Orient Securities: Giving Huiliang Technology (01860) a “buy” rating with a target price of HK$24.63

The Zhitong Finance App learned that Orient Securities released a research report saying that Huiliang Technology (01860) is expected to have revenue of 20.6/26.7/3.73 billion US dollars from 2025 to 2027, and adjusted net profit to mother is 0.88/131/219 million US dollars. Based on the average valuation of comparable companies, the company was given a valuation of 38xPE in 2026, corresponding to a market value of US$4.98 billion, converted to HK$38.76 billion at the HKD/USD exchange rate of 7.78, with a target price of HK$24.63 per share, giving it a “buy” rating.

Orient Securities's main views are as follows:

Domestic programmatic advertising leader, data algorithm flywheel drives growth

Unlike traditional advertising agencies, the AI programmatic advertising circuit has at least three advantages: 1) Algorithmic efficiency improvement determines α: relies on algorithm efficiency to drive advertising ROAS growth to win advertisers' budget allocation growth, and can simultaneously enjoy the beta of advertising market growth and α of its own algorithm efficiency; 2) It has an obvious flywheel effect: algorithms rely on data accumulation to improve efficiency, data relies on ad campaign accumulation, and advertising scale relies on algorithm progress to expand; 3) Competitiveness comes from algorithm efficiency: growth depends on its own algorithms to improve efficiency, which essentially increases the value of unit traffic, and can attract long-tail advertisers to improve the efficiency of their own traffic advertising Penetration rate, self-improvement can create incremental growth without excessive competition with friends and merchants. Huiliang Technology is a leading domestic programmatic advertising company. In terms of scale and strength, it is already in the top three in the world. The bank is optimistic not only about the potential of AI programmatic advertising as a blue ocean circuit, but also about the company's growth potential driven by its own data-algorithm flywheel.

The IAP intelligent algorithm was launched, and there is a sharp upward trend in volume and price

Currently, the company mainly monetizes game IAA (in-app advertising). Hybrid/IAP ROAS intelligent bidding products were launched in April and July 2025, respectively, and relied on the accumulation of early advertising data to strengthen the layout of IAP (in-app purchase) advertisements. IAP targets a smaller customer base, more differentiated payment capabilities, and requires higher accuracy in advertising algorithms, so it has higher ROAS and profit margins. From an industry perspective, IAP has become mainstream in the game market. The market size is 4.6 times that of IAA. As the efficiency of the company's IAP algorithm improves, it is expected that the volume and price of the core advertising business will increase. The bank is optimistic about the company's logic of a sharp rise in volume and price driven by the IAP intelligent algorithm. Since 25Q2, it has seen a trend of high growth in the company's heavy game purchases, and is optimistic about the continued high growth potential of IAP advertising after the algorithm has climbed the hill.

Non-game advertising opens up long-term space and is optimistic about long-term growth potential

In addition to games, the non-game market has more space overseas. In 2024, the scale of e-commerce advertising alone was 2.7 times that of game advertisements, and the number of mobile apps in the non-game category increased markedly in 2025, with the exception of skits, achieving an increase of more than 50%. Medium- and long-tail advertising traffic is expected to increase markedly, and programmatic advertising platforms can give full play to their medium- to long-term advantages. The company launched Target CPE smart bidding products suitable for non-travel categories in 24 years, and after a year of climbing, the trend has begun. Currently, the penetration rate is less than 1%, and there is still plenty of room for expansion. We are optimistic about the penetration potential of companies in the huge non-game advertising market, which is expected to support long-term revenue space.