Kaiyuan Securities has issued a research report maintaining a "Buy" rating on MOBVISTA (01860), expressing confidence that its AI infrastructure will support accelerated expansion in in-app advertising (IAP) and non-gaming categories, driving sustained high earnings growth. The firm forecasts net profits attributable to shareholders of $137 million, $237 million, and $380 million for 2026-2028, respectively, with corresponding P/E ratios of 21.9x, 12.7x, and 7.9x.

Key Insights from the Report

The report highlights that Q1 2026 sustained robust growth, with expectations that the new infrastructure will accelerate product expansion and drive strong performance. For Q1 2026, the company reported revenue of $581 million, representing a year-on-year increase of 32% and a sequential increase of 1%. Net profit attributable to shareholders reached $34 million, up 61% year-on-year, while adjusted net profit was $24 million, an 11% increase. The gross margin for the quarter stood at 20.96%. Sales, administrative, and R&D expense ratios changed by +0.04, -0.44, and +1.06 percentage points year-on-year, respectively, with the rise in R&D expenses primarily attributed to increased model training costs. Additionally, a gain of $17 million was recognized from changes in the fair value of financial instruments.

Sustained High Growth in Gaming and Steady Expansion in Non-Gaming

The report is optimistic that the "data flywheel" effect will continue to solidify the company's algorithmic advantages. In Q1, ad tech business revenue reached $577 million, up 33% year-on-year and 1% sequentially. Revenue from the Mintegral platform accounted for $560 million, also growing 33% year-on-year and 1% sequentially. Gaming category revenue was $430 million, surging 41% year-on-year and 3% sequentially, while non-gaming category revenue reached $129 million, up 12% year-on-year. According to Singular's "Q1 2026 Trends Report," Mintegral ranked among the top four globally in several key verticals, including entertainment, tools, and games, based on download volume, reflecting the sustained leadership of its advertising algorithms. The report believes the "data flywheel" will continue to reinforce the company's competitive edge.

Steady IAP Growth and New Infrastructure to Accelerate Expansion

The company is actively advancing its AI infrastructure development, with the new generation infrastructure having completed major development and expected to launch in October. IAP products have shown steady growth on the existing infrastructure, and the new infrastructure is expected to support more complex models and a greater variety of features and data, potentially accelerating IAP product development. Furthermore, the company plans to gradually launch vertical-specific models for e-commerce, short-form video dramas, and other areas after the new infrastructure goes live, further expanding its business scope. Marketing technology business revenue in Q1 was $4 million, up 2% year-on-year, as the company drives the intelligent agent-based restructuring of its MarTech product line, with a new commercialization phase anticipated in Q4. The report is optimistic that the new infrastructure will support the company in accelerating its expansion into game IAP products and non-gaming categories, driving sustained high revenue growth, with operating leverage gradually being released to enhance profitability.

Potential Risks Outlined

The report also notes potential risks, including changes in advertising industry regulations, intensifying market competition, and slower-than-expected progress in AI application development.