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HUYA Stock Looks Very Cheap At EV/EBIT Multiple Of 1

Oct. 06, 2021 4:20 AM ETHUYA Inc. (HUYA)DOYU15 Comments
EE Investing profile picture
EE Investing


  • Due to its relatively mature user base, HUYA is not as negatively impacted by the recent regulatory changes, as investors might expect.
  • HUYA's cash position ($1.7B) is almost as big as the total market cap ($1.9B).
  • The company has an EV/EBIT multiple of 1 and a PE ratio of 14.
  • HUYA also has many competitive advantages over DouYu and its other competitors and I, therefore, give the stock a BUY rating.
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With a combined market share of 80%, HUYA (NYSE:HUYA) and DouYu (DOYU) are the two market leaders in the Chinese game-centric streaming market. Recent regulatory changes have brought both stocks to historical lows. However, taking a look at the user

This article was written by

EE Investing profile picture
My Background: Grew up in Germany, working and living in China. MSc in Finance. Years of experience in strategy consulting and finance.Stocks that I cover usually have market caps between $10M and $25B and fall into one of the two categories below:Category A - Asian stocks: I work and live in China, am able to speak Mandarin, and therefore can provide readers with unique insights. I believe especially Chinese stocks are extremely mispriced. Some companies are obvious scams and/or trade for far too high valuations, and some stocks are growing rapidly have P/E ratios of below 3 and are debt-free. Most of my profits I earn in this category. (recent examples are FINV, YRD, VIPS or HUYA)Category B - Growth at a reasonable price: As I do not want my whole portfolio to be exposed to Asia, I also analyze a lot of US stocks. My focus is on, often undercovered, growth companies that are in the best case already profitable and available for a reasonable price. (recent examples are PUBM, GPRO or MED)(Important Note: My articles and comments are not intended to be investment advice. Please do your own due diligence before making investments in any security.)

Analyst’s Disclosure: I/we have a beneficial long position in the shares of HUYA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

I've kept my small packet from $10-12 days (at a loss now, obvs) but have opted to start buying leaps here. I think this ship will turn in the next 6-18 months and leaps into 23 and 24 are the way to capitalise on this IMO. We'll see, I guess...
Xav Welsh profile picture
MS just started Huya with an underweight rating and $7 price target…
@Xav Welsh obviously MS knows nothing ..
Kinix Research profile picture
My biggest concern now has nothing to do with Chinese regulations actually... Like you point out, it doesn't really change the deep value and growth story on an already profitable company almost trading at negative enterprise. I'm actually worried HUYA (and DOYU) get taken private at these practically free valuations...
@kinix or consolidated into 10cent
Senior EE Investing, all in for a while -------BUT-------right now China tech in a serious BEAR market. When the dust settles this could be a huge winner-----BUT in my opinion-----Chinese tech depends on BABA-------and that seems to have lost gravity-------could be $110.00 as it looks for support on the elevator ride down.As for the "PRINCE"-------front man Jack Ma-------that turned out to be a Elvis imposter-------and another greedy, rich dude that thought he could get away with anything and everything under the sun. What brought him down (in my humble opinion) was his arrogance and hubris and telling the big Machers in Beijing -------I got the plan for a new financial world----------WRONG!! Great article on HUYA and thanks!! CIAO
declutter profile picture
@kevinconnolly fully agree. Mr X is dishing out a humble pie for Mr Ma . There is a Chinese saying ” 下 马 威” - commanding Ma to get off his high horse .
declutter profile picture
Finally , there is someone covering Huya in its analysis. I believe this is a raw diamond at this moment , waiting to be uncovered and polished up in the near future . Those with patience shd start accumulating now
Tenaval profile picture
Thank you for your article. Your analysis has made me feel a little better. Let's hope the company can be around longer than a certain anit-gaming Mr X. This could well be a multi-bagger from here.
Pearl Gray Equity and Research profile picture
there's no way you can use a multiple to judge a stock tied to GDP contraction and decomposition of assets due to regulation.
EE Investing profile picture
@Pearl Gray Equity and Research I don't quite understand - could you elaborate?
Also, China's GDP is growing at least 4% each year for the next years, I'm not sure what you are referring to
Adream profile picture
@Pearl Gray Equity and Research do cash decompose nowadays ? :D
BogdanGechi profile picture
Thanks for the article. Nice to see some $HUYA coverage.

There was a time last year when I thought Huya was undervalued at $20, so I bought a small position. Only bad news happened since, the merger with DouYou got rejected, regulatory changes from CCP, Cathy Woods liquidated ARK's position and also, there's an entire market correction going on right now.

No doubt this company is undervalued in a vacuum, but with all the recent drama, I'm kind of hesitating to buy more.
EE Investing profile picture
@BogdanGechi I'm pretty sure all Chinese tech stock will drop today at the market opening - could be a good time to buy some HUYA stocks.

Good luck with your position anyways!
nikita.b profile picture
Long $doyu
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