【Company Research】Momo (MOMO US) – Mixed 1Q20; Cautious on ST recovery pace

Momo delivered mixed 1Q20 results, with revenue/adj. net profit -3.5%/-19% YoY, 3%/9% above consensus. 2Q20 guidance came in at -6.1%~-8.5% YoY, midpoint 1% below consensus. User metrics performed soft. 2Q20E would still see pressure, given moderate traffic and suppressed gifting willingness. We are conservative on its short-term recovery pace, given COVID-19 challenges and competition from short videos. We keep our financial forecast unchanged, with TP of US$29.4 (13x FY20E P/E).  As most headwinds have been priced in recent soft stock price, we maintain BUY for low valuation and upcoming catalysts (e.g. topline recovery, Tantan’s monthly breakeven).

 

  • 1Q20 beat, while guidance & user metrics were soft. 1Q20 revenue declined 3.5% YoY, 3%/3% above our estimates/ consensus. Non-GAAP net profit declined 19% YoY, 8%/9% above our estimates/consensus. 2Q20E guidance came in at -6.1%~-8.5% YoY, midpoint 1% below consensus, mainly on COVID-19 impact. User metrics declined, with MAU -6% YoY/QoQ, paying users -8% YoY/-7% QoQ.

 

  • Waiting for 2H20E recovery. 1Q20 livestreaming revenue -13% YoY, while VAS +30% YoY. As stated in our preview note, user metrics declined in 1Q20, and would gradually recover in 2Q20E. Financials recovery might lag behind users. Momo would still bear near-term pressure from COVID-19 in 1H20E due to: 1) soft momentum with work resumption delay and social distancing; and 2) suppressed gifting willingness by soft consumption power under macro uncertainty, especially for top spenders. We are conservative on its live streaming growth in 2H20E, and expect livestreaming to deliver positive revenue YoY growth until 1Q21E.

 

  • Tantan to face near-term user growth pressure. Tantan’s revenue +29% YoY (+3% QoQ) in 1Q20. Its paying users declined to 4.2mn in 1Q20 (vs. 4.5mn in 4Q19), for iOS new subscription policy and weak engagement under COVID-19. We expect Tantan’s revenue to accelerate in 2H20E, supported by user recovery and enhanced features. Tantan would see narrowing net loss quarter by quarter in FY20E.  

 

  • Maintain BUY. We keep our financial forecast unchanged, with TP of US$29.4 (13x/10x FY20/21E P/E). Given multiple challenges from COVID-19 and traffic pressure in 1H20E, we suggest investors to wait for more clear signals for its recovery.
点击阅读原文

公司地址:香港中环花园道三号冠君大厦45-46楼

电话:(852)3900-0888 传真:(852)3761-8788

招银国际版权所有 Copyright © 2019-2020 CMB International Capital Corporation Limited. All rights reserved.

  • 扫码关注我们
  • 扫码下载壹隆环球App