Hello (MOMO) 交银国际证券·2024-09-17 08:10Investment Rating - The report maintains a neutral rating for MOMO US with a target price of 6.39 [1][8]. Core Insights - The core business of MOMO, including Momo and Tantan, is still in an adjustment phase, leading to continued pressure on short-term revenue and profits. The new business segments are growing rapidly but are expected to slow down [1]. - For the second quarter of 2024, MOMO's revenue is projected to decline by 12% year-on-year, with profits expected to align with previous forecasts. Tantan is focusing on optimizing user experience and matching efficiency, but may turn unprofitable in the second half of the year [1][2]. Financial Performance Summary - Revenue Forecasts: The new revenue forecasts for 2024 and 2025 have been adjusted downwards, with total revenue expected to be RMB 10,448 million for 2024 and RMB 10,303 million for 2025, reflecting a decrease of 3% and 7% respectively from previous estimates [2]. - Adjusted Net Profit: The adjusted net profit for 2024 is forecasted at RMB 1,144 million, down 6% from previous estimates, while for 2025 it is expected to be RMB 1,476 million, a decrease of 17% [2]. - Gross Margin: The adjusted gross margin is projected to be 40.1% for 2024, slightly down from 40.4% in the previous forecast [2]. - Operating Income: The operating income for the second quarter of 2024 is expected to be RMB 425 million, reflecting a 25% decline quarter-on-quarter and a 49% decline year-on-year [6]. Business Segment Performance - Momo and Tantan: Momo's revenue is expected to be RMB 9,573 million for 2024, while Tantan's revenue is projected at RMB 873 million, both showing declines from previous forecasts [2][6]. - New Applications: Revenue from new applications is expected to grow by 36% year-on-year, driven by the rapid growth of the overseas social product Soulchill [1]. Market Context - MOMO's market capitalization is currently below its net cash position, which stood at $1.7 billion at the end of the second quarter, indicating limited downside potential for the stock price [1].