Crazy Sports (0082. HK) is Expected to See Growth Acceleration & Mean Reversion Upon New Economic Potential from Sports Consumption

EQS Newswire / 14/10/2024 / 10:24 UTC+8

On October 8th, the State Council Information Office of the People’s Republic of China held a press conference to brief on systematically implementing a package of incremental policies to solidly promote economic growth, structural optimization and sustained momentum of development.

 

Zheng Shanjie, chairman of the National Development and Reform Commission (NDRC), stated at the meeting that in response to the new situations and problems in the current economic operation, the Party Central Committee and the State Council have made scientific decisions and taken decisive actions. While effectively implementing existing policies, they have also launched a package of incremental policies around five aspects, including increasing counter-cyclical adjustment of macro policies and expanding domestic effective demand, to promote sustained economic recovery and improvement.

 

In my opinion, the sports industry, as an important lever to stimulate domestic demand and promote cultural and tourism development, has ushered in a broader development space under the promotion of a package of incremental policies. Focusing on the digital sports and entertainment market, it is also not difficult to foresee that the leading digital sports entertainment enterprise, Crazy Sports Group Limited (0082. HK), may still benefit significantly from it. At this point, there are also more reasons to be optimistic about the accelerated growth in the medium and long term, and the mean reversion for value based on improved market environment.

 

“Sports+” Continues to Spark Economic Dynamics and Is Expected to Further Receive Policy Support

 

Zheng Shanjie emphasized in his speech that the incremental policies of enhancing domestic demand should focus more on improving livelihoods and boosting consumption. So, how can we promote consumption?

 

Referring to the market performance during the just concluded National Day holiday, it can be found that sports consumption is becoming a new potential for activating the economy.

 

On the evening of October 6th, the 2024 China Open and the World Table Tennis (WTT) China Smash came to an end in Beijing. The two international tournaments combined with the National Day golden week have generated considerable economic energy. Data shows that the total box office of China Open this year has reached a historic high of 80 million yuan; The box office of the WTT China Smash reached nearly 60 million yuan, driving a comprehensive consumption of over 50 million yuan. As of October 5th, about 140,000 out of town fans and over 13,000 out of town spectators have entered the stadium to watch the game.

 

The consecutive start of the two major events has had a significant spillover effect on the cultural and tourism consumption of their host city, Beijing. According to data from China Railway Beijing Group, the expected inbound and outbound passengers totaled 26.853 million, an increase of 73000 or 2.8% year-on-year during the National Day golden week. According to Trip.com data, travel orders in Beijing increased by 7% year-on-year, and ticket orders increased by 11% year-on-year during the golden week.

 

It can be seen that the popularity and clout of heavyweight events can make the event economy become a new momentum for urban development, thereby stimulating economic vitality. Besides, the “silver economy” has become an important driver for future macroeconomic growth against the backdrop of China’s rapid population aging.

 

Sullivan’s White Paper on Industrial Development Trends in China over the Next 50 Years stated that by the end of 2023, the population of people aged 60 and above in China will reach nearly 300 million, and it is expected that this number will reach 400 million by 2035. Silver-haired families will gradually become the main consumer group in China in the future. Hu Zuquan, director and researcher of the Population Development Research Office of the Economic Forecasting Department of the State Information Center, previously stated that by 2035, China’s silver economy is estimated at around 30 trillion yuan in size, accounting for about 10% of the GDP during the same period.

 

Specifically, the silver economy holds quite extensive industry chain, including numerous sub-sectors such as healthcare, elderly care, tourism, and entertainment. Sports, as a crucial part of maintaining health and anti-aging for middle-aged and elderly people, are also an important component of the silver economy.

 

Dr. Zhang Lijun, chairman of the board of directors of Crazy Sports, once stated that people are eager to learn about the latest medical technology achievements and hope to receive guidance on healthy living. It is reported that during his tenure as a research scholar at Stanford University School of Medicine, Dr. Zhang was invited to participate in a Health Matters community event organized by Stanford University School of Medicine. During the event, a group of world-class medical professors and experts from Stanford University discussed many key topics related to health and elderly care. Dr. Zhang found that there is a high consensus both domestically and internationally in the areas of disease prevention, anti-aging, and graceful aging.

 

According to the report on development trends and potential opportunities of silver economy released by Shanghai Securities, it is expected that by 2050, China’s elderly education market will exceed 100 billion yuan in size. Elderly learning includes different types of interest-based learning such as health and well-being learning, physical exercise learning, etc.

 

Overall, it is increasingly prominent that sports can bring multiplier effects to economic development. Therefore, sports are expected to become an important part of the country’s expansion of domestic demand and gain more policy support.

 

Crazy Sports is Expected to Be Significant Beneficiary As Sports Industry Continues to Grow in Size

 

By following this logic, it can be inferred that the value of Crazy Sports is worth reassessing since the Group features the ability to host and operate sports events from related industry chain through empowering its business with artificial intelligence (AI) technology to foster new consumption scenarios of diversified integration of “sports+”.

 

Specifically, Crazy Sports continuously creates new business models that combine sports and new scenarios, gradually increasing its attractiveness to both To C and To B, and better accommodating the growth of the sports market.

 

In respect of event operations, Crazy Sports has capitalized on its unique “Digital + Sports” and “Sports + Entertainment” resources advantages to successfully host significant sports IP events, such as the WBC Professional Boxing Championship. It is learned that this event has not only created unprecedented popularity in the Chinese professional boxing industry, but also significantly driven the development of local tourism economy and carried forward the traditional culture such as Foshan Kung Fu.

 

As mentioned earlier, as the sports economy is becoming a new driver for urban development, Crazy Sports may have more chance to host more events by virtue of its constantly improving capabilities for event operations in this field, thereby further promoting the Group’s development.

 

From another perspective, in the face of the current digital economy era, companies are utilizing big data and AI technology to build a more complete AI ecosystem, which is expected to fully share the dividends of the digital sports market. For example, Ruyi, the first domestic large model AI assistant tailored in specific for “Sports + Lottery” sector in China, was launched during the UEFA Euro 2024. This AI assistant provided personalized services to users, successfully seizing the opportunity in the field of paid sports information, and significantly enhancing the spending willingness and consumption amount of private domain users.

 

It is worth noting that in China’s silver economy market, which is worth 30 trillion yuan, there is no absolute dominant giant born domestically. As a pioneer in exploring “Sports+”, Crazy Sports is expected to expand more business in areas such as “Sports + Health”, “Sports + Elderly Care”, “Sports + Entertainment”, and “Sports + Tourism” in the future, thereby enjoying more dividends of industrial growth.

 

The “Graceful Life” theory proposed by Dr. Zhang Lijun emphasized the importance of eating well, sleeping well, maintaining a sharp mind and staying energetic.  He also pointed out that anti-oxidation, anti-glycation and anti-inflammation are key strategies for anti-aging to achieve a high-quality life, and regular physical exercise is undoubtedly an essential approach to “Aging Gracefully”.

 

From this, it can be seen that Crazy Sports has demonstrated strong capabilities in both event operations and sports technology, laying a solid foundation for creating a new consumption scenario of “Sports+” diversified integration. This not only brings strong impetus to the Group’s development, but also highly aligns with the national development trend, and is expected to continue to benefit from policy promotion and the rapid development of the industry.

 

Conclusion

 

“Sports+” is leading the new wave of China’s consumer market with its unique charm and unlimited potential, constantly creating a new development situation of “sports as a platform, economy as a performer”. Enterprises like Crazy Sports, whose business models align with the overall trend of social and economic development, have also gained more attention from the market.

 

Data shows that as of the close of October 9th, the Group’s stock price has risen by over 30% for the month. Subsequently, based on its solid foundation and continuously expanding diversified growth points, the Group’s future performance in the capital market also deserves more attention from investors.

 

14/10/2024 Dissemination of a Financial Press Release, transmitted by EQS News.
The issuer is solely responsible for the content of this announcement.

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