Alliance Global Partners Issued Updated report on iClick (NASDAQ: ICLK)

Maintained Buy and Raised Target Price from US$12 to US$18

Alliance Global Partners (A.G.P.) issued an updated report on iClick Interactive Asia Group Limited (NASDAQ: ICLK) on 20 January 2021, reiterating its Buy rating with a target price of US$18, which represents an upside of 34.6% from the closing price of US$13.37 as at 20 January 2021.             

A.G.P. believes market adoption of iClick's high-margin, high-value enterprise solutions is better-than-expected. It sees building mini-programs and managing data platforms for enterprises on Tencent's platform as a mega-opportunity, and the number of clients that have installed iClick's mini-programs on WeChat also beats expectation in the first nine months of 2020. By considering the changing consumption patterns as well as the growing need for online and offline marketing channels, these make iClick's offering valuable and put its services in high demand. To date, iClick has targeted some of the largest multi-national brands in China for its enterprise solutions.

A.G.P. also argues the recent launch of standardized products for SMBs will help complementing the growth from its enterprise segment. While there is growing competition among SMBs, A.G.P. believes iClick's partnership with Tencent and its proven success among large enterprises have laid a solid foundation.  While the SMB price point is much lower, A.G.P. sees the integration of standardized mini-programs takes much less effort, and could lead to a potential upside to enterprise solutions. A.G.P. expects enterprise segment revenue to reach $29.1 million in 2020, $60million in 2021, and $105 million in 2022; and will break even in 2021 and become a large profit source in 2023.

A.G.P. indicates that the demand for marketing solutions remains solid, as iClick has seen a full recovery from most of the markets it serves. Among all, A.G.P. sees the travel sector as the substantial upside, which represented about 10% of marketing solutions revenue prior to the pandemic, and believes it is only a matter of time for recovery. A.G.P. expects travel restrictions will eventually ease, whether in 2H21 or 2022, leading to a substantial upside to marketing solutions revenue estimates and overall adjusted EBITDA.

As a result, A.G.P. maintains its Buy rating and increases the target price from US$12 to US$18. The target price is based on a SOTP valuation, including the AdTech business at 3x on 2022 revenue estimates of $298 million (eventual recovery from travel sector is not yet reflected), Enterprise business at 7x on increased 2022 revenue estimates of $105 million, and an adjustment of $49 million in net cash.