20230301-招银国际-Gradual_revenue_and_margin_recovery_in_FY23_5页_1mb

Weibo (WB US) Summary

Core Content

Weibo (WB US) reported its 4Q22 financial results, indicating a decline in total revenue by 27% YoY to US$448 million, in line with expectations. This decline was attributed to macroeconomic headwinds and the impact of the pandemic. However, the company showed resilience in certain verticals, particularly in advertising, with non-GAAP net income increasing by 9% YoY to US$179 million, surpassing the consensus estimate of US$122 million. This improvement was driven by effective expense control and the reversal of compensation expenses.

Main Points

• Revenue Trends:

  • FY22 total revenue dropped by 19% YoY to US$1.8 billion.
  • 4Q22 ad revenue fell by 29% YoY to US$393 million, with declines in the cosmetic and e-commerce sectors.
  • Despite this, some verticals showed growth: food & beverage, automobile, and handset sectors.
  • VAS revenue declined by 12% YoY to US$57 million in 4Q22.

• Monetization Efforts:

  • Weibo expanded into the aesthetic medicine e-commerce market using its live streaming capabilities.
  • Total aesthetic medicine e-commerce GMV doubled in 2022.

• User Growth:

  • MAUs grew by 2% YoY to 586 million in December 2022.
  • Video content and ad ecosystem improved, with effective video views and video feeds growing by double-digit and 50% YoY, respectively.

• Operating Efficiency:

  • GPM declined by 3ppt YoY to 76.3% in 4Q22, primarily due to content investment and social e-commerce.
  • S&M and R&D expenses decreased by 20% and 13% YoY, respectively.
  • Non-GAAP OPM fell by 2ppt YoY to 33.9% in 4Q22 and by 4ppt YoY to 32.7% in FY22, due to the slowdown in top-line growth.
  • Management expects operating efficiency to recover to FY19/FY20 levels by FY23.

• Earnings Forecasts:

  • Revenue is expected to grow by 8.3% in FY23 and 5.6% in FY24.
  • Adjusted net profit is projected to increase by 5.3% in FY23 and 7.6% in FY24.
  • Adjusted EPS is expected to rise from US$2.30 in FY22 to US$2.42 in FY23 and US$2.60 in FY24.

• Target Price:

  • The target price (TP) was revised up by 4% to US$28.90, based on a 12x 2023E PE multiple.
  • The TP implies a 39.7% upside from the current price of US$20.68.

• Valuation:

  • P/E ratio for FY23E is 11.5x, compared to the consensus P/E of 12.2x.
  • The P/B ratio is expected to decrease from 3.1 in FY20A to 1.0 in FY25E.

Key Financial Metrics

Analyst Ratings and Forecasts

• Analyst Certification:
  • The analyst certifies that the views expressed reflect personal opinions and that there are no conflicts of interest.
• CMBIGM Ratings:
  • BUY: Potential return of over 15% over the next 12 months.
• Forecast Revision:
  • Revenue for FY23E and FY24E is revised up by 4% and 5%, respectively, due to improved ad demand and operating efficiency.

Shareholding and Performance

• Shareholding Structure:
  • Sina: 40.1%
  • Alibaba: 28.7%
• Stock Data:
  • Market Cap: US$4,863.2 million
  • 52-week High/Low: US$27.42/US$10.71
• Share Performance:
  • 1-month: -9.1% (Absolute), -8.1% (Relative)
  • 3-months: 29.7% (Absolute), 29.9% (Relative)
  • 6-months: 0.0% (Absolute), 3.1% (Relative)

Financial Highlights

• Operating Profit:
  • 4Q22: US$517 million
• Net Cash from Operations:
  • 4Q22: US$400 million
• Net Profit:
  • 4Q22: US$407 million
• Adjusted Net Profit:
  • 4Q22: US$569 million

Peer Comparison

Risk and Disclaimer

• The report is not tailored to individual investors and does not guarantee accuracy or completeness.
• There are risks involved in trading any securities.
• CMBIGM is not liable for any losses incurred from relying on the information.
• The report is for the use of intended recipients only and may not be distributed without consent.

Conclusion

Weibo is expected to recover from FY22's decline in revenue and margin, driven by improved ad demand in key industries and enhanced operating efficiency. The company's strategic moves into new markets, such as aesthetic medicine e-commerce, and its strong user base support its long-term growth prospects. The BUY rating and revised target price reflect positive outlook and potential for a significant return over the next year.