HUYA, Inc.

HUYA Details

HUYA, Inc. (NYSE: HUYA) is a live streaming platform based in China with a large and active community of live game streamers. HUYA's most popular video format is e-sports live streaming, developed in collaboration with e-sports event organizers, game developers, and publishers. Non-game entertainment options on its platform include talent shows, anime, and outdoor activities.

Q3FY21 Results:

• Increase in Revenue: The company reported a 5.71% increase in total revenue to RMB 2.98 billion in Q3FY21 (ended September 30, 2021) compared to RMB 2.81 billion in Q3FY20, driven by YoY growth of 137.01% in Advertising and other revenue.
• Robust Net Income: In Q3FY21, net income climbed 107.25% year on year to RMB 524.38 million, up from RMB 253.01 million in Q3FY20.
• Cash and Debt Position: The company had a cash balance of RMB 11.12 billion (including short-term deposits and investments) as of September 30, 2021, with no outstanding debt, resulting in a strong balance sheet.

Key Risks:

• Regulatory and Political Risk: The Chinese authorities' recent crackdown on its US-listed businesses and the consequent possibility of stricter rules could dent the company's operations. After the passage of a bill in the US, this could lead to the delisting of some Chinese companies from the country's exchanges. This constitutes significant political and regulatory risks for the firm.
• Voting Concentration Risk: Tencent Holdings Limited owns 69.7% of HUYA's common stock as of March 31, 2021, giving it significant control over its activities. As a result, other shareholders' power to influence business choices is hampered.

Valuation Methodology: Price to Book Value-based Multiple Based Relative Valuation

Analysis by Kalkine Group

Stock Recommendation:

HUYA's share price has declined 59.85% in the past nine months and is currently leaning towards the 52-week low of USD 5.81. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 48.62. Considering the correction in the stock price in the past nine months, substantial revenue, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 5.82 up 2.11% as of February 08, 2022.

HUYA’s 1-Year Daily Technical Chart (Source: REFINITIV, Analysis by Kalkine Group)

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.