20230222-招银国际-汇量科技-01860.HK-Recovery_in_sight_with_clear_margin_expansion_11页_1mb

Mobvista Inc. (1860 HK) Company Update Summary

Core Content

Mobvista Inc. (1860 HK) is a global advertising and data analytics company that has faced challenges in the second half of 2022 due to global macroeconomic issues and inflation. However, the company is expected to recover and reaccelerate in FY23E with a projected revenue growth of 25% YoY. The report highlights that Mobvista's strategic focus on margin expansion, vertical expansion, and the integration of its ad-tech and mar-tech businesses are key drivers of this recovery.

Main Points

• Ad-tech business performance:

  • Revenue growth slowed to +13% YoY in 4Q22E due to reduced ad budgets.
  • Ad-tech revenue is expected to grow at +17% YoY in FY22E and +25% YoY in FY23E.
  • Gross margin is forecasted to improve to 19.6% in FY22E and 19.9% in FY23E.
  • Adj. net profit is expected to rise by +110% YoY in FY23E, reaching $23 million.

• Mar-tech business potential:

  • Mar-tech is in an early stage of developing a full revenue model.
  • Expected to grow by +50% YoY in FY23E, contributing 1.5% of total revenue.
  • Mar-tech includes SaaS tools like GA, Reyun, and SpotMax, offering services such as creative optimization, ROI analysis, and data insights.
  • The SaaS ecosystem is expected to bring synergies with ad-tech and improve margins in the long term.

• Strategic initiatives:

  • Continuous vertical expansion, particularly in hardcore games and e-commerce.
  • Increasing domestic client demand following China's reopening.
  • Enhanced targeting through algorithm optimization.
  • Collaboration with Google to boost growth potential.

• Financial forecast:

  • FY22-24E topline CAGR: 22%
  • FY22-24E bottom line CAGR: 74%
  • Adjusted net profit for FY23E: $23 million (+110% YoY)
  • Gross profit for FY23E: $222 million (+27% YoY)

• Valuation and Target Price:

  • SOTP-based target price: HK$6.3
  • Implies 1.2x FY23E P/S and 58x FY23E P/E.
  • The valuation is above the industry average, reflecting the company's growth potential and margin improvement outlook.

• Peer comparison:

  • Ad-tech peers: Trade Desk, Applovin, Unity, and Google.
  • Domestic peers: Tencent, Baidu, Weibo, XD Inc., Weimob, Zhihu.
  • SaaS peers: Salesforce, Youzan, Ming Yuan Cloud, KE Holdings.

Key Information

• Revenue Trends:

  • FY20A: $516 million
  • FY21A: $755 million (+46% YoY)
  • FY22E: $891 million (+18% YoY)
  • FY23E: $1,114 million (+25% YoY)
  • FY24E: $1,337 million (+20% YoY)

• Adjusted Net Profit Trends:

  • FY20A: $9 million
  • FY21A: -$4 million (-78% YoY)
  • FY22E: $11 million (+110% YoY from FY21A)
  • FY23E: $23 million (+110% YoY)
  • FY24E: $33 million (+43% YoY)

• Market Capitalization and Performance:

  • Market Cap: HK$7,201 million
  • Average 3 months trailing revenue: HK$5.26 million
  • 52-week high/low: HK$6.63 / HK$3.80
  • Total issued shares: 1,637 million

• Shareholding Structure:

  • Seamless Technology: 62.8%
  • GIC: 8.0%
  • Citigroup: 4.7%

• Key Risks:

  • Softer-than-expected global macroeconomic momentum.
  • Potential loss of key advertisers or publishers.
  • Higher-than-expected investment or net loss from the SaaS business.

Summary of Financial Metrics

Strategic Outlook

Mobvista is positioned to benefit from the growing demand for app globalization, especially in the Southeast Asia market. The company's "Glocal" strategy and cross-jurisdictional expertise give it a competitive edge. The report also notes that the company's ad-tech and mar-tech businesses are moving towards integration, creating long-term synergies and improving profitability.

Conclusion

The report concludes with a BUY rating, based on the SOTP valuation model. It emphasizes Mobvista's potential for growth and margin improvement, supported by its strategic initiatives and market positioning. The target price of HK$6.3 reflects the analyst's confidence in the company's ability to outperform the industry average.