微博（WB US）：2025年第三季度展望：部分垂直领域面临逆风，广告业务承压

3Q25 preview: ad business under pressureamid headwindsin certain verticals Target PriceUS$14.00(Previous TPUS$14.50)Up/Downside23.7%Current PriceUS$11.32 WeforecastWeibo’s 3Q25 total revenue to decline by 5% YoY to US$442mn,slightlybelow our previous expectation,primarilydue to weaker-than-expectedad demand in certain verticals such as FMCG, handsetsand online games. Weestimatenon-GAAP net income to drop by 20% YoY to US$111mn in 3Q25E(largely in line with consensus estimate), mainly due to therevenue decline andstepped-up AI investment. Given the pressure in certain verticals, we lowerFY25-27E total revenue forecast by 1-2%. We roll forward our valuation windowto FY26E and fine-tune our target price to US$14.0 based on 8x FY26E non-GAAP PE (previous:US$14.5 on 8x FY25E non-GAAP PE). Maintain BUY, withfocus on the potentialrevenuerecoveryand AImonetizationinFY26E. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Adbusiness faces headwinds in certain verticals.We forecastadvertising and marketingrevenueto decline by 6% YoY to US$377mn in3Q25E: 1) adrevenuefrom FMCG vertical faced high-base effect due to theOlympic event in 3Q24; 2) ad revenue from handset sector also declinedYoY as handsetmanufacturers tightened their ad budgets amid salesvolume declines; 3) ad revenuefrom online games vertical fell YoYdue tothe decline in adbudgetsof certain key accounts. That said, adrevenuefrom certain verticals such as e-commerce and automobile maintainedresilient YoY growth in 3Q25, whichshouldpartially offset declinesin otherverticals. Ye TAO, CFAfranktao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Stock Data Eyes on AI development.We remain positive on Weibo’s AI development:1) Compared to other AI Search applications, Weibo’sIntelligentSearch hasrelatively high adoption rate (12% of total users) and usagefrequency (36.6times per user per month) according to QuestMobile, supported by its qualitysearch results.Intelligent Search MAUs surpassed 50mn in Jun2025,andwe expectthe MAUstohavefurther grownbySep2025; 2) AI will continueto improve ROI of Weibo’s ad solution, through enhancing ad conversionand ad placementefficiency. Margin faces short-term pressure.We forecast non-GAAP OPM todecline to 29% in 3Q25E, from 35% in 3Q24, mainly due to therevenuedeclineand stepped-up AI investment. We now forecast FY25E non-GAAPnet income to decline by 3% YoY to US$462mn. Weibocurrentlytrades at7x FY26E non-GAAP PE, which offers ample safety margin compared topeers’average (19x). Although it still takes time for the ad business torecover,itsrelativelystable earnings and net cash levelshouldsupportdecentshareholder return(c.US$200mn dividends per year,whichtranslatesinto c.7% dividend yield), in our view. 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) all of 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 research report 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 months: Stock with potential return of +15% to-10% over next 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDSELLNOT RATED :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 12 months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International CapitalCorporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.C