Huya Earnings: Revenue Mix Shift Toward Games Translates to Strong Profitability

No-moat Huya’s first-quarter earnings were above our estimates, and management lifted profitability guidance for the full year. This led us to lift our forecasts for the company, but the favorable valuation impact from this was offset by Huya paying out its $150 million in special dividends as shares went ex-dividend on May 9. Overall, we maintain Huya’s fair value estimate at $7.70 per share. We reiterate that the bulk of Huya’s value stems from its net cash position equivalent to $5.60 per share at the end of March, excluding special dividends, against the stock price of $4.70 as of the market close on May 13.