YY delivered in-line 4Q20 results, with revenue +78% YoY. Non-GAAP OPM improved to 1.5%. 1Q21E rev guidance largely in line. YY Live was deconsolidated from this quarter. We are bullish on overseas livestreaming TAM (over US$10bn), and expect the Group rev to grow 45% YoY in FY21E, with 0.2% non-GAAP NPM. Bigo would continue its momentum with rising paying ratio and ARPU, especially in developed markets. Likee is still at early stage of monetization, suggesting ample room ahead. We maintain Bigo’s financial forecast unchanged, with higher SOTP-based TP at US$136.
- Solid 4Q20 with in-line guidance. 4Q20 revenue grew 78% YoY, in line with our estimate. Non-GAAP OPM improved to 1.5%, with second quarterly profit. 1Q21E rev guidance came in at +73% to 77% YoY (in US$), largely in-line. YY live financials will be reflected as discontinued operations, thus not comparable with consensus. JOYY announced dividend of US$0.51/ADS, suggesting 2% yield.
- Bigo’s momentum to continue. We believe Bigo Live would continue its momentum in FY21E, forecasting 45% YoY, with higher rev mix from developed markets (~43%). 1Q21E rev was estimated to grow 5% QoQ, with relatively stable OPM QoQ. Mgmt. stated that Bigo’s paying ratio was still below YY Live, while ARPU at 3x of YY Live. We are bullish on overseas livestreaming TAM (over US$10bn), and expect Bigo to benefit from structural opportunities in global epidemic, with deeper penetration and diversified revenue.
- Likee to enhance monetization with user expansion. Likee would still prioritize its user expansion in FY21E, while stepping up livestreaming monetization. Likee rev +400% YoY in 4Q20, and we expect higher rev mix ahead, coupled with narrowing loss. We expect Hago’s rev to double in FY21E at RMB800mn. Hago has achieved monthly breakeven in 4Q20, and is estimated to achieve quarterly profit in 3Q21E & 4Q21E.
- Maintain BUY. With YY Live deconsolidation, we forecast JOYY’s topline at 33% CAGR in FY20-23E. We slightly raised our SOTP-based TP to US$136 with investment change. Valuation is attractive (3.2x FY21E P/S), given its high growth potential in overseas TAM.
