The Zhitong Finance App learned that CITIC Securities released a research report stating that it maintains the “buy” rating of Huiliang Technology (01860) and believes that it is expected to benefit from the growth in performance brought about by domestic Internet outbound trends and category expansion in the long term. The target price is HK$6. The company's revenue in 2022 was in line with expectations (YOY +18%), and profits turned positive year over year. Looking ahead to 2023, with the improvement of the macro environment and the introduction of a new product architecture that focuses on improving delivery efficiency, the bank expects its performance growth to return to the fast track, and the rapid development of AI is also expected to further open up space for efficiency optimization and market expansion.

According to the report, looking at each business,Ad tech sector:Mintegral achieved revenue of 830 million in 2022, an increase of 43.5% over the previous year. Thanks to leading efficiency advantages and scale effects, Mintegral's revenue scale grew steadily. The Ad-Tech sector achieved gross profit of 170 million US dollars, with a gross margin of 19.1% (yoy+3.2pcts). The company will focus on optimizing ROAS this year. Based on Mintegral's investment efficiency advantages, and the increase in algorithm model iteration speed brought about by increased R&D investment and system architecture upgrades in 2022, combined with the improvement in the external environment and the major trend of Chinese manufacturers going overseas, it is expected to further unleash the growth momentum of the advertising technology sector.

Marketing technology sector:Revenue is growing rapidly, and collaboration capabilities are constantly being strengthened. In 2022, the revenue contribution (net revenue scale) of the Mar-Tech sector reached 5.6% (yoy+3.9pcts), and the GA/thermal engine business achieved revenue of 1.4/11.2 million dollars (yoy +56%/+632%); the Mar-Tech sector achieved gross profit of 85.27 million US dollars, with a gross margin of 67.7%. With the completion of the integration of Thercloud Data with the company and the upgrading of products and services, the synergy between the Mar-Tech sector and Ad-Tech is expected to be strengthened, and the closed loop of advertising and data analysis is expected to be further improved, thus jointly driving performance growth.

The bank mentioned that in the short term, going overseas is still an important driving force for the company's performance growth. At present, Huiliang Technology has accumulated deep traffic advantages overseas. In 2022, based on the cumulative number of devices reached, 96.1% of the traffic contribution came from overseas. New products began to expand overseas in 2023Q2, which is expected to be a strong driver for the company's performance growth. Looking at the medium to long term, as AI accelerates the implementation of the industry, the big language model is expected to be deeply integrated with the company's vertical industry model, leading to an increase in operating costs and R&D efficiency, thereby further expanding market space. The company will also open a small R&D center in Silicon Valley to accelerate the advancement of large-scale model projects by linking local resources.