We expect the company's 4Q22 Non-GAAP net profit to decline by 39.7% year-on-year. Weibo Corp is expected to release 4Q22 results in March. We expect the company's 4Q22 revenue to be $438 million, down 29.0% from a year earlier, and 4Q22 Non-GAAP 's net profit to be $469 million; 4Q22 Non-GAAP 's net profit is $118 million, down 39.7% from a year earlier, corresponding to a Non-GAAP net interest rate of 26.9% and a consensus estimate of $125 million.
Pay attention to the main points
E-commerce in the fourth quarter and the World Cup led to some advertising, but the short-term business pressure remains. In terms of users, hot events such as the 4Q22 World Cup contributed to the performance of Weibo Corp users. According to the month-on-month growth of Weibo Corp MAU from November to December of QuestMobile,2022, the MAU increased by 3.5% and 3.4% respectively, showing Weibo Corp's product advantage of differentiated hotspot ecology. On the business side, we believe that benefiting from the rapid promotion of e-commerce and World Cup theme marketing, despite the repeated impact of the epidemic, 4Q22's advertising business is still relatively stable (RMB caliber), in which food and beverage, e-commerce platforms and other industries advertisers are relatively positive, but as the advertising market is still in the process of gradual recovery, we believe that the year-on-year performance of advertising revenue is still weak. We expect 4Q22's advertising and marketing services revenue to be $380 million, down 31.1% from a year earlier. The performance of the company's value-added business is relatively stable, and we expect 4Q22 value-added services revenue of $57.93 million, down 11.5% from the same period last year.
The company has a strong ability to control expenses and maintain profitability and resilience. In terms of gross profit margin, due to the cost of advertising production, copyright content and other costs, we expect 4Q22's gross profit margin to drop slightly to 78.5% month-on-month. In terms of expense rate, we believe that relying on the high gross margin business model and relatively mature business state, the company has a strong business control ability and maintains a steady profit level. in addition, due to the postponement of offline activities such as Red Man Day in the fourth quarter due to the impact of the epidemic, release a certain profit space. We expect the net interest rate of 4Q22 Non-GAAP to be 26.9%, which is basically the same as the previous month.
The external environment warms up and reduces costs and increases efficiency, waiting for the company's performance growth to be repaired. Looking forward to 2023, we believe that the company is expected to benefit from the overall repair trend of the advertising industry. Weibo Corp, as the main position of brand advertising, with FMCG customers as the basic business, if consumer demand recovers quickly, the company's revenue growth may be more resilient. At the same time, games, new energy vehicles and other industries are also expected to continue the trend of active investment. In addition, the company has improved its profit performance by reducing inefficient channel input and optimizing personnel structure, and the company has also indicated at the 3Q22 performance meeting that it plans to steadily increase its operating profit margin in 2023 while maintaining core competitiveness investment and new business development.
Profit forecast and valuation
We basically maintain the 2022-2024 profit forecast, maintain the outperform industry rating and the Hong Kong stock / US stock target price of HK $194.0 / US $25.0, which corresponds to 11 times 2023E Non-GAAP Pmax E. At present, the company's Hong Kong shares and US stocks are traded at 9x7x 2023max 2024 Non-GAAP PUBG E, and the target price upward space for Hong Kong stocks / US stocks is 20.0% and 20.6% respectively.
Risk.
Repeated epidemic or macroeconomic recovery is lower than expected, industry regulatory policies continue to strengthen, industry competition intensifies, investment impairment risk.