DouYu: Staying Neutral After Q4 Results

seekingalpha04-02

I have a negative view of DouYu's recent quarterly user metrics and the management's comments relating to its revenue outlook this year.But there are catalysts for DOYU like a faster pace of share ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDouYu: Staying Neutral After Q4 Results\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-02 03:32 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4681563-douyu-staying-neutral-after-q4-results><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>I have a negative view of DouYu's recent quarterly user metrics and the management's comments relating to its revenue outlook this year.But there are catalysts for DOYU like a faster pace of share ...</p>\n\n<a href=\"https://seekingalpha.com/article/4681563-douyu-staying-neutral-after-q4-results\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4509","symbol_name":"腾讯概念","start_time":0,"source_url":"https://seekingalpha.com/article/4681563-douyu-staying-neutral-after-q4-results","article_id":"2424877386","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1330303357/image_1330303357.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424877386","pubTimestamp":1711999937,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"I have a negative view of DouYu's recent quarterly user metrics and the management's comments relating to its revenue outlook this year.But there are catalysts for DOYU like a faster pace of share buy","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4509":"腾讯概念","DOYU":"斗鱼","BK4513":"直播概念","BK4085":"互动家庭娱乐"},"translate_title":"都宇：第四季度业绩后保持中立","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DOYU":1},"content_text":"I have a negative view of DouYu's recent quarterly user metrics and the management's comments relating to its revenue outlook this year.But there are catalysts for DOYU like a faster pace of share buybacks and better-than-expected profitability for the current year.My Neutral view of DOYU stays unchanged, after considering the unfavorable read-throughs from its recent results and the presence of potential re-rating catalysts.StefaNikolic Elevator Pitch I rate DouYu International Holdings Limited (NASDAQ:DOYU) as a Hold. Previously, my July 24, 2023 article was focused on the regulatory developments and the top-line outlook for DouYu. The current update evaluates DOYU's key financial and operating metrics. I leave my existing Hold rating for DouYu unchanged. I am disappointed with DOYU's Q4 2023 user metrics and management's commentary relating to the company's 2024 revenue prospects. But DouYu's shares have already suffered from a substantial pullback following the release of its results, and there are potential catalysts associated with profitability and capital return. In that respect, I have chosen to retain a Hold rating for DOYU. Post-Results Share Price Correction Is Warranted DouYu's stock price declined for three consecutive trading days between March 26, 2024 and March 28, 2024. Specifically, the company's shares dropped by a substantial -16.5% during the three-day period before Good Friday. Notably, DOYU released its Q4 2023 and FY 2023 financial results announcement on March 26 before the market opened. The company's post-results share price underperformance is largely justified, considering the unfavorable read-throughs from DOYU's latest results announcement and management commentary. Firstly, DOYU's user base shrank in the most recent quarter. The company's paying users and mobile MAUs (Monthly Active Users) decreased by -34% YoY and -10% YoY, respectively, for the final quarter of the prior year. DouYu noted in its results announcement that \"the soft macroeconomic environment and reduced revenue-generating promotions\" had affected its user metrics in a negative way. At its Q4 2023 results briefing, the company also acknowledged that \"As the live streaming sector matures, there is always competition over streamers.\" In other words, the weak Chinese economy and a higher level of competitive intensity might have contributed to the decline in users for DOYU. Secondly, the market's view of DOYU's revenue growth prospects turned negative following the management's comments at the recent earnings briefing. At the company's latest quarterly earnings call, DouYu indicated that \"we expect live-streaming revenue to experience downward pressure in 2024 as the overall revenue share from live-streaming remains significant.\" In specific terms, DOYU sees its core live-streaming business contributing slightly less than 80% of its top line for fiscal 2024. As a reference, DouYu's live-streaming revenue fell by -36% YoY in the most recent quarter. As such, it is no surprise that the sell side analysts' consensus FY 2024 revenue estimate for the company was revised downwards by -13% (source: S&P Capital IQ) following DOYU's results release on March 26, 2024 morning. As it stands now, the market anticipates that DouYu's top line in local currency or RMB terms will contract by -22% in the current fiscal year. Two Potential Catalysts To Watch It isn't all gloom and doom for DOYU. The company's user base contraction for Q4 2024 and its weak FY 2024 revenue outlook are key negatives as outlined in the preceding section. But there are potential catalysts for DouYu which deserve attention. One potential catalyst is above-expectations profitability in 2024. As per the consensus data obtained from S&P Capital IQ, the sell side currently forecasts that DOYU's normalized net profit will decrease by -86% to RMB21 million. It is likely that analysts considered the effects of negative operating leverage in projecting their earnings for DouYu, as I have noted the consensus FY 2024 top-line negative growth estimate of -22% in the previous section. However, DouYu does have certain profitability improvement levers which might allow its actual profit for the current year to surprise on the upside. DOYU mentioned at its Q4 2023 earnings briefing that it has plans for \"further workforce adjustments\" in Q1 2024, and the company also noted that it is \"continuing to make ROI (Return On Investment)-driven decisions\" in areas such as marketing spend. The other potential catalyst is a step up in share repurchases for the rest of 2024. DouYu's new buyback program seems to be progressing at a slower-than-expected pace. Earlier, on December 28, 2023, DOYU disclosed the initiation of a new one-year $20 million share repurchase plan which came into effect on January 1, 2024. The company didn't reveal in its earnings announcement whether it did any share buybacks since the start of this year. DouYu noted at its Q4 2023 results briefing that it is \"currently in the initial phase of implementing our share repurchase program\", I added the emphasis as I think it implies that a limited amount of share buybacks is likely to have been done since the beginning of 2024. However, assuming that DouYu does eventually complete the $20 million share buyback program by the end of this year, this will translate into a significant buyback yield of around 9.5%. Final Thoughts My view of DOYU is mixed. The company's number of users declined in the recent quarter, and its top-line outlook for 2024 is unfavorable. On the flip side, DouYu's shares have already taken a beating and there is the possibility of a stock price recovery assuming that catalysts linked to buybacks and profitability are realized.  DouYu is now trading at a consensus next twelve months' price-to-revenue multiple of 0.35 times (source: S&P Capital IQ). The stock's undemanding valuations are justified by its weak revenue growth prospects (consensus -22% top-line contraction) and its modest profitability (consensus low-single-digit normalized net margin estimate) for 2024. As such, a Hold rating for DouYu is warranted.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2424877386"}