WB(HK:09898) GF SECURITIES·2024-03-17 16:00Investment Rating - The report assigns a "Buy" rating for the company, with a current price of $9.51 and a fair value of $15.52 [1][2]. Core Insights - The company reported Q4 2023 revenue of $464 million, which is a year-over-year increase of 3% and a quarter-over-quarter increase of 5%, exceeding consensus expectations of $454 million. The constant currency revenue grew by 5% year-over-year [2]. - The gross margin reached 78%, up 2.1 percentage points year-over-year, although it declined by 0.3 percentage points quarter-over-quarter. This is 1 percentage point above the consensus expectation of 77% [2]. - GAAP net profit attributable to shareholders was $83.23 million, down 41% year-over-year but up 7% quarter-over-quarter, surpassing the consensus estimate of $78.99 million. Non-GAAP net profit was $76.37 million, down 57% year-over-year and down 44% quarter-over-quarter, falling short of the consensus estimate of $122 million due to tax adjustments affecting non-recurring items [2]. - The company declared a special cash dividend of $200 million to enhance shareholder returns [2]. - Advertising revenue for Q4 was $404 million, reflecting a year-over-year increase of 3% and a quarter-over-quarter increase of 4%, with constant currency growth of 5%, compared to the consensus estimate of $394 million [2]. - The company expects to increase investments in community vertical content and user acquisition in 2024, as well as infrastructure for AIGC, which may lead to a slight increase in operating expenses [2]. Financial Projections - Revenue is projected to reach $1.75 billion in 2024 and $1.80 billion in 2025, with year-over-year changes of -1% and +3% respectively. Adjusted net profit is expected to be $437 million in 2024 and $486 million in 2025, with growth rates of -3% and +11% respectively [2][8]. - The report estimates a fair value of $15.52 per ADS based on a 1x PEG valuation, corresponding to a PE ratio of 8.4 times the adjusted net profit for 2024 [11][12].