WB(HK:09898) GF SECURITIES·2024-03-17 16:00Investment Rating - The investment rating for the company is "Buy" with a target price of $15.52 per ADS (121.35 HKD) [1][2]. Core Views - 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 revenue growth at constant exchange rates was 5% year-over-year [2]. - The gross margin reached 78%, up 2.1 percentage points year-over-year, although it declined 0.3 percentage points quarter-over-quarter. This was 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 a constant exchange rate growth of 5%, compared to the consensus estimate of $394 million [2]. - The company is expected to increase investments in community vertical content and user acquisition in 2024, as well as expand infrastructure in AIGC, which may lead to a slight increase in operating expenses [2]. Financial Summary - The company’s revenue for 2024 and 2025 is projected to be $1.75 billion and $1.80 billion, respectively, with year-over-year growth rates of -1% and 3% [2][8]. - Adjusted net profit for 2024 and 2025 is expected to be $437 million and $486 million, reflecting year-over-year growth rates of -3% and 11% [2][8]. - The company maintains a cautious outlook on revenue due to the mixed performance across different industries, particularly with beauty products declining while sectors like automotive and gaming show growth [2][8]. Valuation - The valuation is based on a PEG ratio of 1x, leading to a target price of $15.52 per ADS, which corresponds to a PE ratio of 8.4 times the adjusted net profit for 2024 [2][11].