20221118-招银国际-Ongoing_moderate_recovery_5页_1mb

报告摘要

Weibo (WB US) Summary

Core Content

Weibo reported its third-quarter 2022 (3Q22) financial results, revealing a moderate recovery in revenue and user growth, but facing challenges in advertising demand due to macroeconomic pressures and the lingering impact of the resurgence of the pandemic.

Key Financial Highlights

Revenue

3Q22 Revenue: US$454 million, a 25% YoY decline (or 20% on a constant currency basis), slightly below the consensus estimate of US$469/460 million.
9M22 Revenue: Declined by 15% YoY, reflecting the weak ad demand in key sectors such as e-commerce, FMCG, and 3C.
FY22E Revenue: US$1,854.3 million, with revisions to lower FY23 and FY24 revenue estimates by 10.7% and 12.6% respectively.

Non-GAAP Net Income

3Q22 Non-GAAP Net Income: US$119 million, a 43% YoY decline, in line with the consensus estimate of US$120 million.
FY22E Non-GAAP Net Income: US$488.4 million, with revisions to lower FY23 and FY24 estimates by 5% and 3% respectively.

Adjusted EPS

3Q22 Adjusted EPS (RMB): 2.1, in line with the consensus.
FY22E Adjusted EPS (RMB): 2.1, with revisions to lower FY23 and FY24 estimates by 8.4% and 12.1% respectively.

Revenue and Growth

User Growth: MAUs reached 584 million in September 2022, up 2% YoY, with a stable DAU/MAU ratio at 43.3%.
Ad Revenue:
- 3Q22 Ad Revenue: US$393 million, down 27% YoY.
- Early Recovery: During Double 11, ad revenue from e-commerce and FMCG returned to positive YoY growth, indicating a recovery in overall ad demand.
- Auto and Luxury: Recorded double-digit YoY growth, attributed to innovations in ad products and improved ROI.
Alibaba's Ad Revenue: Dropped by 28% YoY to US$15 million, consistent with Weibo's overall ad performance.

Cost and Margin

GPM: Declined by 4ppt YoY to 79.2% in 3Q22, due to increased content investment and resumed payment of cultural business construction fees.
Non-GAAP Net Margin: Dropped from 34.5% in 3Q21 to 26.2% in 3Q22, due to slow top-line growth and GPM contraction.
Cost Management: Management expects cost reduction and operating efficiency improvements in 4Q22E.

Valuation and Target Price

Target Price: Revised down to US$20.30 from US$21.80, based on 9x 2023E PE.
Current Valuation: 7x 2023E PE, the lowest among peers.
Expected Growth:
- FY23/FY24 Non-GAAP Earnings: Projected to grow by 9% and 8% YoY respectively.
- Free Cash Flow: Expected to improve from US$306 million in FY22 to US$359 million in FY23 and US$417 million in FY24E.

Analyst Ratings and Recommendations

Rating: BUY (maintained).
Reasoning: Despite challenges in ad demand, the current valuation is seen as attractive, with potential for earnings recovery and improved free cash flow.

Shareholding and Stock Data

Market Cap: US$3,388.6 million.
Average 3-Month Trading Value: US$15.9 million.
52-Week High/Low: US$43.96/US$10.71.
Shareholding Structure:
- Sina: 40.1%
- Alibaba: 28.7%

Share Performance

1-Month Return: 6.9% (absolute), 2.1% (relative).
3-Month Return: -19.6% (absolute), -6.9% (relative).
6-Month Return: -31.1% (absolute), -26.2% (relative).

Peer Valuation Comparison

Weibo's P/E (2023E): 8.2x, significantly lower than peers.
Weibo's P/B (2023E): 0.8x, indicating undervaluation compared to peers.

Analyst Certification and Disclosures

The research analyst certifies that the views in the report reflect personal opinions and that compensation is not tied to the report's content.
The analyst confirms no trading in the stock 30 days before or 3 days after the report's issue.
CMBIGM is not a registered broker-dealer in the U.S. and U.K., and disclosure is made to accredited investors only.

CMBIG Ratings

BUY: Stock with potential return of over 15% over the next 12 months.
OUTPERFORM: Industry expected to outperform the market benchmark.

Conclusion

Weibo is undergoing a moderate recovery, with user growth and early signs of ad demand improvement. However, advertising demand remains challenged due to economic headwinds and pandemic effects. Despite these challenges, the current valuation is considered attractive, and the analyst recommends maintaining a BUY rating. The company is expected to improve its free cash flow and operating efficiency in the coming quarters.