WB(HK:09898) GF SECURITIES·2024-05-28 05:32Investment Rating - The report assigns a "Buy" rating to the company, with a current price of $8.77 and a target value of $15.22 per ADS, equivalent to HKD 118.87 [1][9]. Core Insights - The company's revenue for Q1 2024 was $395 million, slightly above consensus expectations, with stable revenue and profit margins. The advertising revenue from Alibaba grew by 23% year-over-year, while third-party advertising revenue declined by 6% [1][3]. - The report anticipates that the company will benefit from increased advertising budgets during the upcoming summer Olympics, particularly in sectors like apparel, gaming, and food and beverage [1][4]. - The overall advertising business is expected to see a recovery in the second half of the year, with a projected revenue of $1.77 billion for 2024, reflecting a 1% year-over-year growth, and $1.84 billion for 2025, reflecting a 4% growth [3][4]. Financial Summary - The company reported a GAAP net profit of $34 million for Q1 2024, with a non-GAAP net profit of $63 million, indicating a 51% year-over-year decline [1][4]. - The EBITDA for 2024 is projected to be $597 million, with a net profit margin of 27% and an adjusted net profit of $487 million [5][6]. - The report highlights a stable gross margin of 79% for the upcoming years, with operating profit expected to reach $481 million in 2024 [5][6]. Earnings Forecast - The adjusted net profit for 2024 is expected to be $487 million, with a compound annual growth rate (CAGR) of 7.6% projected for 2024-2026 [10][4]. - The report estimates total revenue for 2024 at $1.77 billion, with advertising revenue expected to remain stable at $1.54 billion [3][4]. Valuation Metrics - The report uses a PEG ratio of 1.00 for valuation, leading to a target price of $15.22 per ADS based on a projected adjusted net profit of $487 million for 2024 [9][10]. - The report compares the company with peers, indicating a stable market position and potential for growth in advertising revenue despite macroeconomic challenges [9][10].