We estimate 1H22 revenue rose 48% YoY
　　We estimate Mobvista Inc’s revenue rose 48% YoY to US$454mn in 1H22, and adjusted attributable net loss reached US$22.8mn （vs. adjusted attributable net loss of US$6.8mn in 1H21）。
　　Trends to watch
　　Prudent towards expansion of core business; development of marketing technology still takes time. We estimate revenue from advertising technology （ad-tech） business rose 46% YoY to US$448mn in 1H22. Specifically, we estimate revenue from programmatic advertising platform Mintegral climbed 83% YoY to US$411mn in 1H22 （up 64% YoY and 5% QoQ to US$211mn in 2Q22 according to Mobvista’s announcement）。 We think the firm will become more prudent about Mintegral’s user acquisition and category expansion amid overseas economic downturn and slowing growth of overseas sales revenue of games independently developed by domestic companies. However, Mintegral maintained medium to high growth compared with overseas top ad-tech companies. Given the impact from the spin-off of large media business and clients’ budget cuts, we estimate Nativex platform’s revenue dropped 24% YoY to US$37.1mn. Mobvista announced that as of June 2022, it held a 64% stake in Reyun, a marketing data service provider. The company plans to integrate GameAnalytics, Reyun and SpotMax into one product, but the consolidation may take time. Moreover, the tightening of regulations since 2021 has weighed on Reyun business. We therefore believe the firm’s marketing technology business will maintain mild growth over the short term. We estimate revenue from GameAnalytics, Reyun and SpotMax in 1H22 at US$466,200, US$5.7mn and US$258,400.
　　Gross margin likely improved in 1H22; net margin under short-term pressure. We estimate gross margin of ad-tech business rose 5ppt YoY to 19% in 1H22, thanks to prudent user-acquisition strategy and continued optimization of algorithms. We estimate this drove up blended gross margin to 20%. Moreover, increases of salaries and amortization of intangible assets caused by the acquisition of Reyun weighed on profit growth. We estimate adjusted attributable net loss ratio in 1H22 widened 2.8ppt YoY to 5.0%.
　　Financials and valuation
　　Given the slowing expansion of Mintegral and increasing expenses, we trim our 2022 and 2023 revenue forecasts by 17.1% and 22.2% to US$947mn and US$1.3bn. We also revise down our 2022 and 2023 adjusted net profit forecasts by 279.0% and 82.8% to -US$30.4mn and US$11.8mn. We maintain OUTPERFORM and cut our SOTP-based TP by 30.0% to HK$5.6 （1.2x 2022e P/S）， offering 18.1% upside. The stock now trades at 1.1x 2022e P/S.
　　Risks
　　International environment changes; goodwill impairment; uncertainty over vertical expansion; policy headwinds.