WEIBO CORP(9898.HK)：1Q25 BEAT;ACCELERATED AI FOR DIFFERENTIATED AND ENHANCED CORE SOCIAL COMPETENCIES-格隆汇

机构：中银国际
研究员：Raphael CHEN/Dolores Tang

　　+1% YoY c.c topline and core ad revenue in 1Q25 led consensus andBOCIe mainly due to skyrocketed 89% YoY Alibaba ad on its CNYfestival promotions and AI products marketing. 30.1% adj. NPM alsobeat consensus. We deem Co. dedicates to accelerate its AIinvestments, integrations and adoptions into its social ecosystem toenhance its core social competencies for broadened ad monetisationopportunities. We see brand ad is still under pressure amid currentmacro conditions and key advertisers’ dynamic ROI-oriented budgetallocations. Maintain HOLD and US$10.0/HK$79.0 TP unchanged.
　　Key Factors for Rating
　　Accelerated AI investments, adoptions and integrations. We deem Co.
　　will continue explore the integrations and adoptions of AI into its core socialecosystem across search, social interaction, content ecosystem, contentrecommendation and commercial advertising scenarios to strengthen the corestrengths of existing products, drive user growth and deepen engagement, andultimately enhance commercialisation. These accelerated AI adoptions into corein-app consumption scenarios will enhance Co.’s ad products competitivenessamid ROI-oriented budget allocations of various key advertisers. Thus, we raiseour FY2025 ad revenue forecast by 2% due to increased Alibaba ad spending.
　　Our raised FY2025 adj. EPADS forecast mainly reflects the company’s disciplinedSG&A despite accelerated AI-related investments.
　　1Q25 clean beat mainly on Alibaba ad. Total revenue of US$397m (flattishYoY/ +1% YoY on c.c) was 1% above consensus. Core online ad revenue wasflattish YoY or +1% YoY on c.c.. Non-Alibaba ad revenue declined by 6% YoY,mainly dragged by online game and handset sectors while being partially offsetby auto, eC, food & beverage sectors. Alibaba ad revenue surged by 89% YoYon strong promotional demand from Spring Festival Gala and AI-relatedproducts. VAS revenue grew 2% YoY. MAUs/DAUs stood at 591m/261m. Adj.
　　NPM was 30.1%, beating consensus of 24.0%.
　　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 change of key advertisers; (ii) slowerthan-expected macro and ad rebound; (iii) competition; and (iv) ADR delisting.
　　Valuation
　　Maintain HOLD and TP US$10.0/HK$79.0 on unchanged 5.5x 2025E adj. EPADS.