Is Hong Kong's hottest new stock coming this year?
On May 24, the "AI interactive marketing stock" - Quzhi Group's secret trading was very popular, with the largest increase of 92%. As of the closing, the secret trading showed an offer of HK $33, up 32% from the bidding price of HK $25. For "lottery winners", 200 shares per hand will earn 1600 Hong Kong dollars per hand, excluding handling fees. On May 27, Quzhi Group will be listed on the main board of Hong Kong Stock Exchange.
Quzhi Group, founded in 2013, is an AIoT (Artificial Intelligence Internet of Things) marketing solution provider. Its model is to provide consumers with effective interactive machine marketing services by developing and operating vending machines and equipped with various modules to achieve technology driven interactive functions, including odor emission, motion recognition and voice interaction.
It is worth mentioning that although the vending machine is the carrier, Quzhi Group mainly sells advertisements instead of drinks, and its marketing revenue accounts for 80% of its revenue. Quzhi Group is the fourth largest FMCG outdoor marketing service provider in China in terms of revenue in 2023, with a market share of about 1.2%, while the largest market participant has a market share of 14.3%.
The biggest increase in dark market is 92%
On May 24, the dark market of Hong Kong stock Quzhi Group opened high and went up, with the largest increase of 92%. As of the closing, the dark market transaction showed an offer of HK $33, up 32% from the bidding price of HK $25. 200 shares per hand, excluding service charges, earns HK $1600 per hand.
On May 17, 2024, Quzhi Group launched its IPO process on the Hong Kong Stock Exchange, with Haitong International as the sole sponsor. Quzhi Group announced the global sale of 19.704 million shares, including 1.9704 million shares in Hong Kong and 17.7336 million shares internationally. The company had conducted nine rounds of financing before, and the valuation after the last round of financing was 4.16 billion yuan. The investors include Eagle Fund, Yuandu Venture Capital, Junlian Capital, Jianfa Emerging Investment, Hongzhang Investment, Yuanzhan Capital, etc.
According to public data, Quzhi Group is an AIoT (Artificial Intelligence Internet of Things) marketing solution provider, focusing on outdoor marketing of FMCG. Quzhi Group develops vending machines and equips them with various modules to realize technology driven interactive functions that are crucial to successful marketing activities, including odor emission, motion recognition and voice interaction, making interactive machine marketing services possible.
Quzhi Group is the fourth largest FMCG outdoor marketing service provider in China in terms of revenue in 2023, with a market share of about 1.2%, while the largest market participant has a market share of 14.3%.
As of December 31, 2023, Quzhi Group has operated 7543 vending machines in 22 cities in China. 98.4% of the vending machines are located in the first tier and new tier cities in China, basically all of which are located in commercial properties with high revisit rate, such as office buildings, long-term rental apartments and shopping malls, to reach the target consumer groups, especially the young consumers who are proficient in technology represented by "Generation Y/Z". Quzhi Group has provided marketing services for about 1400 SKUs of FMCG, most of which are new products.
Don't sell drinks, sell advertisements
It is worth mentioning that, compared with traditional vending machines, Quzhi Group's "Quna" (vending machine operation network platform) does not sell drinks but advertisements. Quzhi Group's revenue mainly comes from providing brand customers with marketing services characterized by machine distribution, accounting for about 80%.
It is reported that the core business of Qena is to provide brands with new grass planting and featured product promotion for Touchtouch consumers. Qena's offline vending machine process can have multiple feedbacks of "online offline online": for example, consumers participate in activities and do tasks on the App and get a QR code to receive prizes; Get the new products you are interested in by using the QR code to the offline terminal; Consumers can decide whether to pay and how much to pay, and then return online to share and comment.
According to the prospectus, the acquisition and experience of physical products is an important step in building consumer awareness. The vending machine plays an important role in effectively connecting the brand and target consumers by promoting efficient physical distribution of FMCG, and is difficult to be replaced by pure online marketing.
In terms of finance, the revenue of Quzhi Group will continue to grow from 2021 to 2023, which will be 500 million yuan, 550 million yuan and 1 billion yuan respectively; In the same period, the corresponding net profits were - 139 million, - 116 million and 137 million yuan respectively. In 2023, the Group will turn losses into profits, with a gross profit margin of 53.2% and a net profit margin of 13.6%. Marketing services contributed about 80% of the Group's revenue, and commodity sales accounted for about 14.3%. In terms of cash reserves, as of December 31, 2023, cash and its equivalents are close to 300 million yuan.
The compound annual growth rate of FMCG AIoT marketing market reached 16.3%
China's FMCG AIoT marketing market has experienced rapid growth in the past few years.
According to the prospectus, since 2018, China's FMCG market has maintained stable development. The market size has increased from 540.1 billion yuan in 2019 to 648.6 billion yuan in 2023, with a compound annual growth rate of 4.7%, and is expected to grow to 906.4 billion yuan by 2028. Among them, the growth rate of new products is faster than that of mature products.
Corresponding to the continuously growing FMCG market is the faster growing FMCG AIoT marketing, which will increase from 6.4 billion yuan in 2018 to 11.6 billion yuan in 2022, a compound annual growth of 16.3%, and is expected to increase to 43.2 billion yuan by 2027.
Quzhi Group believes that the rapid development of FMCG AIoT marketing is mainly due to its ability to directly address multiple traditional marketing pain points.
First of all, AIoT marketing can reduce the cost and time of new product release. For FMCG brands, on-site marketing activities are usually expensive and time-consuming.
For example, the FMCG brand needs to bear a series of expenses when holding activities in the supermarket, including the supermarket shelf expenses, distribution expenses and labor costs. In addition, according to insightful consulting materials, the cycle of FMCG brands from new product marketing planning to market launch usually takes at least two months. However, AIoT marketing, such as the Group's launch of brand customers' products through smart terminals, can significantly reduce the time required and the corresponding funds for activities.
Secondly, AIoT marketing can reduce the cost of online customer acquisition and carry out precision marketing. In the era of the rapid development of the Internet, almost every FMCG brand will use the Internet to carry out online publicity for itself, but like the "prisoner's dilemma", when everyone does so, the effect of online publicity will be greatly diluted, and the cost of brands and consumers to obtain information will double.
For example, in 2022, the cost for mainstream e-commerce platforms to acquire consumers will be 300 yuan per capita. AIoT marketing can improve the efficiency of brand customer acquisition and reduce the average customer acquisition cost by combining offline and online marketing.
Finally, AIoT marketing can obtain feedback from consumers. In traditional marketing channels, information transmission is usually one-way, that is, one-way transmission from media to consumers, while consumers' detailed needs are often unable to convey to the brand, especially the market test information of new products.
Therefore, some brands obtain consumer feedback and testing information through paper questionnaires, on-site interviews, etc., which consumes both money and precious time. AIoT marketing can obtain and analyze consumers' preference for corresponding products, purchase intention and other information through AI and digital methods, so as to help brands make more accurate and effective product improvement and marketing style.
Editor in charge: Tactical Constant
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