by winston » Mon Mar 01, 2021 2:29 pm
sold
Kingsoft (3888 HK) - Pullback creates opportunity for exposure to strategic growth areas
In our view, the rising US 10Y yield has been a significant factor in contributing to the recent derating of Kingsoft’s share price, and we believe that this creates an opportunity for exposure to strategic and high-growth areas, especially in office software and cloud.
We are increasingly constructive on Kingsoft Cloud’s (unrated) outlook for 2021 on the back of premium customer growth, with a focus on leading enterprises within selected fast-growing verticals (e.g. games, video, financial services).
We believe that the enterprise cloud business should maintain a fast growth trend, which should be positive given its relatively higher gross margins.
On WPS, we believe that it is strategically placed to benefit from the government’s direction of adopting domestic products in key technology areas, given its leading position in domestic office software services and coverage of governmental bodies and SOEs.
On its games business, we are positive on its upcoming new mobile titles, with Final Fantasy Brave Exvius: War of the Visions obtaining its game license on Feb 9. BUY.
Source: OCBC
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