We initiate with a "Buy" rating and a TP of HK$5.79. We adopt relative valuation based on price-to-sales ratio. We assign Vobile a 2023 price-to-sales ratio of 6x with a target market value of HK$12.27 billion.
With the development of global streaming media and social networks, the scene of content infringement is more complicated. As the existing copyright protection mechanism is still to be developed, a large number of small and medium-sized content creators in China have not been effectively protected and protected for their content infringements. As the world's leading content protection service provider with the world's largest content fingerprint database, Vobile's technology and industrial accumulation can meet the urgent demand of domestic and overseas content rights holders.
We expect Vobile's business expansion into the Chinese market to exceed the market's expectations. It is generally believed that the demand of content protection in China is highly fragmented and difficult to aggregate. We believe that in China the fragmented market of demand can be effectively gathered by jointly building a protection platform with local platforms, relying on Vobile's industry-leading technology. As a result, Vobile's business expansion growth has a bright future.
Catalysts: New policies or documents on original content right protection in China; Reports of copyright infringement in China; Vobile's customers of content rights holders upgrade the cooperation contract with Vobile.
Risk: Customers' low acceptance of newly developed protection services; slower-than-expected development of content protection awareness in China.