DouYu 4Q20 Earnings Analysis
Operates a similar business to Twitch by enabling gamers to livestream while they are playing.
Since Twitch and YouTubeare banned in China, the market is really dominated by three main players, Huya, DouYu and Tencent
Users can watch live streams for free but will need to be a paid user to live stream themselves. DouYu also makes money from ads with 91% of revenues coming from live streams in 4Q20
DouYu has 337 million (FY19) users with MAUs of 174.4 million (FY20) with 17.5 million paying users.
China has the largest eSport market in the world with $37.9 billion in revenues in 2018 (vs $30.4 billion for the US) and is growing at 25% annually.
Arbitrage opportunity in case of merger with spread of over 40%
All Stock deal where each ADS of Douyu will be converted into 0.730 ADS of Huya
Merger of equals and the pro-forma company will have two co-CEOs (the current CEOs of each company). Tencent will own 68% of the new company.
On the day of the merger, both DouYu and Huya willeach pay a special cash dividend of $60 million and$200 million respectively
Antitrust probes on Chinese Big Tech
Volatility of Chinese emerging tech stocks
Delisting of Chinese stocks on US exchanges
Revenues of RMB 2.26 Billion ($347 million) in 4Q20 vs RMB 2.06 Billion in 4Q19
Revenues of RMB 9.60 Billion ($1.47 billion) in FY20 vs RMB 7.28 billion in FY19
Net loss of RMB 228 million ($35 million) in 4Q20 vs net income of RMB 157 million in 4Q19
Net income of RMB 404 million ($62 million) in FY20 vs net income of RMB 33 million for FY19
Total assets: $1.36 billion ; total liabilities: $295 million; book value: $1.06 billion
Cash: $809 million, No debts, current assets: $1.23 billion, current liabilities: $288 million
Net current asset value of Benjamin Graham: $930 million
Read the full analysis on my Research Partnership: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/31465220