2025年第二季度业绩超预期，但2025年下半年前景仍不明朗

2Q25 results beat,but 2H25 outlook remainsuncertain Target PriceUS$14.50Up/Downside26.7%Current PriceUS$11.44 Weiboannounced 2Q25 results:net revenue increased by 2%YoY toUS$444.8mn,2%ahead of Bloomberg consensus estimate;non-GAAPoperating income grew by 3% YoY to US$161.8mn, 11% higher thanconsensusestimate, thanks to the enhanced operatingefficiencyand collection of baddebtsrecognized in the past period.Theoutlookoftheadvertising businessremainschallenging in2H25, due to tough comparison and uncertainty in certainverticals.We expect total revenue to decline by 2% YoY in 3Q25E. That said,Weibo’s AI progress in 2Q25 was encouraging, which mayhelp drive the usertraffic and ad revenue growth in the long term. We trim our FY25-27E totalrevenue forecast by 1-2% in view of thead businessuncertainty, but maintainour target price of US$14.5 based on8x FY25Enon-GAAPPE.Maintain BUYon Weibo’s decentshareholderreturn(7%dividendyield). China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Ye TAO, CFAfranktao@cmbi.com.hk 3Q25Ead business outlook remains challenging.Advertising andmarketingrevenuewas down by 2% YoYtoUS$383mn in 2Q25, mainlydriven by the solid growth of revenue from e-commerce and automobileverticals. FMCG, online games, luxury andentertainmentverticals saw YoYdecline in ad budget.Looking into 3Q25E, we expect advertising andmarketing revenue to decline by 2% YoY. By verticals in 3Q25E, we expect:1) e-commerce and automobile verticals to maintain healthy YoY growth; 2)FMCG to face pressure as Olympics in 3Q24 led to tough comps; 3) onlinegames verticals to decline YoY duetoalack ofblockbustergames; 4)handset verticals to faceuncertaintydue to the decline in national subsidy.VAS revenuedeclinedby 2% YoY to US$61mn in2Q25. Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Stock Data PositiveAIprogress.AIdrove Weibo’s business growth on several fronts:1) AI-empoweredIntelligentSearch: through integrating with third-party LLMlike Alibaba’s Qwen, Intelligent Search MAUs surpassed 50mn in Jun, upby over 60% QoQ in Jun 2025. And total queries grew by over 150% QoQin Jun 2025. The company plans for a potential pilot for ad monetization onIntelligent Search in 4Q25; 2) AI ad creative platform: Weibo launched anAI ad creative platform LinChuang in 2Q25. AI-generated ads alreadyaccounted for over 10% of performance-based ads in 2Q25. Overall, weexpectAI to drive Weibo user engagement and create incrementalmonetizationopportunities. Increasing AI investment.Overall non-GAAPOPMimproved by0.4pptsYoY to36.4% in2Q25,primarily due tothedecline in G&A expenses (-70%YoY). The decline in G&A was mainly attributable to thecollection ofcertainbad debtsrecognized in the past period.But due to the increase in AIdevelopment, we expect non-GAAP OPMtodecline by c.3pptsYoY to 30%in 2H25E.Weibocurrentlytrades at6x FY25E non-GAAP PE, which offersample safety margin versus peers’average (19x). Its stable earningsperformance alsosupportsa decent level of shareholder return (US$200mnannual dividend per year, whichtranslatesinto c.7% dividend yield). Source: FactSet Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in this report: (1) allof the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this researchreport within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potentialreturn of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimi