Jefferies Issued Updated Report on iClick (NASDAQ: ICLK)

Maintained Buy and Raised Target Price from US$12.0 to US$17.4

Jefferies issued an updated report on iClick Interactive Asia Group Limited (NASDAQ: ICLK) on 28 January 2021, maintaining its Buy rating with a target price of US$17.4, which represents an upside of 20.1% from the closing price of US$14.49 as at 27 January 2021.

Jefferies reaffirms its positive stance on ICLK in light of BZUN deal and expect incremental revenue to kick-in in 2H21 with full year contribution in 2022. Jefferies expects the co-operation to leverage the expertise of both parties, which includes SaaS expertise of ICLK and operational capabilities of BZUN. The goal is to provide the most comprehensive solutions to brands which can benefit from the private domain traffic of Tencent. The positives for ICLK include (1) accelerated digitization and penetration of large clients and sharing of client resources of both companies. Big customers are new to ICLK; (2) cross-selling opportunities and adding value to merchants with comprehensive solutions; (3) accelerate the pace of development of standardized SaaS product offerings to mid-sized customers; (4) incremental revenue and business opportunities.

Jefferies expects enterprise solutions to be profitable in 2021 while marketing solutions outlook remains intact. Per the deal between BZUN and ICLK, Jefferies estimates enterprise revenue to increase by 125% YoY to USD63m in 2021and 60% YoY to USD101m in 2022; GPM maintains at about 65% without factoring in higher margin for standardized SaaS products; non-GAAP earnings to be about USD16m in 2021 and most of the incremental revenue from the deal to come in 2022. Jefferies believes that the potential upside comes from the ramp-up of standardized product offerings to midtier customers in future. On marketing solutions, Jefferies estimates it to maintain 13% YoY growth in 2021, where it factors in more conservative assumptions on the back of the COVID breakout.

As such, Jefferies maintains Buy rating and raise price target to US$17.4, based on 20x 2021 price to sales and 20x 2021 P/E on marketing solutions based on historical internet sector average PE.