Weimob interim results under pressure; Guosen Securities expects recovery to appear in 2H22 gradually
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$WEIMOB INC (02013.HK)$ announced its interim results report. Under the influence of macro environment and epidemic control, there is greater pressure on the performance in 1H22. Weimob reported revenue of￥900M, - 6.2% YoY; gross profit of￥598M, - 21.4% YoY; loss of￥659M during the period, expanding by 17.6% YoY; adjusted net loss of￥567M, expanding by 499.2% YoY, far exceeding the loss of￥94.7M in the same period of the previous year. Guoxin Securities believes that Weimob has absorbed the pressure in Q2 and will rebound in 2H22, giving it a Hold rating.
Key takeaways:
1. Revenue and net profit margin decline; Loss is expected to turn into profit in 2H23.
Revenues from continuing operations for the 1H22 totaled￥900M, - 6.2% YoY. The SaaS business revenue grew by 5.7% YoY, mainly due to the impact of the epidemic on sales and delivery; merchant solutions business revenue decreased by 22.3% YoY, mainly due to weak macro demand in 1H22. Adjusted net loss was￥567M, with net profit margin of -63% (-10% in the same period last year). The widening loss was mainly due to increased investment in R&D and one-time compensation for staff optimization. Based on the earnings conference, the mgmt expects to make a profit in 2H23.
2. Change in revenue structure and increase in R&D investment dragged down gross margin.
In the 1H22, the overall gross margin was 66%, - 13pct YoY, due to the change in revenue structure and increased investment in R&D. Among them, the gross margin of the SaaS business was 61%, -14 pct YoY, which was affected by the merger of Haiding and increased investment in R&D. The gross margin of merchant solutions business was 77%, - 9 pct YoY, mainly due to the increase in the proportion of revenue from operation services and TSO services with relatively low gross margin. In addition, the revenue share of the SaaS business with a relatively low gross margin increased by 7pct YoY, which also lowered the overall gross margin.
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