Gridsum Is The Early Mover In Chinese Big Data Analytics

Gridsum Holding Inc – ADR GSUM is the “early mover in big data analytics” in China, and seems to be poised to benefit from the country’s entry into “an information era in which data serves as a key raw material for generating business growth,” Goldman Sachs’ Piyush Mubayi commented in a report.

Mubayi initiated coverage of Gridsum with a Buy and a 12-month price target of $20.60. The price target represents potential upside of 25 percent.

Revenue Growth

China’s move towards the increasing adoption of big data analytics creates an estimated revenue opportunity of $604 million by 2020 for Gridsum, Mubayi stated, adding that the company’s topline growth could come from significant customer base expansion and rising ARPUs.

Apart from having s strong competitive position in big data analytics, Gridsum has significant potential to penetrate new verticals such as financial services, supporting sustainable revenue growth. The analyst projected a gross revenue CAGR of 57 percent in 2016-2018.

Margin Expansion

Mubayi believes Gridsum would be able to generate consistent operating margin expansion by “increased cross-selling of its products and higher monetization of existing data assets.” He expects Gridsum’s operating loss to narrow in 2016, and the company to achieve a positive operating margin of 5.9 percent in 2017.

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