Hello (US:MOMO) BOCOM International·2025-06-07 13:15Investment Rating - The report upgrades the investment rating of the company to "Buy" based on better-than-expected overseas business growth and effective marketing cost control [2]. Core Insights - The company is expected to see a revenue inflection point in the second half of the year, driven by accelerated overseas growth, leading to a 5% increase in the 2025 revenue forecast and a 13% increase in adjusted net profit forecast to 1.4 billion RMB [2]. - The target price has been raised to $8.30 from $7.20, reflecting a potential upside of 17.6% [1][2]. - The company's market capitalization is approximately $1.2 billion, which is below its net cash of $1.4 billion as of Q1 2024, indicating limited downside risk for the stock price [2]. Financial Performance Summary - For Q1 2025, the company reported revenues of 2.52 billion RMB, a slight year-over-year decline of 2%, but exceeding market expectations by 4% [6]. - The adjusted net profit for Q1 2025 was 400 million RMB, significantly better than the market expectation of 270 million RMB, aided by channel optimization and improved marketing efficiency [6]. - The overseas revenue grew by 72% year-over-year, contributing to 16% of total revenue, driven by the rapid growth of new products [6][12]. Revenue and Profit Forecasts - The updated revenue forecasts for 2025, 2026, and 2027 are 10.485 billion RMB, 10.724 billion RMB, and 11.090 billion RMB, respectively, reflecting a growth of 5% and 6% compared to previous estimates [5][20]. - The adjusted net profit forecasts for the same years are 1.404 billion RMB, 1.427 billion RMB, and 1.456 billion RMB, indicating a steady growth trajectory [5][20]. Market Position and Valuation - The company’s stock price has shown a year-to-date decline of 8.43%, with a 52-week high of $8.15 and a low of $5.27 [4]. - The report highlights that the company maintains a stable shareholder return policy, further supporting its valuation [2].