China Renaissance Issued Updated report on iClick (NASDAQ: ICLK)

Reiterated Buy and Raised Target Price from US$12.89 to US$17.80

China Renaissance issued an updated report on iClick Interactive Asia Group Limited (NASDAQ: ICLK) on 27 January 2021, reiterating its Buy rating with a target price of US$17.80, which represents an upside of 28% from the closing price of US$13.96 as at 25 January 2021.             

China Renaissance believes the strategic partnership in product development and customer acquisition between Baozun (NASDAQ: BZUN) is positive for iClick in three ways.

1) The partnership should help integrate iClick's SaaS products with Baozun's ecommerce services to provide one-stop private domain digitalization solutions to merchants of different sizes. China Renaissance believes the integration progress should deepen iClick's understanding of merchants' demands and accelerate its R&D progress in standardized products.

2) China Renaissance views the minimal overlap in customer base between the two companies should create customer acquisition synergies. For overall strategy with Enterprise Segment (SaaS), iClick will target to onboard Baozun's customers in luxury, food & beverages, cosmetics and premium clothing sub-sectors at first. China Renaissance believes customers added from Baozun could further lift overall ARPU given their relatively larger size.

3) iClick and Baozun will also focus on generating new traffic for merchants across different channels, accelerating integration between private and public domain. This should allow more space for iClick to deploy and monetize its data analytics and marketing automation capabilities. China Renaissance sees a good opportunity for iClick to build up its GMV-based revenue model on top of its traditional fee-based revenue model for its Marketing Solution and Enterprise Solution.

As a consequence, China Renaissance reiterates its Buy rating and increases the target price from US$12.89 to US$17.80. The target price is derived from 10.4x FY22E GP.