【行业研究报告】虎牙-Challenges to linger

20May202220May2022PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGEMOREREPORTSFROMBLOOMBERG:RESPCMBRANDhttp://www.cmbi.com.hkChinaInternetSectorSophieHuang(852)39000889sophiehuang@cmbi.com.hkEasonXu(852)39000849easonxu@cmbi.com.hkStockDataMktCap(US$mn)927Avg3mthst/o(US$mn)12.0852wHigh/Low(US$)18.13/3.04TotalIssuedShares(mn)87Source:BloombergShareholdingStructureMorganStanley24.57%TeachersInsurance&AnnuityAssoofAmerica8.84%ARKInvestment6.23%Source:BloombergSharePerformanceAbsoluteRelative1-mth-14.1%-2.9%3-mth-36.1%-23.5%6-mth-59.3%-45.3%Source:Bloomberg12-mthPricePerformanceSource:BloombergAuditor:Ernst&YoungRelatedReports1.Reinvestingforgrowth-11Nov20212.Initiation:GamestreamingleaderwitheSporttailwinds–18Jun202102468101214161820May-21Aug-21Nov-21Feb-22HUYAUSCCMP(rebased)(US$)BUY(Maintain)TargetPriceUS$6.0(PreviousTPUS$11.0)Up/Downside+45.3%CurrentPriceUS$4.13HUYAreported1Q22resultswithrevlargelyin-linewhilenon-GAAPearningsbeat.Rev-5%YoYtoRMB2.5bn,withlivestreaming-10.1%YoY.Non-GAAPGPMwas13.5%withrisingcontentcostsandhigherrevenuesharingfees,whilenon-GAAPNPrecordedatRMB47mn,25%aboveconsensus,attributabletolower-than-expectedopex.Thesoftmomentumin2Q22Ewouldcontinue(forecasting-19%YoY),dampenedbytighteningregulations.LookingintoFY22E,weturnmoreconservativeonlivestreaminggivenweakerconsumptionsentimentwithsoftmacroandregulatoryadjustments(removingrankingsofvirtualgiftingfromMay).WetrimmedFY22E-24Erevby1-6%,toreflectepidemicimpactandlivestreamingadjustment.MaintainBUYwithlowerTPatUS$6.0(0.9xFY22EP/S).1Q22beatonmargin.Rev-5%YoYtoRMB2.5bn,2%aboveconsensus.Livestreaming-10.1%YoYduetodecreasingARPPUonHUYALiveamidtheweakermacroenvironment,whileadsandotherrev+47.2%drivenbytheincreaseincontentsub-licensingrev.Non-GAAPGPMwas13.5%withrisingcontentcostsandhigherrevenuesharingfees,whilenon-GAAPNPrecordedatRMB47mn,aheadofconsensusatRMB37mnattributabletolower-than-expectedopex.Challengesyetover.Weexpectrevtodecline19%YoYin2Q22E,inwhichlivestreamingwouldremainflatQoQ,whileadsandotherswoulddrop44%YoYgiventhelackofsublicensingincomeandnegativeimpactsonadsunderlockdownsdisruption.Lookinginto2022E,livestreamingwouldbemorechallenging,given:1)softmacrotodampenconsumptionsentimentonlivestreaming,2)tighteningregulationsthatremoverankingsofvirtualgiftinginMaytolessenusers’willingnesstotip.Marginimprovementtodelay.MgmtguidedthatGPMwillbeat~9%in2Q22Eduetostablerevenuesharingratioandslightlyrisingcontentcosts.Netlossmarginwouldbe~3%in2Q22E,duetocontinuousopexoptimizationoffsetbyone-offcostsfromthebusinessadjustment.Goingforward,weexpectmarginenhancementtodelaywithmutedlivestreamingowingtoregulatoryheadwinds.MaintainBUY.WetrimmedFY22E-24Erevby1-6%,toreflectepidemicimpactandlivestreamingadjustment.MaintainBUYwithlowerTPatUS$6.0(0.9xFY22EP/S).EarningsSummary(YE31Dec)FY20AFY21AFY22EFY23EFY24ERevenue(RMBmn)10,91411,3519,5809,6289,877YoYgrowth(%)30.34.0-15.60.52.6Adj.netincome(RMBmn)1,262833-330-148103Adj.EPS(RMB)5.293.45-1.34-0.590.40YoYgrowth(%)63.6-34.8NANANAConsensusEPS(RMB)NANA-1.17-0.151.83P/E(x)5.07.7NANA65.9P/S(x)0.590.560.670.660.65Yield(%)0.00.00.00.00.0ROE(%)12.97.9-3.2-1.51.0Netgearing(%)NetcashNetcashNetcashNetcashNetcashSource:Companydata,Bloomberg,CMBIGMestimates