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Weibo reported its 3Q22 results on 17 Nov. 3Q22 revenue was down by 25% YoY (or -20% YoY on a constant currency basis) to US$454mn, largely in line with our/consensus estimate of US$469/460mn. 9M22 revenue declined by 15% YoY, as the macro headwind and resurgence of COVID-19 weigh on ad demand. Non-GAAP net income dropped by 43% YoY to US$119mn, in line with consensus estimate of US$120mn. The decline was primarily due to the contraction of GPM and in addition to the weak top-line growth. For 4Q22E, management expects Weibo’s YoY decline rate of revenue to narrow, as ad budget of e-commerce and FMCG advertisers stabilize and the World Cup may further boost ad demand. We revised down FY23/FY24 non-GAAP net income by 5/3% as the slow recovery of advertising demand continues to dampen Weibo’s earnings growth outlook. We lower our target price by 7% to US$20.3, based on 9x 2023E PE. Maintain BUY. Early recovering trend in Double 11. Ad revenue was down by 27% YoY to US$393mn in 3Q22 (1Q22/2Q22: +9.5/-23.2% YoY). Weibo continued to see weak advertising demand in categories such as FMCG, e-commerce and 3C, mainly due to the weak consumption sentiment and the impact of COVID-19. That said, Weibo still recorded double-digit YoY growth of ad revenue from auto and luxury categories, as Weibo continues to innovate its ad products and improve ad ROI. Besides, Weibo saw that the ad budget from e-commerce and FMCG categories during this year’s Double 11 returned to positive YoY growth track, showing early recovery of overall ad demand. Ad revenue from Alibaba dropped by 28% YoY to US$15.0mn in 3Q22, which is largely inline with the overall performance of Weibo ad business. VAS revenue declined by 14% YoY to US$60mn in 3Q22. Healthy user growth with enhanced efficiency. Weibo’s MAUs grew 2% YoY to 584mn in Sep 2022, with stable DAU/MAU ratio at 43.3%. Weibo saw strong YoY recovery of user traffic in the entertainment area, with user traffic viewing TV series and variety show related content on Weibo doubled YoY in 3Q22E. Overall GPM was down by 4ppt YoY to 79.2% in 3Q22, as Weibo increased content investment and resumed payment of cultural business construction fees in 2022. The decelerating top-line growth and GPM contraction dragged non-GAAP net margin from 34.5% in 3Q21 to 26.2% in 3Q22. Looking into 4Q22E, Weibo will continue to execute its strategy to reduce costs and improve operating efficiency. Maintain BUY. We lower our TP by 7% to US$20.3, based on 9x 2023E PE. Current valuation of 7x 2023E PE was the lowest among its peers. We expect its non-GAAP earnings to deliver 9/8% YoY growth in FY23/FY24, and also expect free cash flow improvement from US$306mn in FY22 to US$359/417mn in FY23/FY24E. Current valuation offers attractive value.【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

关键词： recovery