China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

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China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>Unity’s 4Q22 top line was in line with our estimate, and non-GAAP operating income beat our estimate/cons. by 9.7%/32.9%. </li>
<li>As ads market gradually stabilizes, we expect Unity ads to gain share as ironSource merger releases more synergy.</li>
<li>In addition to increasing customer base, revenue contribution from industries (beyond games) keeps expanding. Maintain BUY and raise TP to US$ 50. Our TP implies 8.4X PS/121X PE in 2023.</li>
</ul>


Unity’s 4Q22 top line was in line with our estimate, and non-GAAP operating income beat our estimate/cons. by 9.7%/32.9%. 
As ads market gradually stabilizes, we expect Unity ads to gain share as ironSource merger releases more synergy.
In addition to increasing customer base, revenue contribution from industries (beyond games) keeps expanding. Maintain BUY and raise TP to US$ 50. Our TP implies 8.4X PS/121X PE in 2023.


[Unity Software Inc. (U US) Target Price Change]: Maintain BUY for Merger Synergy and Prudent Costs