DouYu International Holdings Limited

DOYU Details

DouYu International Holdings Limited (NASDAQ: DOYU) operates a game-centric live streaming platform in China and is considered to be a pioneer in the eSports value chain. The platform offers its users immersive and interactive games and entertainment live streaming on both PC and mobile apps, and also provides coveted access to a wide variety of premium eSports content through collaborations with various participants across the eSports value chain. As of June 15, 2021, DOYU’s market capitalization stood at USD 2.67 billion, with 324.41 million American Depository Shares (ADS) listed and outstanding (10 ADS representing one ordinary share).

Q1FY21 Results: The company reported a 5.50% decline in net revenue to RMB 2.15 billion in Q1FY21 (ending March 31, 2021) compared to RMB 2.28 billion in Q1FY20, primarily due to the reversion of paying users' consumption of the virtual items to that of the pre-pandemic level. Net loss for Q1FY21 was RMB 101.83 million vs net income of RMB 254.53 million reported in Q1FY20. Average Monthly Average Users (MAUs) in Q1FY21 increased 21.3% to 191.9 million from 158.1 million in Q1FY20.

Key Risks: DOYU relies heavily on eSports games to generate its user traffic. If it fails to attract users through live streaming of popular eSports games, or if the game developers/publishers fail to maintain the operation of their online games, the company’s user and streamer base may shrink significantly, and adversely affect its results of operations. Further, prolonged frictions between the US and China, and the recent passage of a bill in the US that could lead to the delisting of some Chinese companies from the country’s exchanges (in case the US authorities are unable to satisfactorily audit the company for three consecutive years) expose the stock to significant political and regulatory risks. Though a solution to the standoff could be negotiated in the medium term (before the earliest possible delistings begin in 2024), the companies that might not be able to fulfill the revised standards are at risk.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DOYU Daily Technical Chart

Stock Recommendation: DOYU stock fell 44.58% in the past 3 months and is currently leaning towards the lower end of the 52-week range of USD 7.08 to USD 20.94. The stock is currently trading below its 100 DMA level. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 9.15. Considering the correction in the stock price in the past 3 months, increasing demand for online gaming platforms, no long-term debt, a consistent increase in MAUs, and associated risks, we recommend a “Buy” rating on the stock at the closing price of USD 7.82, down 4.98% as of June 15, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Viant Technology, Inc.

DSP Details

Viant Technology, Inc. (NASDAQ: DSP) is a people-based advertising software company that enables marketers and agencies to centralize the planning, buying, and measurement of their advertising investments across most channels. Adelphic, its self-service Demand Side Platform (DSP), is an enterprise software platform that helps marketers to execute programmatic advertising campaigns across Connected TV, Linear TV, mobile, desktop, audio, and digital out-of-home channels. DSP was listed on the NASDAQ on February 10, 2021. As of June 15, 2021, the company’s market capitalization stood at USD 1.82 billion.

Measures to Expand Adelphic’s Targeting Capabilities: On June 09, 2021, the company signed a license agreement to integrate TiVo’s linear TV viewership data feed into Adelphic software. The real-time television tune-in and ad exposure data feed are expected to improve audience activation and measurement. Previously, on May 05, 2020, DSP announced the integration of Peer39’s Advanced Contextual Data Marketplace into Adelphic, which scales its contextual data providers’ library and accelerates advertisers’ abilities to elevate media performance in cookie-less environments. On April 29, 2021, DSP integrated Tru Optik’s Data Marketplace into Adelphic, expanding its pool of Connected TV (CTV), Over-The-Top (OTT), and audio audience segments.

Robust Q1FY21 Results: The company reported a 5.20% rise in net revenue to USD 40.14 million in Q1FY21 (ending March 31, 2021) compared to USD 38.16 million in Q1FY20. Net loss for Q1FY21 was USD 14.87 million, compared to a net income of USD 0.33 million reported in Q1FY20. As of March 31, 2021, cash stood at USD 246.59 million while the long-term debt amounted to USD 18.17 million.

Key Risks: The company generates the majority of its revenue from advertising agencies, with two advertising agency holding companies representing 13.3% and 13.2%, respectively, of the total FY20 revenue. Hence, the loss of such agencies could significantly harm its business. In addition, DSP is dependent on third-party data center hosting facilities (such as Google Cloud Platform and Amazon Web Services) to provide continuous power, internet connectivity, and technological security for its servers. The termination/lapse of service or damage to a facility could affect its brand name and financial position.

Outlook: For FY21, the company expects revenue to range from USD 200.0 - 205.0 million, with adjusted EBITDA to be in the range of USD 24.0 - USD 27.0 million. DSP’s revenue and adjusted EBITDA estimates for Q2FY21 range from USD 45.0 - USD 47.0 million and USD 3.5 - USD 4.5 million, respectively.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DSP Daily Technical Chart

Stock Recommendation: DSP stock fell 43.58% in the past 3 months, and is currently trading at 114.76% of its original issue price. On the technical chart, the next support level is USD 25.43. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 33.29. Considering the attractive valuation of the newly listed company, product enhancements, positive future outlook, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 28.69, down 7.00% as of June 15, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

Waitr Holdings Inc.

WTRH Details

Waitr Holdings Inc. (NASDAQ: WTRH) is an online ordering technology platform in the US that provides delivery, carryout, and dine-in options. The company, along with its subsidiaries Bite Squad and Delivery Dudes, connect local restaurants and grocery stores to diners in underserved U.S. markets. On March 31, 2021, WTRH had over 23,000 restaurants from 800 cities listed on its platforms. As of June 15, 2021, the company’s market capitalization stood at USD 248.09 million.

Strengthening Presence in On-Demand Delivery: On May 24, 2021, WTRH announced a partnership with Potbelly Corporation. The partnership allows the customers of the company to order their choice of foods from 46 Potbelly Sandwich Shops across Minneapolis and Texas. Previously, on March 11, 2021, WTRH completed the acquisition of Delivery Dudes, a third-party delivery business operating primarily in the South Florida market. The acquisitions enhanced the company’s market presence in the on-demand delivery sector.

1QFY21 Results: The company reported total revenue of USD 50.93 million in Q1FY21 (ending March 31, 2021) as compared to USD 44.24 million in Q1FY20, thus realizing a growth of 15.11% YoY. The increase in the top line was a consequence of the acquisition of Delivery Dudes and organic expansion into new markets which strengthened the market presence in both new and existing markets. WTRH reported an operating income of USD 2.47million in Q1FY21 which was 238.38% higher than that of USD 0.73 million in Q1FY20. The net loss for Q1FY21 was USD 3.71 million in contrast to USD 2.10 million in Q1FY20.  

Key Risks: Implementation of a favorable, company-friendly labor regulation initiated during the tenure of the Trump administration by the Department of Labor (DOL) has been revoked by the Biden government. Moreover, a more worker-friendly regulation could be enforced by the DOL, along with stricter enforcement against misclassification claims by the companies. The issuance of such stricter regulations or an increase in such DOL enforcement activity could adversely affect the operations and profitability of the company.

Outlook: On June 03, 2021, the company unveiled a strategic rebranding initiative to change its name and visual identity, the effect of which could be seen in the next 12 – 18 months. The initiative is in line with WTRH’s long-term vision of innovation, expansion into new verticals, and developing a technology-forward platform.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

WTRH Daily Technical Chart

Stock Recommendation: WTRH has decreased by 27.27% and 40.40% in the past 3 months and 6 months respectively and is currently leaning towards the lower end of the 52-week range of USD 1.76 to USD 5.85 The stock is currently trading below its 200 DMA level. On the technical chart, the next support level is USD 1.76. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 2.51. Considering the correction in the stock price, strategic growth endeavors, significant leverage, and other associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 2.08, down by 3.26% as of June 15, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.