BOCI initiated coverage on iClick (NASDAQ: ICLK)

at Overweight with a target price of US$21.3

BOCI initiated coverage on iClick Interactive Asia Group Limited (NASDAQ: ICLK) at Overweight with a target price of US$21.3 on 23 February 2021, representing an upside of 57% from 22 February 2021 closing price of US$13.59.

BOCI believes that iClick is a leading independent player in programmatic digital marketing in China, which operates the biggest independent marketing services platform and one of the fastest growing WeChat based SaaS enterprise platforms. The marketing services are backed by machine and AI-driven technology with extensive consumer data, analytics, and access to publishing channels, representing high barriers to entry. Currently, 4,000 KA clients with a low attrition rate of 5% is a proven stable revenue stream. BOCI expects the leadership position to be sustained by technology and client relationship in up-coming years given the fragmented market.

The long-standing and deep relationships with Tencent and Baidu makes iClick one of the strongest ad resellers for both tech giants. iClick's smart cloud business line focusing on mobile marketing has successfully integrated its marketing API into Tencent (700.HK) social ad exchange platform and is the first key account channel enabling service provider. iClick is also a platinum partner of Tencent's IBG for APAC client coverage and exclusive reseller for Baidu video and in-feed ad globally. The premium partnership secures the quality media inventory from Tencent's and Baidu's ad exchange, which is a critical differentiation factor for DSP vendors.

BOCI benchmarks iClick's new growth trajectory in CRM SaaS against Weimob (2013.HK). iClick has its market entry into one of the rapidly expanding SaaS markets fuelled by the fast growth of smart retail and Tencent's business vision of SaaS based social commerce. Sales growth and higher margins are expected from the growing Enterprise Solutions compared with marketing services. It also helps to secure a healthy balance sheet with a strong cash position and low leverage. Besides, BOCI reckons iClick has growth momentum of its enterprise solution after the partnership deal with Baozun.

Driven by the dual growth engine of marketing and enterprise solution, BOCI expects 23.3% 2019-23E CAGR for marketing revenue and an accelerating 62.0% 2019-23E CAGR for SaaS-based enterprise revenue. The target price US$21.3 is based on SOTP method, with 4.6x 2021E P/S for marketing solutions and 18.2x 2021E P/S for enterprise solutions