Hello (MOMO) 华泰证券·2025-03-19 03:24Investment Rating - The investment rating for the company has been upgraded to "Buy" [4][7][14] Core Insights - The company reported total revenue of 2.64 billion RMB for Q4 2024, a year-over-year decrease of 12.2%, slightly above Bloomberg consensus expectations of 2.60 billion RMB [1] - Non-GAAP operating profit was 280 million RMB, slightly below the consensus estimate of 302 million RMB, with a corresponding profit margin of 10.62% [1] - The company is focusing on transforming its core business while maintaining positive operating cash flow, highlighting its "cash cow" asset characteristics [1][4] - The company has a strong cash position with total cash and cash equivalents reaching 14.7 billion RMB (approximately 1.45 billion USD) at year-end [3] Revenue and User Metrics - The Momo business generated revenue of 2.423 billion RMB in Q4 2024, down 11% year-over-year, with a paid user count of 5.7 million, a decrease of 23% [2] - The company is shifting towards a profit-centered ROI-driven strategy, effectively reducing customer acquisition costs [2] - The Tantan business reported revenue of 213 million RMB in Q4 2024, down 21.6% year-over-year, with a paid user count of 900,000, a decrease of 25% [2] Financial Performance and Shareholder Returns - The company announced a special cash dividend of approximately 50 million USD to be distributed on April 30, 2025, and has a remaining stock buyback plan of 222 million USD [3] - The potential return rate from dividends and buybacks is estimated at 22.67% based on the market capitalization of approximately 1.2 billion USD as of March 17 [3] - The company has adjusted its Non-GAAP net profit forecasts for 2025, 2026, and 2027 to 1.32 billion RMB, 1.39 billion RMB, and 1.46 billion RMB respectively, reflecting a downward adjustment of 30% for 2025 and 2026 [4][12] Valuation Analysis - The target price for the company is set at 11.69 USD, based on a DCF valuation method with a WACC of 16.88% [4][14] - The current market capitalization is significantly below the book net cash, indicating potential undervaluation and room for valuation recovery [4][14]