat in the digital ecosystem and its potential impact on various stakeholders.

Main Points

1. WeChat User Growth Benefits

• Penetration of Lower-Tier Cities: WeChat continues to expand into rural and lower-tier cities, converting middle-aged populations into mobile internet users.
• Diversified Toolkit: The platform has become more versatile, with mini-programs playing a key role in enriching WeChat's infrastructure (e.g., payment, e-commerce).
• Long-Tail Content Creators: These creators are now seeking better user traffic management and monetization opportunities within the WeChat ecosystem.

2. Cheaper Customer Acquisition Cost and Monetization

• Social Sharing Advantage: The social sharing feature significantly reduces customer acquisition costs and opens new monetization avenues.
• Key Customer Acquisition Models:
  • Group-buying model (e.g., Pinduoduo)
  • Social sharing model (e.g., Boheyuedu)
  • Cash reward model (e.g., Qutoutiao)
  • Business-side integration model:
    • E-commerce SaaS providers (e.g., Youzan, Weimeng)
    • Official account integration (advertising for novels, comics, and Q&A services)

3. Outlook: Mini Games as the Next Big Thing

• Replication of Original App Success: The success of original paid apps, especially games, is expected to be mirrored by mini games.
• Monetization Diversification: E-commerce and Q&A services are anticipated to see increased per customer transaction volumes.
• CPS Model Expansion: The variety of SKUs (stock keeping units) under the CPS model is expected to grow.

4. Investment Highlights

• Potential Beneficiaries:
  • Anysoft Information Technology (300571 CH): Benefiting from monetization of long-tail official accounts.
  • Huge Leaf (600226 CH): Due to its planned acquisition of WeChat official account operator Liangziyun.
  • China Innovationpay Group (8083 HK): Anticipated to acquire a 51% stake in Youzan.

5. Risks

• Strict Social Sharing Restrictions: WeChat may impose tighter controls on sharing activities.
• Content and Product Quality: There is a risk that content or products may not meet expectations.
• User Growth and Monetization: WeChat's user growth and monetization could be weaker than anticipated.

Key Information

• Rating Definitions:

  • Positive: Sector expected to outperform benchmark by more than 10%.
  • Neutral: Sector relative performance ranges between -10% and 10%.
  • Cautious: Sector expected to underperform benchmark by more than 10%.

• Company Ratings:

  • Buy: Expected to outperform benchmark by more than 15%.
  • Accumulate: Expected to outperform benchmark by more than 5% but not more than 15%.
  • Hold: Expected relative performance between -5% and 5%.
  • Underperform: Expected to underperform benchmark by more than 5%.

• Analyst Certification: The views expressed accurately reflect the analysts' personal opinions, and no remuneration is linked to specific recommendations.

• Disclosure of Interests:

  • GF Securities (Hong Kong) does not hold shares in the mentioned securities.
  • No investment banking relationships with the companies in the past 12 months.
  • Analysts and their associates do not serve as officers of the companies mentioned.

• Disclaimer:

  • The report is for informational purposes only.
  • It does not constitute an offer to buy or sell securities.
  • No liability is accepted for losses arising from the use of the materials.
  • Investment involves risks and past performance does not guarantee future results.

Figures Summary

• Figure 1: WeChat MAU (Monthly Active Users)
• Figure 2: Monthly total time spent and per capita daily time spent on mobile internet
• Figure 3: Breakdown of time spent on major apps
• Figure 4: WeChat accounts account for ~25% of total mobile internet time
• Figure 5: Internet penetration into lower-tier cities and older age groups in Dec 2017
• Figure 6: Major monetization models for WeChat official accounts
• Figure 7: Sector breakdown of top 200 mini-programs in Dec 2017
• Figure 8: Mini games dominate mini-programs in 2M18
• Figure 9: Mini games represent 38% of top 50 mini-programs

Copyright

This document is copyrighted by GF Securities (Hong Kong) Brokerage Limited. Unauthorized copying or redistribution is prohibited.