Equity Analysis /
Hong Kong

HK : Joy Spreader Interactive Technology - Ready to grow after a major hiccup

    Mark Po
    Mark Po

    Research Analyst

    CGS-CIMB
    26 March 2022
    Published by

    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 rerating 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 downward 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.