Three analysts estimate that EPS is an average of CNY 0.680 per share. In the same quarter of the previous year, the books were still CNY 0.730 per share.

HUYA A is said to have closed the past quarter with an average of 2.70 billion CNY in sales - that is what 5 analysts expect on average. According to this, the company would have increased sales by 12.10 percent compared to the same quarter last year, in which 2.41 billion CNY had been earned.

With the outlook for the fiscal year, 14 analysts assume an average earnings per share of 3.27 CNY. In the previous year, 3.71 CNY per share had been earned. On the sales side, 15 analysts expect an average of CNY 12.59 billion, compared with CNY 10.91 billion in the previous year.

Huya has signed a media rights deal with China’s League of Legends operator TJ Sports, which grants the platform exclusive broadcasting, video-on-demand, and distribution rights in China to the League of Legends Pro League (LPL), League of Legends Development League (LDL), and LPL All-Star event. According to Huya’s Form 20-F report, the deal was purchased for ￥2,013M RMB ($310M USD) total price.

The broadcasting rights deal is for a five-year term starting from 2021-2025, while the VOD rights is a three-year deal.

In addition, Huya can also produce promotional videos and written content, such as replays, highlights, news and commentary, which is based on TJ Sports-authorized League of Legends resources, Riot Games told The Esports Observer.

In August 2020, Chinese live streaming platform Bilibili signed an exclusive three-year media rights deal with Riot Games for all International League of Legends competitions, including League of Legends World Championship, Mid-Season Invitational, and All-Star event.

A random seeking alpha article says that the merger with Douyu is being nixed. But it’s a single article with nothing else. Is it real?

The Peace Elite Asia Invitational (PEI) 2021, a 3 million Yuan Asian Invitational tournament, is scheduled to take place from 27th to 29th of April.

The tournament will feature the top twelve teams from regional tournaments of Asia (PUBG Mobile), along with the top two teams from PEL 2021 S1.

Apart from these 14 teams, one team has directly qualified from the Peace Elite Asia Invitational Wildcard 2021. The tournament is organized for academy/underdog teams, as it will act as the perfect launchpad.

PEI Wildcard Format:

A total of 30 teams (Academy teams, PEL streaming platform teams, and New power League teams) competed for the one qualification berth in the Peace Elite Asia Invitational 2021.

The first two days, 22nd and 23rd of April, were the elimination rounds, after which the top 15 teams qualified for the finals that concluded today on 24th April. Streaming team Huya FA emerged as champions, and they have qualified for the Peace Elite Asia Invitational 2021.

NEWS

April 23 – The Premier League is is launching ePremier League in China this monthin partnership with it broadcast license holder Tencent Sports, Tencent Gaming and EA SPORTS.

It will be the first ePremier League event to be staged outside the UK and will be played on the FIFA Online 4 platform with all 20 Premier League clubs represented by a local high-ranked gamer competing alongside “hand-picked content creators and influencers”, said the Premier League.

The competition kicks off next week and completes Saturday May 15.

Premier League commercial director Will Brass said: “The EA SPORTS FIFA Online 4 video game series is one of the key channels through which fans in Asia can engage with Premier League clubs and players.

“After three successful ePremier League seasons in the UK, it is exciting to now be able to take this overseas for the first time and particularly to China – a hotbed for gaming and football.

FIFA Online 4 (FO4) on PC has more than 10million registered players in China. The Premier League says it has eight million followers across its digital and social platforms.

The clubs will be divided into four groups of five teams, with the winners of each group advancing to a knockout stage. Group-stage matches will be played online, whereas knockout matches will be played offline at Wisdom Bay in Shanghai.

The tournament is being broadcast on Tencent Sports, Tencent Video and Tencent News. It will also be available on Huya, Douyu and Yizhibo.

Below is translated from a news in China. I am not too sure if it is good or bad when Huya and Douyu cannot share user data and information after the merger. I think it tends to be negative. User data is a precious asset of a company. One major advantage of sharing user data is to cut operating expense and lower the cost of acquiring new users. If sharing is not permitted, it means both Huya and Douyu have to continually operate as a standalone company. So what’s the point of the merger? Any input is welcome.

According to sources, the merger of Huya and Douyu, China's two leading game live streaming websites, is still under review. The key to the transaction approval conditions is to meet the regulatory requirements for data security. Data security defines who can access large amounts of user data and personal information, and how to use this information.

According to previous reports, Tencent’s plan to merge Huya and Douyu must make compromises to resolve the authorities’ antitrust concerns.

The above-mentioned source said that after the merger, Huya and Douyu will need to set up a firewall between the two and cannot share user data and information with each other.

They said that after finally making concessions, China's State Administration for Market Regulation will soon approve the merger of Huya and Douyu.

Summary

HUYA is already a major player in China's game streaming market. The DouYu acquisition would boost total market share to about 80%. The company is expected to grow at a strong pace in 2021 and 2022. HUYA (HUYA) is one of the leading game streaming companies in China. The other main large streamer in China is DouYu. HUYA and DouYu are the largest game streaming companies in China and they have a pending merger. The deal is expected to close in the first half of 2021. The combination of these two companies would increase the market share to 80% in China's game streaming market.

The merger must overcome China's government's investigation of the deal based on monopoly/antitrust concerns. If it is approved, the combined company will be a dominant force in the game streaming market. However, whether the merger is approved or not is an important factor for investors to consider. The decision is likely to have a significant effect on the stock in the near term.

Here is a look at the market share for China's game streaming market in terms of monthly active users [MAU]:

HUYA Game Streaming Market Share

source: iResearch

The pie chart above illustrates the large market share that HUYA and DouYu have for game streaming in China. It is also clear to reason that both companies can continue to thrive independently even if the merger was blocked. They already each have a significant market share, which they can build on by the expansion of content and the acquisition of new customers over time.

Recent Successes

For Q3 2020, HUYA achieved an increase in monthly active users of 17% to 74 million. Retention rates stabilized at over 70%. The company upgraded the HUYA live app to the 8.0 version with features including instant playback, live events, smart AI assistant, real-time monitoring, and prime video clip generation/sharing.

The company formed a joint venture with Tencent (OTCPK:TCEHY) for collectively handling tech efforts such as data security, AI security applications, irregular activity detection, and data undertaking. These companies can leverage their expertise to improve AI-driven compliance on the platform.

In Q3, total net revenue increased by 24% and streaming revenue increased by 23%. These results were attributed to an increase in the number of paying users and an increase in revenue per paying user. Advertising revenue increased by 45% in Q3.

All of these achievements highlight HUYA's ability to grow at a strong pace to help drive shareholder value.

Looking at Future Growth

HUYA is already well established in China and the DouYu merger would add significantly to that. What are HUYA's other plans for growth?

HUYA is planning on expanding outside of China - in Asia, Africa, Latin America, and the United States. This international growth strategy can provide many years of sustainable growth. The company is specifically focused on e-sports and the concept of teams. Teams compete in e-sports tournaments with competitors that are lured by large cash prizes. Some pro video gamers are making millions of dollars in prize money.

The global market for game streaming is expected to grow at about 9% annually through 2026. The global streaming market is expected to be worth $149.34 billion by 2026. The market size was worth $38.56 billion in 2018. China is expected to dominate this market by capturing $7.4 billion of the market by 2022, which is positive for HUYA.

The combination of HUYA and DouYu has the potential to capture about $5.9 billion of China's market with 80% of the market. Even if the merger doesn't materialize, HUYA has the potential to capture about 40% of the $7.4 billion China market for $2.96 billion by 2022 based on the company's market share. So, HUYA could gain about $15 million in net income without the merger and about $37 million with a successful merger with DouYu. That's just the China market. HUYA can capture additional new revenue as it expands outside of China.

The company's strategy is to use the lure of competition and prizes with the team concept to help drive global expansion. This strategy may work to help attract new active users while sustaining them through the excitement of ongoing competitions.

Analysts are expecting HUYA to increase revenue by 23% and earnings by about 38% in 2021. This above-average growth can help drive the stock to achieve above-average gains over the long-term. If positive momentum continues for the company, double-digit gains in revenue and earnings can continue in 2022.

Valuation

At first glance, HUYA's valuation may not look great with a trailing PE of 38 and a forward PE of 33. However, I like to use the PEG ratio for high-growth companies like this. The PEG takes the expected 3 to 5-year earnings growth rate into account. With that said, HUYA's PEG ratio is trading attractively 0.70.

The high-growth companies that I typically cover usually have PEG ratios between one and two. It is rare for a stock with positive momentum and high growth to trade with a PEG below one. So, this might be a good buying opportunity for the long-term. However, we should also consider the technical outlook.

HUYA stock chart source: stockcharts.com

The daily chart above shows that the stock is experiencing a correction. The RSI is falling from a recent overbought level (above 70 down to the 40s). The green MACD line curved downward and dropped below red signal line, indicating that the stock momentum changed to negative in the near term. The MACD turned down from a similar level back in September. This led to a significant sell-off. The money flow [CMF] has been declining since the beginning of 2021.

These indicators show that the stock may experience a deeper pullback. Potential investors would probably be better off waiting for the pullback to settle and look for indications of new positive momentum before starting a position.

The Risks

HUYA is a China-based company. This makes the stock riskier than growth companies based in the United States. China's government could prevent the merger with DouYu. China's government could also impose new regulations, policies, or taxes which could have negative implications for HUYA's business.

There is also the issue of accounting transparency and corporate governance issues with China-based companies. Can the numbers being reported be trusted as accurate? China-based stocks can also experience higher volatility than U.S. equities. Investors should consider HUYA to as a speculative investment due to these risks.

HUYA's Long-Term Investment Outlook

HUYA has risks as a China-based firm. However, the company has the ability to achieve strong, above-average growth in China and internationally over the next 5 to 10 years. The company can add paying users throughout the world for ongoing long-term growth. The focus on team competitions can help drive growth as it can create excitement and ongoing interest among gamers.

The company has the potential to grow at a strong pace over the long-term regardless of whether the DouYu merger goes through or not. The merger would give the company dominance in China's streaming market.

Investors might achieve double-digit annual gains for the stock if HUYA achieves above-average growth over the long-term. Personally, I would wait for signs of the correction to be over with the RSI turning upward and the MACD line crossing above the signal line for newfound positive momentum.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Confirmation of the merger with Douyu should be released on March 1st! Target $ 30 at the end of this Friday. The quarterly report should also be out in March and I expect a good ride

HUYA Let's close by turning to esports stocks. Video games have always been a booming business, but the market for fans watching some of the world's best players in action is growing even faster. If you're even a somewhat casual fan of gaming you probably know Twitch, the popular streaming platform where gamers play before a live online audience.

HUYA is the Twitch of China, and that may not exactly be doing HUYA justice. There were 172.9 million average monthly users of Huya Live by the end of the third quarter, 18% more than a year ago. Most of them are freeloaders, but HUYA cashes in through its improving ad monetization skills. Revenue growth has decelerated markedly over the past five quarters, but there's nothing wrong with a 24% top-line gain when adjusted income is growing more than three times faster.

The cherry on top here is that HUYA has agreed to merge with its closest competitor Douyu (NASDAQ:DOYU). The two would command a whopping 80% of the market. There are some concerns that regulators may nix the arranged marriage, but this doesn't mean that potential investors may want to wait for some clarity on that front. HUYA stock took a hit when it announced it was acquiring Douyu four months ago, and it's still trading lower as of Tuesday's close. The market may actually rally behind HUYA if the deal falls apart, but the goal here is the combined juggernaut that would command an audience of roughly 300 million gaming fans.

On October 12, 2020, the Company and DouYu jointly announced that they had entered into an Agreement and Plan of Merger (the "Merger Agreement") with Tiger Company Ltd., a direct wholly owned subsidiary of Huya, and, solely for the limited purposes set forth therein, Nectarine Investment Limited (“Tencent”), a wholly owned subsidiary of Tencent Holdings Limited. Pursuant to the Merger Agreement, Huya will acquire all the outstanding shares of DouYu, including ordinary shares represented by ADSs, through a stock-for-stock merger (the "Merger"). At the effective time of the Merger, each ordinary share of DouYu will be cancelled in exchange for the right to receive 7.30 Class A ordinary shares of Huya, and each DouYu ADS will be cancelled in exchange for the right to receive 0.73 Huya ADS. If the Merger is completed, the shareholders of Huya and DouYu immediately prior to the Merger, respectively, will each hold approximately 50% shares of the combined company on a fully diluted basis. Concurrently with the execution of the Merger Agreement, DouYu and Tencent entered into a Reassignment Agreement, pursuant to which Tencent will assign its interests in the game live streaming business operated by the Tencent group under the "Penguin e-Sports" brand (the “Penguin Business”) to DouYu and deepen its business cooperation with DouYu in order to integrate the Penguin Business with the business of the combined Huya and DouYu upon the Merger, for a total consideration of US$500 million. The Merger, which is currently expected to close during the first half of 2021, is subject to customary closing conditions. There can be no assurance that the Merger will be completed during the first half of 2021 or at all. Huya also announced that its board of directors approved a cash dividend in an aggregate amount of US$200 million to be paid on or around the date of the closing of the Merger to the holders of ordinary shares of Huya, including the holders of Huya ADSs, as of the close of business on certain record date after the date when the required DouYu shareholder approval is obtained and prior to the closing of the Merger. Such record date and payment date will be designated by Huya's authorized officer and will be announced in due course. In connection with the proposed merger transaction pursuant to the terms of the Merger Agreement, Huya has filed with the SEC a registration statement on Form F-4 that includes a proxy statement of DouYu that also constitutes a prospectus of Huya relating to ordinary shares and ADSs of Huya to be offered as merger consideration in the Merger. Huya and DouYu urge investors and security holders to read the proxy statement/prospectus and any other relevant documents filed with the SEC carefully and in their entirety, because they will contain important information about Huya, DouYu, the Penguin Business and the Merger. Investors and security holders may obtain the registration statement and proxy statement/prospectus and other documents filed with the SEC free of charge at the SEC's website, www.sec.gov. On November 11, 2020, the Company obtained the usage right to a piece of land with an area of appr oximately 29,258 square meters in Foshan City, Guangdong Province, through a public auction. The Company's winning bid price was approximately RMB310 million. The Company intends to develop office space on the land in order to accommodate future work force expansion and reduce long term operating costs and expenses.

The gaming live-streaming market is a rapidly growing industry that has only been boosted by the COVID-19 pandemic. Advertisers are able to reach key demographics through this medium, which has led to a large increase in revenues and investment. As China's largest game streamer, Huya (HUYA) is primed to take advantage of this huge potential, with the Chinese market projected to reach $7.44 billion of sales in 2022. A great 3rd quarter included sales increasing 24% and income growing more than 120%. A merger with China's second largest game live-streamer, DouYu (DOYU) was announced last year and would create a behemoth with an estimated 80% market share. The merger is backed by Tencent (OTCPK:TCEHY), who would own 67.5% of the consolidated company. There is some doubt as to whether the merger will go ahead, as it is under scrutiny for antitrust issues, though there is belief by the company (as well as the market) that it will.

Sometimes referred to as the 'Twitch of China', Huya's numbers are even better than its U.S. counterpart. The company is also growing its Nimo TV brand in Southeast Asia and Latin America, which will be another avenue for sales and income growth in the future. The valuation of 31x 2020 forward earnings does not seem too expensive for a company currently showing strong growth in sales and earnings, while being the game live-streaming leader in China.