Core views:

The company released 24Q3 earnings report: 24Q3 revenue reached 0.464 billion US dollars, YOY/QoQ +5%/+6%, vs. Bloomberg's agreed forecast of 0.437 billion US dollars (over 6%). NongAAP's net profit to mother was $0.139 billion, YOY/QoQ +2%/+10%, vs. the agreed forecast of 0.12 billion (over 16%). 24Q3 gross margin reached 80%, up 1.4 pct year on year and 0.6 pct month on month. 24Q3 sales cost $0.123 billion, YoY +12%, QoQ +8%. 24Q3 R&D costs $80.41 million, YOY/QoQ -3%/+12%. $27.3 million in administrative expenses, YoY +26%, QoQ +2%.

The 24Q3 advertising industry was driven by the hot spots of the Summer Olympics, and the number of customers and marketing increased, and the food, beverage, and footwear categories performed well. 24Q3 ad revenue was $0.399 billion, YoY +2%, QoQ +6%, vs. consistent expectations of $0.377 billion. The overall advertising performance in the third quarter was higher than expected due to the hot marketing of the Summer Olympics. The overall sales amount for the Summer Olympics was high. The total number of advertisers and the number of Olympics-related customers was higher than in previous major events.

Looking at the industry, food and beverage, apparel, footwear, and apparel in FMCG, such as sporting goods, have all seen good growth. 24Q3VAS revenue was $65.87 million, YoY +25%, QoQ +5%, vs. agreed expectations of $57.66 million. Mainly due to the growth brought about by the membership business, the ratio of subscribers/DAU is relatively stable, and ARPU continues to increase.

Profit forecasting and investment advice. Weibo showcased the social media platform as an eventful hot topic in the operation of the Olympics. The platform's characteristics continue to absorb advertisers' budgets. The company is increasing the upgrading of marketing products in the category of new products, and the decline in the beauty category is basically about to bottom. We expect the company's revenue to reach $1.76 billion and $1.85 billion in 2024-25, an increase of 0.2%/4.8%. The adjusted net profit for 2024-25 is estimated at $0.481 and $0.49 billion, up 6.7% and 2.0% year-on-year.

Referring to the valuation of other internet media platforms, the adjusted net profit for 24 years was given 6 times PE, with a reasonable value of 11.86 USD/ADS (HK$92.31 per share), maintaining the “buy” rating.