AdTiger (01163.HK) Summary
Core Content
AdTiger (01163.HK) is an advertising agency that reported RMB 190.5 million in revenue for the first half of 2022, representing a 32.7% year-over-year (YoY) growth compared to the first half of 2021. The growth was driven by the recovery of the education and financial segments, although the Group's gross margin dropped by 6.6 percentage points (p.p.), leading to a 54.0% YoY decline in the bottom line and a net margin of 3.3%. Despite the challenges, the company maintains a "BUY" rating, with a revised target price of HK$0.42 per share, reflecting a forward P/E of 19.0x, 11.5x, and 8.9x for FY 2022, 2023, and 2024 respectively.
Main Points
Revenue and Growth
- 2022 1H Revenue: RMB 190.5 million
- YoY Growth: 32.7%
- Primary Revenue Sources: Utility and content app developers (42.7%), e-commerce (28.4%)
- Revenue Forecasts:
- 2023(E): RMB 586.6 million
- 2024(E): RMB 686.2 million
Gross Margin and Profitability
- Gross Margin (2022 1H): 17.3% (slightly below expectations)
- Net Profit (2022 1H): RMB 11.8 million
- Net Margin (2022 1H): 3.3%
- Gross Margin Forecasts:
- FY 2022–2024: Estimated to drop by 1.0–2.3 p.p.
- Net Profit Margin Forecasts:
- FY 2022–2024: Estimated to decrease by 0.9–2.0 p.p.
- Net Profit Forecasts:
- FY 2022: RMB 11.8 million
- FY 2023: RMB 19.4 million
- FY 2024: RMB 25.1 million
Market Performance
- Current Price: HK$0.29
- 52-Week Range: HK$0.27–HK$2.52
- Market Cap (HKD, bn): HK$0.2
- Stock Performance:
- 1 month: -37.6%
- 3 months: -81.9%
- 6 months: -62.8%
- 1 year: -58.6%
New Technologies
- AI Dubbing: Supports over 70 languages and 200 voice characters
- 3D Avatars: Customized virtual characters for animated videos
- Human-like AI Characters: Created based on real-life models for video and animation
Strategic Initiatives
- Overseas KOL Business: On track with customer cooperation
- SaaS Service: Under development in 2022 1H
- Financial Services: Assisting local financial institutions in global advertising
Key Information
Valuation
- Target Price (TP): HK$0.42/share
- Forward P/E:
- FY 2022: 19.0x
- FY 2023: 11.5x
- FY 2024: 8.9x
- Current Valuation: Considered low enough despite market volatility and higher risk premium
Peer Comparison
| Stock Code |
Company Name |
Market Cap (HKD, mn) |
P/E (%) |
Fw. P/E (%) |
P/B (%) |
P/S (%) |
Revenue (HKD, mn) (%) |
GM (%) |
ROE (%) |
| 01351.HK |
Bright Future |
172.5 |
- |
- |
0.5 |
0.3 |
588.2 |
20.0 |
-5.8 |
| 01860.HK |
Mobvista |
6,579.2 |
21.0 |
51.2 |
3.3 |
0.9 |
5,871.7 |
16.1 |
14.7 |
| 01948.HK |
UJU Holding |
1,716.0 |
5.0 |
- |
1.3 |
0.2 |
9,450.9 |
5.5 |
34.7 |
| 02131.HK |
Netjoy |
835.4 |
9.9 |
5.3 |
0.5 |
0.2 |
3,763.4 |
7.0 |
4.7 |
| 06988.HK |
Joy Spreader |
2,941.2 |
13.9 |
20.2 |
1.1 |
1.4 |
1,395.9 |
32.4 |
8.3 |
| Average |
|
2,448.9 |
12.4 |
25.6 |
1.3 |
0.6 |
4,214.0 |
16.2 |
11.3 |
| 01163.HK |
AdTiger |
174.3 |
37.0 |
- |
0.9 |
0.4 |
424.0 |
18.7 |
2.4 |
Risk Factors
- Squeezed Profit Margins: Due to aggressive pricing strategies and reduced bargaining power
- Weak Development in China: Long-term challenge
- Erosion of Traditional Digital Marketing Demand: Due to growth in e-commerce and streaming platforms
- Slow New Business Development: Costs are affecting profitability
- Overseas Marketing Demand: Sliding economic growth and global political/economic situations may reduce demand
Financial Highlights
Profit and Loss (PnL)
| Item |
2021 (A) |
2022 (E) |
2023 (E) |
2024 (E) |
| Revenue |
351.8 |
474.7 |
586.6 |
686.2 |
| Gross Profit |
65.9 |
74.0 |
90.7 |
105.8 |
| Net Profit |
11.9 |
11.8 |
19.4 |
25.1 |
| YoY Growth (Net Profit) |
311.8% |
-1.7% |
65.3% |
29.4% |
Balance Sheet
| Item |
2021 (A) |
2022 (E) |
2023 (E) |
2024 (E) |
| Total Assets |
411.0 |
450.9 |
495.0 |
522.1 |
| Total Liabilities |
233.9 |
262.1 |
286.7 |
288.7 |
| Controlling Interests |
176.1 |
187.8 |
207.1 |
232.1 |
Financial Ratios
| Ratio |
2021 (A) |
2022 (E) |
2023 (E) |
2024 (E) |
| Gross Margin |
18.7% |
15.6% |
15.5% |
15.4% |
| Operating Margin |
4.5% |
3.1% |
4.2% |
4.6% |
| Net Profit Margin |
3.4% |
2.5% |
3.3% |
3.7% |
| Return on Equity (ROE) |
6.9% |
6.4% |
9.8% |
11.4% |
| Return on Asset (ROA) |
2.9% |
2.7% |
4.1% |
4.9% |
Cash Flow
| Item |
2021 (E) |
2022 (E) |
2023 (E) |
2024 (E) |
| CFO |
10.7 |
20.5 |
42.2 |
22.1 |
| CFI |
-20.8 |
-25.8 |
-3.9 |
-7.9 |
| CFF |
-0.8 |
-1.5 |
-1.9 |
-2.0 |
| FCFE |
10.5 |
20.1 |
41.4 |
20.2 |
| FCFF |
10.5 |
20.1 |
41.4 |
20.2 |
Analyst Rating and Outlook
- Stock Rating: BUY
- Target Price (TP): HK$0.42/share
- Absolute Upside:
- STRONG BUY: >50%
- BUY: >10%
- HOLD: -10% to +10%
- SELL: < -10%
- STRONG SELL: < -50%
Disclaimer
- This report is not an offer to sell or the solicitation of an offer to buy.
- Information is sourced from reliable but not guaranteed.
- Opinions and estimates are subject to change.
- Recipients must conduct their own independent research.
- West Bull Securities may have positions in the securities mentioned.