20240318-招银国际-汇量科技-01860.HK-Focusing_on_margin_enhancement_7页_947kb

Mobvista Inc. (1860 HK) Equity Research Summary

Key Financial Performance

The company reported FY23 results with revenue growth of 18% YoY, at US$1.054 billion, and profit of US$19.1 million (adj. net profit), aligning with estimates but exceeding consensus. Gross profit margin improved to 20.6% (up 0.8 ppt YoY). Mintegral segment showed resilient growth with a 19.5% YoY revenue increase in 4Q23, driven by midcore and hardcore game segments (revenue share rose to 29.1%), and lifestyle category growth.

Future Outlook and Forecasts

For 2024E, revenue is projected to grow 20% YoY (to US$1.265 billion), with adjusted net profit forecasted at US$37 million (net margin 2.9%), up 10% from previous estimates. Intelligent bidding system upgrades are expected to aid category expansion beyond games, while ROAS system improvements could provide long-term upside if executed well. Gross margin is anticipated to stabilize, and operating margin improve in FY24-25.

Growth Drivers and Business Highlights

Mobvista's diverse business model includes ad-tech and mar-tech segments. FY23 saw strength in EMEA and Americas geography (+25.6% YoY in 4Q23), and China market resilience (+15.1% YoY). Lifestyle and non-casual games segments showed robust growth, contributing to overall expansion. Cost discipline and higher ad efficiency supported margin improvement.

Valuation and Recommendations

CMBIGM maintains a "BUY" rating with a target price of HK$6.0 (up 85.8% from current price), based on SOTP valuation (32x/26x FY24/25P/E). The valuation suggests upside compared to industry peers, with Mobvista's higher growth potential offsetting some discount. Adjusted earnings are forecasted with a 21% CAGR from FY24-26.

Risks

Key risks include macroeconomic uncertainty affecting ad budgets, slower-than-expected ROAS penetration, and high R&D investment potentially pressuring margins.

Market Position

Mobvista targets programmatic advertising monetization, with comparisons to peers like Trade Desk highlighting its competitive advantages, though valuation differs due to individual factors and business risks.