Mintegral contributed to revenue growth for six consecutive quarters, maintaining the “Buy” rating company's 2024Q1 revenue of US$301 million (+23.3% YoY, +8.2% YoY); achieving adjusted net profit of US$8868 million (+96.6% YoY, +45.0% YoY); and an adjusted EBITDA of US$306.97 million (+17.7% YoY, +2.7% YoY). The company's programmatic advertising platform Mintegral had revenue of $284 million (+25.4% YoY, +10.3% YoY), accounting for 94.1% of revenue. Profit side growth was driven by Mintegral's strong revenue growth. The company's 2024Q1 revenue and profit both reached record highs, and it has been profitable for six consecutive quarters since 202Q4. Based on the company's continuous profit forecast, we maintain our 2024-2026 profit forecast. We expect the company's net profit to be $0.40/0.72/088 billion for 2024 to 2026, corresponding EPS of 0.03/0.05/0.06 US dollars, respectively, and the current stock price corresponding to PE is 16.8/9.3/7.6 times. We are optimistic that Mintegral will continue to contribute revenue growth. Maintain a “buy” rating.
The advertiser structure tends to be rich. E-commerce customers and medium to heavy game customers may continue to drive Mintegral's growth company's advertiser structure. Mintegral's non-game category achieved revenue of about US$80.8 million (+83.2% YoY, +8.8%), accounting for 28.5% of Mintegral's total revenue (+9.0 pct year over year), with e-commerce customers becoming an important driving force. The game category remains the basic revenue market, achieving revenue of US$203 million (+11.4% YoY, +10.9% YoY), accounting for 71.5% of Mintegral's total revenue, with medium to heavy game customers continuing to expand. According to SensorTower, heavy games account for 59% of the global mobile game market in 2023, and the company may continue to cultivate medium to heavy game customers, increase the retention of medium to heavy game users, and drive revenue growth.
Profitability has increased, investment in ROAS R&D continues to be increased, and technology has enabled revenue space to increase operating costs by 21.3% year-on-year to US$240 million in 2024Q1. The main reason is the increase in traffic and server costs due to increased business scale, while amortization of intangible assets has increased. The gross margin of 2024Q1's advertising technology business was 19.7%, up 1.4 pct year on year, driving overall gross margin up 1.3 pct to 20.5% year over year. On the cost side, 2024Q1's sales expenses increased 5.1% year on year to 13.17 million US dollars, mainly due to the increase in bidding fees; R&D expenses increased 57.8% year over year to 29.52 million US dollars, mainly due to continuous investment in the intelligent bidding system. The company's net margin for 2024Q1 was 2.35%, up 1.0 pct year-on-year. The company continues to increase investment in ROAS research and development, and technological empowerment may open up the company's commercialization space.
Risk warning: advertising industry policy changes, increased competition in the industry, AI applications falling short of expectations, etc.