Huya: Lowering Fair Value Estimate by 14% as Company's Shares Go Ex-Dividend

We lowered Huya's fair value estimate to $6.60 per share from $7.70 as the shares went ex-dividend on Oct. 9. To recap, Huya declared a special dividend of $25 million, or $1.08 per share, on Aug. 13. While we anticipate Huya should remain in a net cash position following this dividend payout—which amounts to about $3.70 per share—the company is now trading above its net cash value given the recent rally in share prices, compared with a discount in early 2024. Nevertheless, we still see incremental value in its core business, which should see improving profitability going forward. The shares are trading at a discount to our valuation. Although Huya is expected to deliver minor operating losses over the near term, we believe the ongoing execution of its strategic transformation plan—focused on expanding revenue through game distribution and sales of virtual gaming items—will elevate Huya's long-term earnings into positive territory.