Mobvista delivered solid 1Q23 results, with in-line rev (+5% YoY) and upbeat bottom line (at US$4.5mn). We are impressed by Mintegral’s vertical expansion, with rev mix of midcore & hardcore games vertical up to 28.5% (vs. 23% in 4Q22).We see high visibility for Mobvista to accelerate from 2Q23E (forecasting rev +22% YoY), and 2H23E would see further upside from ROAS mode and cooperation with Google. Margin enhancement would continue, backed by narrowing loss of Reyun and lower incentives. We keep our earnings forecast unchanged. Maintain BUY with SOTP-based TP at HK$6.3 (1.2x/1.0x FY23/24E P/S, or 58x/40x FY23/24E P/E, with 31% earnings CAGR in FY23-25E).
　　Resilient 1Q23 amid macro uncertainty. Mobvista delivered solid 1Q23　results, after infrastructure building in 2022. Rev grew 5% YoY (9% QoQ, in- line with our forecast), with adj. net profit of US$4.5mn (vs. our estimate of US$4.0mn). By segment, ad-tech/mar-tech rev +5%/11.5% YoY. Despite soft seasonality and macro uncertainty, Mintegral +13% YoY in 1Q23 (vs. +13% in 4Q22), attributable to resilient game vertical. Nativex declined 49% YoY in 1Q23 for top media agency biz being divested in 1Q22. Thanks to its ads tech advantage and SaaS ecosystem, no. of core customers (whose rev contribution exceeds US$100,000) surged 46% YoY to 421 in 1Q23 (+8% QoQ), with core customer retention rate up to 95.9%.
　　Expecting acceleration from 2Q23E. Mintegral continued sequential growth in 1Q23, in which rev mix of midcore and hardcore games vertical climbed to 28.5% (vs. 23% in 4Q22, 19% in 1Q22). We expect 2Q22E to accelerate (forecasting rev +22% YoY), boosted by: 1) upside from cooperation with Google, and 2) ROAS mode to attract rising hardcore games budget. We maintain its FY22E rev forecast unchanged (+25% YoY).
　　Disciplined cost control to continue. 1Q23 adj. NM reached 1.8%, with net　profit/adj. EBITDA +77%/38% QoQ. Its GPM stabilized YoY at 19.2% in 1Q23, while model training fee and incentive fee declined 53%/79% YoY. We forecast its adj. NM to expand to 2.1% in FY23E, backed by 1) higher ads efficiency with lower incentives; 2) R&D investment to stabilize; and 3) narrowing loss of Reyun.
　　Maintain BUY. We maintain our financials forecast unchanged, with TP at HK$6.3 (by assigning 30x FY23E P/E to ad-tech biz and 3.3x FY23E P/S to mar-tech biz). Key catalysts: 1) 2Q23E acceleration; and 2) upside of ROAS mode and Google cooperation.