Kingsoft 3888

[winston]

not vested

Kingsoft Corp (3888 HK)
1Q21: WPS to Drive Growth Amid Sluggish Online Game Performance

Kingsoft reported a solid set of results for 1Q21.

Revenue increased 33.1% yoy to Rmb1.6b, 4.4% above consensus estimates.

Gross margin expanded 1ppt yoy to 84.4%, better than our estimate.

Kingsoft delivered net profit of Rmb117m vs Rmb6m in 1Q20 (as it recognised a Rmb480.9m loss from Kingsoft Cloud’s discontinued operations).

We remain positive on the company, especially on the continued cloud+office collaboration that will drive WPS growth.

Maintain BUY with a lower target price of HK$74.00.

Source: UOBKH

https://research.uobkayhian.com/content ... 036415830b

[winston]

not vested

KINGSOFT(03888.HK) Interim Net Profit RMB165M, Down 98.2%

KINGSOFT(03888.HK) announced interim result ended June 2021.

The revenue rose 17.3% year on year to RMB3.039 billion.

The net profit amounted to RMB165 million, down 98.2% year on year.

EPS was RMB0.12. No dividend was declared.

Dividend History
Announce Date Event Particular
2021/05/25 Quarter 1 No Dividend
2021/03/23 Final D:HKD 0.2000
2020/11/17 Quarter 3 No Dividend
2020/08/18 Interim No Dividend

Source: AAStocks Financial News

[winston]

not vested

Kingsoft Corp (3888 HK)
2Q21: Poor Performance From Online Game Segment; Downgrade to SELL

Kingsoft reported poor results for 2Q21.

Revenue grew 4% yoy to Rmb1,480m, in line with our and consensus estimates.

Gross margin declined 3ppt yoy to 82%, in line with our and the street’s estimates.

Adjusted net profit came in at Rmb42m vs Rmb365m in 2Q20 (excluding disposal gain from Kingsoft Cloud).

Downgrade to SELL with a target price of HK$34.00 due to the muted growth outlook for the online game segment.

VALUATION/RECOMMENDATION

Downgrade to SELL with a target price of HK$34.00, in view of the lack of online game
growth due to the uncertainty from game approval.

Kingsoft currently trades at 31x 12-month forward PE, higher than Tencent 22x.

We deem the current valuation for Kingsoft to be relatively expensive given the sluggish outlook ahead.

Our target price implies 17x 2022F PE (ex-cash) as we applied 50% holding company discount from 40% previously.

Source: UOBKH

https://research.uobkayhian.com/content ... 3475161d0c

[winston]

not vested

Kingsoft (3888 HK) - Negative surprise

Kingsoft Corp’s (Kingsoft; 3888 HK) 2Q21 revenue grew 4% YoY to RMB1.5b.

Online games revenue was soft as it registered a decline of 22% YoY on the back of decreased revenue from JX Online III due to the high base in 2Q20.

Revenue from the office software and services business increased 47% YoY to RMB786.2m, largely due to growth in the licensing business and subscription services business.

On games, management has revised down its full-year guidance from 10-15% to 5-10% YoY growth.

What has been a key negative surprise has been management’s indication that it could reserve some cash for Kingsoft Cloud in support of its Infrastructure-as-a-Service business given intense competition, especially over the next 3-5 years.

Management has thus also indicated that they would be unlikely to revise the dividend payout ratio nor repurchase shares in the near term, with the other consideration being that such actions could be unlikely to support share prices given the current market sentiment.

Given that Kingsoft Cloud is separately listed, and that the spin-off back in 2020 helped to provide a re-rating for Kingsoft Corp, we believe that such a move could lead to a delay in a narrowing of the holdco discount that the market typically ascribes to the name.

While we remain positive on the WPS momentum and the localization exposure it offers, as well as the potential reacceleration of game growth in 2022, we cut our FV from HKD65 to HKD51 due to more conservative assumptions, higher holdco discount, and latest market cap values for key associates. BUY.

Source: OCBC

[winston]

* Kingsoft Corp – Game delays weigh on profitability – Downgrade to Neutral.

Kingsoft Corp 2Q21 results were a mixed bag:
i) Office software and services (WPS) revenue sustained solid growth of +47% yoy;
ii) online games revenue dropped -22% yoy/-12% qoq to Rmb693mn due to a high base and delayed game release/banhao approvals;

Management lowered its 2021E game revenue guidance to -10% to -5% yoy, from +10% to 15% yoy.

We lower our revenues by 6%/4% for 2021E/2022E as we trim online game revenue by -18%/-15%, partially offset by 9%/8% higher office software and services revenue.

We downgrade the stock to Neutral from Buy, new 12m TP of HK$36.90.

Source: GS

[winston]

not vested

KINGSOFT(3888)

Analysis：

Kingsoft Corporation (03888) businesses remained steady in the first quarter of 2023, with total revenue reaching RMB1,970.3 million, increasing by 6% year-on-year.

Revenue from office software and services business reached RMB1,051.7 million, up 21% year-on-year.

Both domestic individual office subscription and institutional subscription businesses experienced robust growth during this quarter, demonstrating the significant effect of the subscription transformation.

In face of the technological transformation brought about by generative AI and large language models, Kingsoft Office Group stated that it will focus on the AI field, collaborates with companies engaged in the large language models and excel in the application layer.

Company also continues to actively promote the digital transformation and upgrading for organizations of all sizes, and empower their digital construction.

In addition, online games business made progress in iterating core IPs.

The number of daily active users and revenue of JX Online III increased year-on-year in the first quarter of 2023.

Company`s anime mobile games, Snowbreak: Containment Zone and The Other Shore, are scheduled for launch in the second half of 2023.

Kingsoft had a good start in the first quarter of 2023, and it is expected that the favorable situation will continue into the second half of the year.

Strategy：
Buy-in Price: $34.00, Target Price: $37.00, Cut Loss Price: $31.40

Source: Phillips

[winston]

not vested

KINGSOFT(3888)

Analysis：

Kingsoft mainly engaged in the design, research, development and sales promotion of WPS Office software products and services, research and development of games, as well as the provision of end game and mobile game services.

For the quarter ended 31 March 2023, the group revenue amounted to RMB 1.97 billion, increasing 6.3% YoY.

Among them, the office software and services amounted to RMB 1.05 billion, increasing 20.7% YoY and the online games and others revenue amounted to RMB 1.63 billion, decreasing 6.4% YoY.

The cost of revenue amounted to RMB 340 million, decreasing 1.6% YoY.

Gross profit amounted to RMB 1.63 billion, increasing 8. 2% YoY.

Profit attributable to shareholders of the company is RMB 190 million, increasing 96.0% YoY.

Kingsoft will launch two games in second half of the year, one of which has more than one million reservations, which is expected to enhance the company`s game revenue.

In addition, the company cooperates with the Nvidia team to reduce the company`s server deployment costs by 23% and improve the company`s operating efficiency through Nvidia`s GPU and technology.

Strategy：

Buy-in Price: $32.95, Target Price: $35.20, Cut Loss Price: $31.00

Source: Phillips

[winston]

not vested

Kingsoft Corp (3888 HK)
2Q23: Strong Top-line Growth; Solid Progress On Game Pipeline And WPS AI

Kingsoft’s 2Q23 results were better than expectations.

Revenue grew 20% yoy to Rmb2.2b, in line with the street’s estimate.

Gross margin expanded 3.5ppt yoy to 83.5%, 2% above the street’s expectation.

Non-IFRS operating profit surged 59% yoy to Rmb767m, while operating margin expanded 8ppt yoy to 35%, driven by better operating efficiency and improved WPS margin.

Net profit was Rmb251m, up 6.5% qoq, lightly below our expectation.

Maintain BUY with a higher target price of HK$40.00.

Source: UOBKH

https://research.uobkayhian.com/content ... 1431fce501