Xiaomo expects that based on a fixed exchange rate, Weibo-SW (09898)'s core advertising revenue in the first quarter of this year will drop slightly by 2% year-on-year, while remaining flat throughout the year.
The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that it maintains the Weibo-SW (09898) “neutral” rating. Although the valuation is close to a record low, investors are still advised not to re-examine the group until China's online advertising prospects begin to improve. The target price was lowered from HK$90 to HK$84.
According to the report, investors' overall interest in online business has increased, and the company's stock price performance has also improved relatively since February. However, due to low advertising demand and loss of market share due to competition, the bank remains cautious about Weibo's prospects. However, the bank believes that the Group's return on value to shareholders provides downward protection for current stock prices.
The bank expects that, based on a fixed exchange rate, the Group's core advertising revenue in the first quarter of this year will drop slightly by 2% year on year, and will remain flat throughout the year. It also expects the company's total advertising revenue to rise by 2%; operating profit margin and net profit margin for the whole year will drop slightly. The bank believes that the Group's profit growth prospects for this year are still weak, and it is expected that net profit will decline in units year on year. Based on anticipated increases in operating expenses, this year's non-GAAP earnings per share will also be cut by 13%.