ABCI initiated coverage on iClick (NASDAQ: ICLK)

at Buy with a target price of US$18

ABCI initiated coverage on iClick Interactive Asia Group Limited (NASDAQ: ICLK) at Buy with a target price of US$18 on 4 March 2021, representing an upside of 26.1% from 3 March 2021 closing price of US$14.27.

iClick is an independent online marketing and enterprise data solutions provider in China since 2009. Overall, it connects over 3,000 marketers and about 941m active profiled online users and use data and AI-driven technology to help brands target and acquire the right customer efficiently via various marketing and enterprise data solutions. In terms of channel distribution, it covered ~ 125,000 mobile apps and 2.3mn websites in the 30 days leading up to Mar 31, 2020.

iClick's emerging SaaS-based enterprise solutions are primarily built on Tencent's ecosystem and have become a growth driver with revenue contribution increasing from 5% in 2019 to 13% in 3Q20. iClick has also formed a strategic partnership with Baozun (9991 HK), a leading brand ecommerce solution provider in China, to explore additional business opportunities within the Tencent ecosystem.

The future bodes well for online advertising industry. According to iResearch, the amount of total online advertising spending is expected to reach USD 636.8 bn in 2024E at a CAGR of 5.1% in 2019-24E. The proportion of online advertising spending over total advertising spending increased from 33.5% in 2015 to 51.3% in 2019, and is estimated to reach 62.6% in 2024E.

Based on the aforementioned factors, ABCI initiated BUY rating with a DCF-based TP of US$ 18 to reflect its leading position in online advertising market and the potential of its enterprise solution business to ride on Tencent's ecosystem.