20231020-招银国际-快手-W-01024.HK-Expecting_another_upbeat_quarter_7页_880kb

CMBI Research: Kuaishou (01024.HK) Equity Research Update

Date: 20 October 2023

Summary:

CMB International Capital (Hong Kong) Limited ("CMBIGM") updates its research on Kuaishou Technology Holdings Limited (01024.HK), maintaining the "BUY" rating and setting a target price of HK$97 (unchanged from previous).

Key Points:

1. Strong 3Q23E Performance:
   The company is expected to meet sales guidance (+20% YoY) and beat profit expectations (adjusted NP at RMB2.76bn, 16% above consensus), driven by improved operational efficiency.

• Higher gross profit margin due to better GPM (e.g., lower bandwidth costs, rev sharing) and narrowing overseas losses.
• Slightly declining S&M expenses.
• Solid user metrics, with DAU estimated at 384mn, exceeding 126.8 mins average daily time spent.

2. Ecommerce & Ads Growth Driven by Strategy:

• Ecommerce GMV/revenue expected +30%/+35% YoY, fueled by brand participation and the "Stream Initiative," significantly boosted by the upcoming "11.11" campaign (enhanced subsidies, shelf mall access, SME support).
• Live-streaming contributes significantly to GMV growth (per charts like Figure 9).
• Ads division expected +26% revenue YoY, backed by rising ad load, CPM, and key initiatives.

3. Rationale for Revising EPS and Price:
   The forecast lift aims to reflect better adjusted net profit margin (10%, vs. prior 8.6%) in 3Q23E. Despite discounting near-term concerns (Tencent action/voting), management clarified its stance. The recommendation is supported by projected solid 3Q23E results and the imminent "11.11".

4. Valuation & Target Price:

• Maintained SOTP-based target price at HK$97 (c. +72.9% upside from current HK$56.1).
• Valuation metrics remain competitive (consult Table on same page as figures).

Key Assumptions/Drivers of View:

• Strong execution in Ecommerce and Ads.
• Successful marketing during "11.11".
• Purchase of shelf mall access and standard product push.
• Continued gains from "Stream Initiative" (per text).

Analyst Profile:

• Sophie HUANG (852) 3900 0889, sophiehuang@cmbi.com.hk
• Eason XU (852) 3900 0849, easonxu@cmbi.com.hk

Please refer to the source report for full disclosure details and caveats.