Mobvista's 1H23 result was better-than-feared, with rev +11% YoY (1% above our estimate) and profit at US$8.5mn (19% above our estimate). Margin beat on higher GPM and lower incentive. Midcore and hardcore games made a big breakthrough (+76% YoY), with rev mix up to 31% in 2Q23 (vs. 29% in 1Q23). We expect this ratio to continue to climb up in 2H23E. Looking ahead, we expect stronger momentum in 2H23E (forecasting rev >35% YoY growth), backed by:1) ROAS mode with enhanced algorithm to attract midcore & hardcore game ads budget; and 2) further upside from deeper cooperation with Google. Maintain BUY with SOTP-based TP at HK$6.3 (1.2x/1.0x FY23/24E P/S, or 58x/40x FY23/24E P/E, with 31% earnings CAGR in FY23-25E).

Better-than-feared 1H23. 1H23 rev grew 11% YoY, 1% above our estimate. Excluding the top agency business, topline growth would be 13.5% YoY. Profit came out at US$8.5mn, 19% above our estimate, mainly on higher GPM (20.3%, vs. our estimate of 19.4%) and lower incentive fee. Adj. EBITDA was US$51.8mn, largely in line.

Midcore & hardcore game stronger momentum to continue. Mintegral rev accelerated to +14% YoY in 2Q23, in which lifestyle, utility and game led the growth of 212.3%/30.7%/16% YoY. For game vertical (contributed 80% of Mintegral rev), midcore and hardcore games made a big breakthrough (+76% YoY), with rev mix up to 31% in 2Q23 (vs. 29% in 1Q23). We expect midcore& hardcore would continue to climb up, in our view. By geography, China/ EMEA and Americas/ Asia-Pacific / Other regions rev +15%/+12.5%/+0.8%/+35.2% YoY. With recovering ads budget in overseas market, we expect EMEA to be the key growth driver in 2H23E.

Further upside from ROAS mode and cooperation with Google in 2H23E. Given strong game seasonality and ROAS contribution, Mintegral's rev surged >+30% YoY in Jul and early Aug, in our estimates. We expect 2H23E to see more upside from: 1) deeper cooperation with Google, and 2) algorithm optimization in in-app purchase of ROAS mode to attract rising budget from midcore & hardcore games. As such, we forecast 2H23E rev >35% YoY, with adj. NM at 2.3%. Margin improvement would be intact, with higher ads efficiency and narrowing Reyun loss.

Maintain BUY. We maintain our financials forecast unchanged, with TP at HK$6.3 (by assigning 30x FY23E P/E to ad-tech biz and 3.3x FY23E P/S to mar-tech biz).