【行业研究报告】欢聚-Riding on Bigo’s solid recovery

return,backedbyBigo’scontinuousrecoveryandmarginenhancement.In3Q23,
BigoachievedthefirstYoYpositivegrowthwithinsixquarters.Afteritsupbeat
3Q23,weexpectBigo’srecoverypacetocontinue(forecastingrev+1.2%YoYin
4Q23E),supportedbysolidrecoveryindevelopedmarkets.Halobizadjustment
mightdampen4Q23Etopline,butiswellacceptable,inourview.Weforecastadj.
netprofitoftheGroupatUS$48mnin4Q23E,withmargintobeslightlydilutedby
year-endcampaignsandKOLincentives.TofactorinHalobizadjustment,wetrim
toplineby1.4%-3.7%inFY23-25E,butraiseearningsby27%-36%toreflect
bettercostcontrol.MaintainBUYwithTPatUS$50.5.
Well-performing3Q23withdecentshareholderreturn.JOYYdelivered
upbeat3Q23resultswithrevenue+3.6%QoQ(-3.4%YoY),2%/2%aheadof
upbeat3Q23resultswithrevenue+3.6%QoQ(-3.4%YoY),2%/2%aheadof
consensus/ourestimates.BigoachievedthefirstYoYpositivegrowth(rev
+2.2%YoY,withpayingusers+6.6%YoY)insixquarters,backedbysolid
growthintheUSandEuropeandstabilizationoftheMiddleEast.Non-GAAP
NPwasatUS$81mn(non-GAAPNPMat14.3%vs.13.1%in3Q22),
surpassingconsensus/ourestimatesby57%/42%,mainlyonbetter-than-
expectedtopline,marginexpansioninBigoandcostcontrol.In9M23,JOYY
returnedUS$355.4mn(155.6%ofnon-GAAPNPduringthesameperiod)to
shareholdersthroughdividendsandsharebuybacks.Mgmt.willcontinueto
repurchasesharesactivelyin4Q23underarenewablesharepurchase
programofUS$530mnuntilNov2024.
Bigoinsolidrecoverymode,despitesoftguidanceonHaloadjustment.
Despiteglobalmacrouncertainty,wearepositiveonJOYY’shigh-quality
growthandglobalpositioningafterproactiveadjustmentsonnon-core
operations.Weforecast4Q23rev-8%YoY,5%belowconsensus,mainlyon
Halobizadjustment(~US$10mndeclineperquarter).Bigorevshould
continueitspositivegrowthin4Q23E(forecasting+1.2%YoY),backedby
solidrecoveryindevelopedmarkets.Grossingmightseesequentialgrowthin
DeconannualGala.Forothersegments,weforecasttotalotherrevat
RMB74mnin4Q23E(stableQoQ).GPM/OPMmightdecreaseQoQin4Q23E
duetoyear=endcampaignsandKOLincentives(forecastingBigonon-GAAP
OPM-2pptsQoQ).Lookinginto2024E,weforecastrev+1.5%YoY,withsolid
recoveryofBigo,withmargintostaystableYoY.
MaintainBUY.TofactorinHalobizadjustment,wetrimtoplineby1.4%-3.7%
inFY23-25E,butraiseearningsby27%-36%toreflectbettercostcontrol.
MaintainBUYwithanunchangedSOTP-basedTPofUS$50.5,byassigning
6xFY23EP/EtoBigoLive.