Unity Software(U) 浦银国际证券·2024-04-14 16:00Investment Rating - The report initiates coverage on Unity (U.US) with a "Buy" rating and a target price of 26.05 [14][44]. Core Insights - Unity is a leading player in the game engine market, holding approximately 70% market share in mobile games and expanding into industries beyond gaming, such as architecture, automotive, and aerospace, which currently contributes 23% to its Create Solutions revenue [3][33]. - The integration of AI technologies, particularly through the Unity editor, is expected to enhance product competitiveness and drive long-term growth [4][16]. - The company's growth solutions, which include advertising networks and game publishing services, accounted for 61% of revenue in 2023, showcasing a strong network effect and data advantage [15][16]. Summary by Sections Game Engine Market Leadership - Unity dominates the game engine market with a significant presence in mobile gaming, where 70% of the top 1000 mobile games are developed using Unity [10][11]. - The company has a market share of approximately 50% on PC and 40% on consoles, with a 90% share in the AR headset market [10]. AIGC Impact on Content Development - The report suggests that AIGC (AI-Generated Content) will complement traditional content creation tools rather than compete with them, enhancing efficiency in the development process [4][41]. - Unity has integrated AI capabilities into its editor, allowing for proprietary model training and support for third-party AI models, which is expected to benefit the company in the long run [4][41]. Financial Projections - Revenue is projected to grow from 2.29 billion by FY26, with a notable increase in adjusted EBITDA from -758 million by FY26 [9][17]. - The report anticipates a shift towards profitability, with operating losses decreasing from -103 million by FY26 [9][17]. Valuation Analysis - The target price of 283 million in revenue, allowing for a more concentrated effort on high-margin SaaS subscriptions and other growth areas [76].