20210401-软库中华金融服务-虎视传媒-01163.HK-Bottom_out_in_the_intl._market_and_exploration_in_the_China_market,_reiterate__BUY__and_slash_the_TP_to_HKD_1.26_share_8页_417kb

AdTiger (01163.HK) Summary

Analyst Information

• Analyst: Brian Ngo, CFA
• Contact: T: +852 2533 3713, E: brianngo@sbichinacapital.com
• Address: 4/F, Henley Building, No.5 Queen's Road Central, Hong Kong

Recommendation and Target Price

• Recommendation: BUY
• Target Price (HKD): 1.26
• Current Price (HKD): 0.89
• 12-Month Price Range: 0.68 - 1.55
• Market Cap (HKD bn): 0.5

Core Content and Key Points

Revenue Performance

• AdTiger achieved a 10.0% YoY revenue increase in 2020 to RMB 210.3mn.
• APP developers and e-commerce customers contributed 47.2% and 44.7% respectively to the revenue.
• The Group reported an RMB 15.5mn adjusted net profit in 2020, a 55.1% YoY retreat from the previous year.

International Market Challenges

• Tensions between China and India/US in 2020 led to the banning of Chinese apps, including TikTok and WeChat, in India and restrictions in the US.
• These policies caused a 28.7% YoY revenue decline in 2020 2H to RMB 87.4mn, and a net loss of RMB 20.4mn.
• The Group is reiterating a "BUY" recommendation and lowering the target price due to the international market's bottoming out and the potential for growth in the Chinese market.

China Market Exploration

• AdTiger stepped into the Chinese market in 2020 Q4, aiming to provide marketing solutions to customers in the e-commerce, social networking, and gaming sectors.
• The Group is investing in R&D and consultancy to better understand and adapt to Chinese media platforms like TouTiao, Kuaishou, and iFeng.com.
• The educational sector also contributed significantly, with a 6.4x YoY revenue uplift to RMB 17.8mn due to increased online education spending during the pandemic.

Growth Prospects

• The Chinese market is expected to be a major growth driver, with China's GDP growing by 2.3% YoY in 2020 and recovery since 2H 2020.
• The Group's globalization strategy includes helping Chinese companies place ads overseas, foreign companies place ads in China, and Chinese companies place ads locally.
• This diversification is expected to offset the temporary retreat in the global market and drive future growth.

Financial Highlights

Revenue and Profit

• Revenue (RMB mn): 210.3 (2020), 395.0 (2021E), 531.6 (2022E), 649.8 (2023E)
• YoY growth: 10.0% (2020), 87.8% (2021E), 34.6% (2022E), 22.2% (2023E)
• Net Profit (RMB mn): 2.9 (2020), 25.7 (2021E), 65.9 (2022E), 85.4 (2023E)
• YoY growth: -86.9% (2020), 789.4% (2021E), 156.4% (2022E), 29.6% (2023E)

Gross Margin and Operating Margin

• Gross margin: 20.3% (2020), 20.8% (2021E), 22.5% (2022E), 23.5% (2023E)
• Operating margin: 1.1% (2020), 8.1% (2021E), 15.5% (2022E), 16.4% (2023E)

Financial Ratios

• Net profit margin: 1.4% (2020), 6.5% (2021E), 12.4% (2022E), 13.1% (2023E)
• Adj. EBITDA profit margin: 7.1% (2020), 8.3% (2021E), 15.7% (2022E), 16.6% (2023E)
• Return on Equity (ROE): 2.6% (2020), 14.4% (2021E), 29.4% (2022E), 28.5% (2023E)
• Return on Asset (ROA): 0.8% (2020), 5.5% (2021E), 11.2% (2022E), 12.2% (2023E)

Peer Comparison

Ticker	Company	Market Cap (mn)	PE (X)	Fw PE (X)	PB (X)	PS (X)	Revenue (mn)	GM (%)	ROE (%)
01860.HK	Mobvista	9,772.9	-	17.4	4.4	2.4	4,003.3	23.7	10.2
02013.HK	Weimob	41,506.9	-	-	33.2	15.9	2,215.4	50.9	-76.1
02131.HK	Netjoy	5,528.0	-	-	4.1	-	2,899.8	6.9	-
06988.HK	Joy Spreader	7,255.1	35.9	18.1	2.8	5.5	1,039.6	32.6	10.9
09911.HK	Newborn Town	4,874.4	104.8	17.2	7.7	3.5	1,329.6	63.7	6.8
Average	-	13,787.5	70.3	17.6	10.4	6.8	2,297.6	35.6	-12.1
01163.HK	AdTiger	547.8	44.5	-	5.7	1.8	236.7	28.1	-

Risk Factors

• Escalating international tensions between China and the US/India could lead to continued restrictions on Chinese apps.
• Increased competition in the Chinese market may hinder the Group's expansion.
• Cooling demand from e-commerce and app development sectors, despite pandemic recovery.

Analyst Ratings

• STRONG BUY: >50% upside over the next 12 months
• BUY: >10% upside over the next 12 months
• HOLD: -10% to +10% return over the next 12 months
• SELL: >10% downside over the next 12 months
• STRONG SELL: >50% downside over the next 12 months

Conclusion

AdTiger (01163.HK) is advised to BUY with a target price of HKD 1.26/share, reflecting a 25.9x/10.1x/7.8x forward PE for 2021/2022/2023. The Group is well-prepared for China market exploration, which is expected to offset the international market downturn. Despite the challenges in the international market, the diversification strategy and strong growth in the Chinese market provide positive outlook for future performance.