Leo Group Co., Ltd. (002131.SZ) Investment Value Analysis Report on GEO Business

Based on the in-depth analysis above, I will provide you with a comprehensive investment research report on Leo Group Co., Ltd.'s GEO business.

Leo Group Co., Ltd. (Stock Code: 002131.SZ) was originally an industrial machinery manufacturer, and has completed its strategic transformation to the digital marketing and artificial intelligence fields in recent years. The company’s current market capitalization is approximately RMB 70.43 billion, and its stock performance has been extremely strong—with a 173.68% increase in the past year, an 181.84% increase in the past 6 months, and since the rally started on December 31, 2025, it has hit 5 daily price limits in 8 days, with a cumulative increase of over 76%[1][2].

In terms of business structure, the company has fully shifted from traditional manufacturing to digital marketing services, with core businesses covering internet advertising agency, creative content production, intelligent advertising placement, and other areas. In the first three quarters of 2025, the company achieved operating revenue of RMB 14.45 billion and net profit attributable to shareholders of RMB 589 million, turning from a loss to a profit year-on-year[3]. Despite the substantial revenue scale, the company’s profitability remains at a low level—with a net profit margin of only 2.47% and ROE of 3.74%, reflecting the profit margin pressure faced by traditional digital marketing businesses.

GEO (Generated Engine Optimization) is a new concept emerging alongside the rise of generative artificial intelligence, referring to optimizing content to make it more easily retrieved and recommended in responses from generative AI engines[4]. Unlike traditional SEO (Search Engine Optimization), which focuses on competing for rankings on search result pages, the core goal of GEO is to make brands, products, or services preferentially mentioned, cited, or recommended in AI-generated content.

With the popularization of generative AI tools such as ChatGPT, Doubao, and Tongyi Qianwen, users’ information acquisition methods are shifting from the traditional “search-click-browse” model to a “question-generation-direct response” model. According to Gartner’s forecast, approximately 25% of global traditional search engine traffic will shift to AI tools by 2026[5], a trend that creates enormous market space for GEO.

Leo Group’s layout in the GEO field mainly relies on its self-developed AIGC ecosystem platform LEO AIAD, and the company’s “Agent Response Optimization” solution covers three core capabilities[1][2]:

The company builds brand content assets in a systematic and structured manner to ensure that AI systems can accurately understand and adopt brand information.

Leo Group has thousands of professional employees with practical experience in advertising and marketing, and integrates this industry experience into its agent system to promote continuous learning and reuse of past experiences by agents.

Build a reliable brand knowledge base to proactively manage the brand’s digital assets and brand image in the generative AI world.

In research interviews, the company clearly stated that the strategic positioning of its GEO business is to help customers adapt to information presentation and brand perception management in a generative semantic environment, and enhance the brand value of advertisers in the AI era[1].

Leo Group has four key competitive advantages in the GEO field:

Competitive Advantage	Specific Manifestations
Accumulated Customer Resources	Having deep roots in the digital marketing industry for many years, with a large pool of accumulated customer resources
Binding with Key Customers	Established in-depth cooperative relationships with some key customers, facilitating rapid implementation and verification of technical capabilities
Professional Team	Has thousands of professional marketers, with industry experience systematically integrated into agents
R&D Capabilities	Has formed a professional technical R&D team, continuously advancing infrastructure and core technology capability building

In addition, the company is also exploring a business closed-loop of “AI-generated content + automated placement”, as well as the emerging track of AI comic dramas—according to the company, the market size of AI comic dramas is expected to exceed RMB 20 billion[2].

The GEO market is in a rapid initial stage, and many authoritative institutions have released positive market forecasts:

Time Node	Global Market Size	Chinese Market Size	Data Source
2025	USD 11.2 billion	RMB 2.9 billion	China Advertising Association[4]
2030	USD 100.7 billion	RMB 24 billion	China Advertising Association[4]
2026	USD 3.5 billion (estimated)	—	Gartner[6]

In terms of growth trends, the global GEO market is expected to achieve a compound annual growth rate (CAGR) of 55% from 2025 to 2030, while the Chinese market will maintain a high growth rate of 53% over the same period[4]. Citigroup pointed out in its CES 2026 insights that GEO is becoming an important transformation direction for the advertising industry. As search models shift from “link display” to “direct Q&A”, AI Q&A has driven accelerated growth in query volumes, which has actually expanded the total market size of search advertising[7].

The rapid growth of the GEO market is driven by multiple factors:

Changes in user behavior habits—when users ask questions via AI tools, whether brand information can be accurately understood, adopted, and output by generative models directly affects brand perception and communication effects[3]. Enterprises need to proactively manage their digital assets in the generative AI world.

The rapid iteration and popularization of generative AI technology, as well as the continuous emergence of new scenarios such as ChatGPT, Google AI-O, and Meta AI, provide technical foundations and application scenarios for GEO[7].

As the usage rate of AI tools increases, advertising budgets are shifting from traditional search engines to AI platforms, and brand owners need to adapt to new content distribution mechanisms.

Based on the latest financial data, Leo Group features “large revenue scale, weak profitability, and pressured cash flow”[8]:

Financial Indicator	Value	Industry Comparison
Market Capitalization	RMB 70.43 billion	Mid-to-large enterprise
P/E (TTM)	138.06x	Significantly high
P/B	5.10x	Moderately high
Net Profit Margin	2.47%	Low
ROE	3.74%	Low
Current Ratio	2.41	Stable
Free Cash Flow	-RMB 467 million	Pressured

Financial analysis shows that the company adopts aggressive accounting policies, has negative free cash flow, and its valuation is at a historical high. The company’s aggressive accounting treatment means that the upside potential of reported earnings may be limited[8].

The current P/E ratio of 138x is significantly high, mainly reflecting the market’s optimistic expectations for the company’s AI/GEO concept. If the progress of the GEO business falls short of expectations or market enthusiasm fades, the stock price may face significant pullback risks.

As an emerging track, GEO has attracted the layout of multiple listed companies:

Company	GEO Business Progress	Revenue Status
Leo Group	Has layout, no separate revenue disclosure yet	Undisclosed
Tianlong Group	Concept leader, 82% increase in the year	Undisclosed
Yeahmobi	Has layout	Undisclosed
China Online	Has layout	Undisclosed
Gravity Media	Planning to establish GEO business department	No revenue generated yet
B-Ray Media	Just started	Revenue is 0
BlueFocus	AI-driven revenue accounts for a small proportion	Has not constituted a significant impact yet

Notably, multiple companies have intensively issued abnormal fluctuation announcements to “cool down” market enthusiasm—clearly stating that their GEO businesses have not yet formed mature business models and revenue, and there are uncertainties in market recognition and profitability[4].

As an emerging field, GEO’s business model has not yet been fully validated. There is significant uncertainty about the revenue contribution of the company’s GEO business, and the company has not yet disclosed relevant financial data separately[4].

The current 138x P/E ratio is at a historical high, mainly driven by market sentiment. If performance fails to meet expectations, the stock price may face a “Davis Double Kill”.

As more players enter the GEO track, the competitive landscape may deteriorate rapidly. Traditional digital marketing companies and internet platforms may increase their layout in this field.

Generative AI technology is evolving rapidly, and GEO’s algorithms and technical frameworks may require continuous updates, placing high demands on the company’s R&D capabilities.

The regulatory policies for AI-generated content are still unclear, which may have an impact on business operations.

Based on the above analysis, Leo Group’s GEO business has the

to become a new growth driver, but there is significant uncertainty about whether it can be converted into substantial performance contributions in the short term:

Assessment Dimension	Conclusion
Market Space	Broad—global market of hundreds of billions of US dollars, Chinese market of RMB 24 billion (2030)
Company Layout	Leading—has competitive advantages such as technical accumulation, customer resources, and professional teams
Performance Contribution	Uncertain—no separate disclosure of GEO revenue yet, commercialization path to be validated
Valuation Level	High—138x P/E reflects optimistic expectations, pullback risks need to be wary of
Risk-Return Profile	Medium-to-high risk—high concept popularity, fundamental support yet to be validated

May consider accumulating positions on dips, but need to set strict stop-loss levels and closely monitor the disclosure of the company’s GEO business revenue.

It is recommended to maintain a wait-and-see attitude, and wait until the company’s GEO business model is validated and revenue contributions are clear before entering.

• Disclosure of the company’s GEO business revenue data
• Progress of GEO business orders and customer expansion
• Business updates in institutional research transcripts
• Industry policies and regulatory developments related to AI applications

From a long-term perspective, GEO represents an important evolution direction of the digital marketing industry. With its profound accumulation in the digital marketing field and forward-looking layout, Leo Group is expected to occupy a favorable position in this emerging track. However, investors need to recognize that the conversion from concept to performance takes time, and should remain rational in the short term, focusing on fundamental changes rather than simply chasing hot topics.

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[1] Securities Times - “AI Applications See Explosive Growth; Institutions Survey Multiple Related Concept Companies” (https://www.stcn.com/article/detail/3598262.html)

[2] Sina Finance - “Catching the New GEO Wind, Can Leo Group Secure the "Top Spot" in the AI Application Sector?” (https://finance.sina.com.cn/tech/roll/2026-01-13/doc-inhhecrr9129794.shtml)

[3] The Paper - “GEO Concept Remains Hot; Multiple Companies Intensively Issue Announcements to "Cool Down" Market” (https://m.thepaper.cn/newsDetail_forward_32376375)

[4] 21st Century Business Herald - “"New Yi Zhongtian" Surges” (https://m.21jingji.com/article/20260114/7b3fe772425c4691b7a0285980a1d781.html)

[5] Securities Times - “Xinhua Du Hits Two Consecutive Daily Limits; Its Subsidiary Recently Launched AI Agent Matrix” (https://www.stcn.com/article/detail/3595037.html)

[6] Sina Finance - “Citi’s Views on GEO Advertising Ecosystem” (https://finance.sina.com.cn/roll/2026-01-14/doc-inhhhnwp8314309.shtml)

[7] Sina Finance - “Citi’s CES 2026 Insights: GEO Restructures Advertising Ecosystem” (https://finance.sina.com.cn/roll/2026-01-14/doc-inhhhnwp8314309.shtml)

[8] Jinling AI Financial Database - Financial Analysis Data of Leo Group Co., Ltd. (002131.SZ)

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Report Generation Date: January 19, 2026

Disclaimer: This report is for reference only and does not constitute investment advice. Investors should make independent judgments and prudent decisions.