WEIBO CORP(9898.HK)：4Q24 PROFIT BEAT;EXPECTING AI EMPOWERMENTS TO ENHANCE CORE SOCIAL STRENGTHS-格隆汇

机构：中银国际
研究员：Raphael CHEN

　　4Q24 -1% YoY/ flattish YoY topline on constant currency slightly led consensus. 23.3% adj. NPM beat consensus. We expect Co. will continue execute high quality user growth, vertical content ecosystems and operational efficiency as core strategic priorities and will accelerate AI investments and applications leveraging their data, content, KOL and celebrity edges to amplify their social marketing strengths in 2025. However, we expect non-material revenue contribution from AI and believe key advertisers will sustain cautious marketing spending behaviours amid current macro conditions. Maintain HOLD and TP unchanged at US$10/HK$79.
　　Key Factors for Rating
　　Increased AI investments and integrations. We deem Co. will increase AI investments and accelerate AI empowerments by leveraging their data, content, KOL, celebrity edges to solidify their core content marketing strengths in 2025. ROI-oriented user growth, vertical content ecosystems, products/ infrastructures enhancements and operational efficiency will continue to be the strategic priorities in 2025. In terms of verticals, we expect eCommerce platforms, 3C, auto and Internet services will continue their growth momentum while game, luxury, cosmetics and personal care will be less predictable amid macro uncertainties in 2025. Thus, we slightly trim our FY2025-26E revenue forecasts by 1%. Our lower FY2025-26E bottom line estimates mainly reflect our increased opex, primarily R&D, assumptions due to Co.’s increased AI-related investments.
　　4Q24: profit beat; adoption of annual dividend policy. Total revenue of US$457m (down -1% YoY/ flattish YoY on c.c) beat consensus by 1%. Core online ad revenue dropped by -4% YoY or -3% YoY on c.c mainly impacted by underperformed game on high base, with non-Alibaba and Alibaba ad revenue logging -4% YoY and -10% YoY respectively. VAS revenue continued its solid momentum, growing at 18% YoY mainly due to SVIP. MAUs/DAUs were 590m/260m. Adj. NPM was 23.3%, beating consensus. Co. announced the adoption of annual dividend policy and US$200m dividends for FY2024.
　　Key Risks for Rating
Upsides: (i) macro and ad recovery; (ii) supportive policies; (iii) key advertisers’ brand ad rebound; (iv) new ad products; and (v) novel monetisation models.
Downsides: (i) marketing behavioural changes of key advertisers; (ii) slower- than-expected macro and ad rebound; (iii) competition; and (iv) ADR delisting.
　　Valuation
Maintain HOLD and TP of US$10/HK$79 on unchanged 5.5x 2025E adj. EPADS.