Summary of HuiLiang Technology Conference Call Company Overview - HuiLiang Technology primarily relies on in-game advertising monetization and is actively expanding its In-App Purchase (IAP) advertising monetization products. The IAP model is expected to significantly enhance revenue and profit margins once the algorithms mature [2][5]. Core Industry Insights - The non-gaming market presents substantial potential, with e-commerce advertising scale nearly three times that of gaming advertising. Additionally, overseas long-tail traffic is growing rapidly, indicating significant growth opportunities for HuiLiang Technology in the non-gaming sector after optimizing its Cost Per Engagement (CPE) algorithms [2][6][7]. - Programmatic AI advertising utilizes AI algorithms for intelligent distribution of long-tail traffic, improving monetization efficiency. Profit is derived from the difference between upstream ROI and downstream purchasing costs, with an emphasis on increasing ROI to boost profits [2][8]. Financial Projections - Revenue growth for HuiLiang Technology is projected to be approximately 30% in 2026, with a surge to 40% in 2027 as IAP gains traction. The company aims to optimize algorithms to improve gross margins, with a target market valuation of around $5 billion [3][13]. - The company’s revenue growth is closely tied to the release schedule of its algorithms. Following the completion of the IAP and Hybrid algorithm ramp-up in 2025, a new phase of revenue growth is anticipated [10]. Competitive Landscape - The growth of HuiLiang Technology's programmatic advertising platform is primarily driven by enhancements in its algorithms. By accumulating advertising data, the company can empower algorithm development, creating a flywheel effect that positions it favorably within the industry without excessive internal competition [4]. - The overseas programmatic advertising market has a higher proportion of long-tail traffic, with a concentration ratio (CR10) of less than 75%, compared to over 95% in the domestic market. This abundance of long-tail traffic provides ample growth opportunities without intense internal competition, allowing companies to focus on algorithm optimization to secure budgets [9]. Advantages of IAP Algorithm - The IAP algorithm offers significant advantages in advertising monetization. IAP users typically represent high-value traffic, as they are often heavy users whose in-app purchase value far exceeds revenue from ad clicks or visits. The algorithm requires precise traffic targeting to attract deep users, thereby enhancing monetization efficiency [11]. Growth Potential in Non-Gaming Applications - Non-gaming applications, such as e-commerce, social, and utility apps, have vast development potential. The e-commerce advertising market alone is approximately 2.7 times the size of the entire gaming market, with absolute growth rates significantly outpacing gaming advertising. HuiLiang Technology's algorithm performance on third-party platforms is expected to surpass that of leading platforms, allowing it to capture more market share [12]. Profitability Outlook - The company is expected to maintain a healthy financial status with no cash flow pressure, a receivables cycle of around three months, and no significant bad debt risk. Adjusted net profit is projected to be approximately $130 million in 2026, corresponding to a target market valuation of about $5 billion, equating to a current share price of approximately 24.6 HKD [13].
汇量科技20251231