2023H1, which achieved revenue of $510 million (yoy+11%) and core business Mintegral of about $500 million (yoy+11%), achieved an adjusted net profit of $8.941 million and an adjusted net interest rate of 1.8%. In May 2023, the company's Ad-Tech launched the intelligent bidding system Target ROAS, which can bid more differently and dynamically by estimating the advertising value of each user, so as to optimize the effect of advertisers and improve the gross profit margin of the advertising platform. In July, Mintegral reached an all-time high in a single month, and we recommend that we pay attention to the growth momentum that Target ROAS brings to the company's 2023H2 and 2024 after its launch, and maintain its "buy" rating.
Performance overview: performance is in line with expectations and rates continue to improve. 2023H1, the company realized revenue of US $510 million, an increase of 11% over the same period last year, of which Ad-Tech/Mar-Tech revenue accounted for 94.6% and 5.4% respectively; net income reached US $140 million, an increase of 22.7% over the same period last year, and the net income ratio was about 27%, increasing 3pcts over the same period last year. Gross profit was $100 million and gross profit margin was 20.3%, an increase in 0.6pct compared with the same period last year. In terms of expenses, the company's sales / R & D / management expenses are US $2.704 million, respectively, and the rates are 5%, 8%, 5%, respectively, reducing 4/3/0pcts compared with the same period last year. On the profit side, the company made a net profit of $8.52 million and a net profit margin of 1.7%, compared with $21.65 million in the same period last year, mainly including a gain of $48.8 million from the sale of subsidiaries and head media agency business, with a net loss of $27.1 million excluding 2022H1. 2023H1, the company achieved an adjusted net profit of US $8.941 million and an adjusted net interest rate of 1.8%.
Advertising technology business: the steady growth of advertising streams, and the launch of ROAS products promotes Mingtegral to reach a new high in a single month. 2023H1, the company's advertising technology business, achieved revenue of US $498 million, an increase of 11.1% over the same period last year, of which Mintegral realized revenue of US $470 million, an increase of 13.9% over the same period last year, and revenue of US $30.98 million, a decline of 19.4%. Ad-Tech has a gross profit of $97.48 million and a gross profit margin of 19.5%, an increase in 0.5pct compared with the same period last year. In terms of category, the proportion of income from moderate and heavy games / light games / non-games in 2023H1 Mintegral is 29.7%, 50.4% and 19.9% respectively, which is a year-on-year change in 10.5/-9.1/1.4pcts. In May 2023, the company launched the smart bid product Target ROAS, which can bid more differently and dynamically by estimating the advertising value of each user, and the better launch effect will enable Mintegral to achieve a new monthly record in July. We believe that the launch of Target ROAS products is expected to further optimize the delivery effect of advertisers, and is also expected to promote the company's breakthrough in medium and heavy games and non-game categories.
Marketing technology business: the introduction of LLM/AIGC enabling marketing creativity. 2023H1, the company's marketing technology business achieved revenue of US $7.32 million, an increase of 10.3% over the same period last year, of which the proportion of statistics and analysis / material management / advertising services / math optimization was 52.6%, 33.1%, 12.0%, 2.3%, respectively. The marketing technology business has a gross profit of $5.48 million and a gross profit margin of 74.9 per cent. Under the tide of AI technology, the company is using LLM/AIGC to reconstruct marketing-related business. at present, it is the first to introduce image generation and image processing models such as Stable Diffusion and MetaSegment Anything, and put some functions online to Mar-Tech 's Playturbo material production tools to improve the efficiency of advertisers' marketing content production. We believe that, as the world's leading marketing technology company, the company is expected to make use of the ability of large models to improve the marketing efficiency of advertisers and continue to win customers, and turn marketing technology customers into advertising technology customers to achieve rapid realization.
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 iterative technology research and development.
Earnings forecast, valuation and rating: we maintain the revenue forecast for 2023-2025 of US $1.32 million, an increase of 25%, 23%, 19%, and an adjusted net profit forecast of US $0.24, 0.48, and 92 million for 2023-2025, an increase of 144%, 102%, 91%. With reference to the valuations of comparable companies such as Applovin and Unity (according to Reuters consensus expectations, the average 2024 valuation is about 35x PE), and taking into account differences in growth and profitability, we give the company a 2024 30x PE (adjusted) valuation of HK $6 corresponding to the target price of HK $6 in 2023 at a 10% discount rate.