We expect overall revenue of $900 million (YoY+19%) and Mintegral revenue of $830 million (YoY+43%) in 2022, with an adjusted profit of about $9.6 million, mainly due to an increase in gross profit margin and a significant reduction in traffic subsidies through algorithm optimization. Due to the high inflation in overseas markets, the tightening of the company's customer budget led to a slight slowdown in revenue growth in the second half of 2022.
Looking forward to 2023, with the gradual improvement of the macro environment, it is expected that the growth rate of Mintegral in 2023 will be higher than that in the second half of 2022. We believe that the company is expected to long-term benefit from the domestic Internet trend and category expansion brought about by the performance growth, to maintain the "buy" rating.
2022H2 performance outlook: we expect the company to have a revenue of about $900 million (YoY+19%) and a gross profit margin of 20% (YoY+3pcts) in 2022, and an adjusted net profit of about $9.6 million, turning a profit from the same period last year, mainly due to an increase in gross profit margin and a significant reduction in traffic subsidies brought about by algorithm optimization. From September 2, 2022 to January 31, 2023, the cumulative repurchase amount of the company exceeded HK $50 million, demonstrating long-term confidence.
Advertising technology business. ① Mintegral: according to the company's quarterly pipeline announcement, we expect Mintegral revenue of $825 million (YoY+43%) in 2022. 2022H2 overseas market inflation and other macro factors, corporate customer budget tightened, Mintegral flow growth slowed slightly, but the company's technical strength is still being consolidated. According to AppsFlyer's Advertising platform Comprehensive performance report (15th edition), in the first half of 2022, Mintegral ranked No. 3 in the global iOS, Android dual-end retention rankings and No. 3 in games (up 1 place compared to the second half of 2021). The expansion of the new category of the platform has achieved remarkable results. 2022Q4's non-super leisure game revenue increased by 57.7% compared with the same period last year, accounting for 44.4% of the total revenue of Mintegral compared with 34.4% of 2021Q4 to 47.8% of 2022Q4. We believe that with the gradual iterative upgrading of the platform algorithm and the continuous expansion of new vertical classes, the pipeline growth rate of the Mintegral platform in 2023 is expected to accelerate compared with the second half of 2022. ② Nativex: we expect the Nativex platform to generate revenue of $58.5 million (YoY-67%) in 2022, mainly due to the divestiture of the big media platform. Looking to the future, the company's advertising technology business is expected to continue to benefit from the game out to sea, its in-depth layout of overseas traffic + domestic game manufacturers' industry Know-how is expected to enable the company's long-term business growth.
Marketing technology business: we expect marketing technology revenue of $12.2 million (YoY+405%) in 2022.
Extension within the company, continue to improve the business layout, horizontal expansion of business boundaries, create Ad tech + Mar tech strategic matrix, strategic flywheel gradually began to operate. In the marketing technology business, GameAnalytics further strengthens the synergy with the advertising platform; the hot cloud platform improves the closed loop of the company's business, and the revenue scale increases gradually.
We expect that with the development of hot cloud platform, GameAnalytics and other businesses, it and the company's advertising technology platform will achieve higher quality business synergy and promote performance growth.
Risk factors: the risk that the new vertical income is less than expected; the risk that the gross profit level continues to decline due to market competition; the risk of loss of important customers; the risk of impairment of goodwill; the risk of user privacy data regulation; the risk of revenue pressure caused by macro factors.
Earnings forecasts, valuations and ratings: taking into account the narrowing of corporate budgets caused by global macro factors such as high inflation since the second half of 2022, we downgrade the company's revenue forecast for 2022-2024 to US $1.39 billion (the previous value is US $1.73 billion), a year-on-year increase of + 19%, plus 19%, and 26%, and 23%. The adjusted net profit forecast was lowered to $0.10 billion, $0.25 million (the previous forecast was $0.19 billion, $0.53 million). With reference to the valuations of comparable companies such as Applovin and Unity (according to Reuters consensus expectations, the average 2024 valuation is about 30x PE), and taking into account differences in growth and profitability, we give the company a 25x PE (adjusted) valuation in 2024, with a "buy" rating corresponding to the 2023 target price of HK $6.00 at a 10% discount rate.