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

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

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China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>We forecast that Unity's top line/bottom line would be 2.8% /24.7% vs cons. in 4Q22, with  synergies from ironSource merger to take effect and gaming market to gradually recover. </li>
<li>Price increase for Create segment and improved monetization for Operate segment would further boost the company's 2023 outlook, leading to top line/bottom line beating cons. by 3%/55%.</li>
<li>Due to our optimism of both industry and company uptrend, we upgrade to BUY and raise TP to US$ 48.2, implying 7.2X PS/ 159X PE in 2023.</li>
</ul>


We forecast that Unity's top line/bottom line would be 2.8% /24.7% vs cons. in 4Q22, with  synergies from ironSource merger to take effect and gaming market to gradually recover. 
Price increase for Create segment and improved monetization for Operate segment would further boost the company's 2023 outlook, leading to top line/bottom line beating cons. by 3%/55%.
Due to our optimism of both industry and company uptrend, we upgrade to BUY and raise TP to US$ 48.2, implying 7.2X PS/ 159X PE in 2023.


[Unity (U US, BUY, TP US$48.2) Rating Change]: Major Catalysts to Realize Among Industry Recovery