欢聚：核心产品持续复苏，短期利润增长承压

Investment Rating - The report assigns a "Neutral" investment rating to the company, YY US, with a target price of $33.00, indicating a potential upside of 1.1% from the current closing price of $32.65 [1][17]. Core Insights - The company's core products are showing signs of recovery, although short-term profit growth is under pressure. In Q1 2024, YY US reported revenues of $570 million, a year-on-year decrease of 3% but slightly above expectations. Adjusted operating profit was $25 million, compared to $28 million in the same period last year, and adjusted net profit was $67 million, up 35% year-on-year, exceeding both internal and market expectations [1][2]. Financial Performance Summary - Q1 2024 revenue was $570 million, slightly above the forecast of $550 million, with a year-on-year decline of 3% and a quarter-on-quarter increase of 1% [1][13]. - Adjusted net profit for Q1 2024 was $67 million, a 35% increase year-on-year, surpassing expectations of $52 million [1][2]. - The company’s BIGO segment saw revenue growth of 8% year-on-year, driven by an increase in paying users and a significant rise in non-live revenue, which grew by 195% [2][3]. - The management has guided for Q2 2024 revenue to be between $538 million and $569 million, aligning closely with market expectations [2][3]. Valuation and Market Sentiment - The target price has been revised down to $33 from $37, reflecting a 9x P/E ratio for 2024. The company has been actively repurchasing shares, with $54.5 million allocated for buybacks in Q1 2024 [2][3]. - Despite the recovery in core business, short-term profit growth is expected to be constrained, particularly due to the impact of Baidu's termination of the YY Live transaction on investor sentiment [2][3]. Financial Forecasts - Revenue projections for 2024 are set at $2.288 billion, with a slight year-on-year growth of 0.9%. Net profit is expected to decline by 17% to $240 million [3][18]. - The company anticipates a gradual recovery in its core business, with adjusted net profit forecasts for 2024 being revised down by 10% to $240 million [2][3].