20220824-招银国际-快手-W-01024.HK-Another_upbeat_quarter__2H22E_outlook_on_track_4页_851kb

Kuaishou (1024 HK) Company Update Summary

Core Content

CMB International Global Markets has issued an equity research update on Kuaishou, highlighting its strong performance in the second quarter of 2022 (2Q22) and maintaining a positive outlook for the second half of 2022 (2H22E). The report indicates that Kuaishou's results exceeded expectations, with both daily active users (DAU) and revenue growing year-over-year (YoY) and outperforming analyst consensus. The company is expected to continue its growth trajectory, with the full-year GMV target remaining intact.

Main Points

• 2Q22 Performance:

  • Revenue growth of 13% YoY, beating the consensus of 10.7%.
  • Non-GAAP net loss of RMB1.3bn, significantly better than the consensus of RMB2.9bn.
  • DAU growth of 18.5% YoY, surpassing the consensus.
  • Non-GAAP GPM improved to 45%, above the consensus of 43%.
  • Live streaming revenue increased 19% YoY, driven by rising MPUs.
  • Ecommerce GMV grew 31.5% YoY, surpassing the forecast of 25%.

• 2H22E Outlook:

  • Revenue growth is expected to be 12% YoY for 3Q22E and 15% YoY for 4Q22E, in line with guidance.
  • Ecommerce GMV is forecasted to grow 26% YoY in 3Q22E and 30% YoY in 4Q22E.
  • DAU is expected to continue sequential growth, reaching 360mn in 3Q22E.
  • The full-year GMV target of RMB900bn remains unchanged.
  • Take rate is expected to slightly improve in 3Q22E.
  • Ads revenue is projected to grow 12% YoY in 3Q22E, with internal ecommerce and brand ads performing well, while external ads remain flat.
  • Despite challenges in the ads segment, the company is expected to maintain its share gain trend.
  • Live streaming is forecasted to grow 10% YoY, with rising MPUs.
  • Adjusted net margin is expected to be -10% in 3Q22E, with improved GPM offsetting higher S&M expenses (estimated at RMB10bn).

• Target Price & Recommendation:

  • The target price is HK$120, maintaining the previous price target.
  • The recommendation is BUY, with an upside of +59.8% from the current price of HK$75.1.

Key Financial Highlights

Shareholding & Stock Performance

• Shareholding Structure:

  • Tencent: 20.7%
  • 5Y Capital: 16.0%
  • Employee Shareholding Plan: 7.4%

• Stock Data:

  • Market Cap: HK$318,832 mn
  • Average 3-Month Turnover: HK$2,218.34 mn
  • 52-Week High/Low: HK$110.5 / HK$53.2

• Share Performance (3-Month):

  • Absolute: +3.9%
  • Relative: +8.8%

Key Ratios

• Revenue Growth (%):

  • FY20A: 50.2
  • FY21A: 37.9
  • FY22E: 15.4
  • FY23E: 17.7
  • FY24E: 15.4

• Gross Margin (%):

  • FY20A: 68.9
  • FY21A: 42.9
  • FY22E: 17.9
  • FY23E: 25.5
  • FY24E: 23.6

• Operating Margin (%):

  • FY20A: -38.1
  • FY21A: -42.1
  • FY22E: -26.3
  • FY23E: -16.7
  • FY24E: -9.4

• Adj. Net Margin (%):

  • FY20A: -13.4
  • FY21A: -23.3
  • FY22E: -9.4
  • FY23E: -3.4
  • FY24E: 2.6

• Effective Tax Rate (%):

  • FY20A: -0.5
  • FY21A: -1.3
  • FY22E: -8.7
  • FY23E: -5.2
  • FY24E: -13.2

• ROE (%):

  • FY24E: 9.6

Analyst Certification & Disclaimer

• The analyst certifies that the views expressed in the report reflect personal opinions and are not influenced by compensation.
• The analyst has not traded in the stock covered in the report within 30 days prior to the report's release, nor will they do so within 3 business days after.
• CMBIGM may have investment banking relationships with the companies covered in the report, which could lead to potential conflicts of interest.
• The report is not an offer or solicitation to buy or sell any securities.
• CMBIGM is not responsible for any losses incurred by relying on the information in the report.
• The report is intended solely for the use of the intended recipients and cannot be reproduced or distributed without prior consent.

Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10% over the next 12 months.
• SELL: Potential loss of over 10% over the next 12 months.
• NOT RATED: Stock is not rated by CMBIGM.

Market Performance Expectations

• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Important Disclosures

• There are risks involved in transacting in any securities.
• The report is not suitable for all investors and does not provide individually tailored investment advice.
• Past performance does not guarantee future results.
• The value of investments is uncertain and may fluctuate.
• Investors are advised to consult with a professional financial advisor before making investment decisions.

Company Background

• CMB International Global Markets Limited is a subsidiary of CMB International Capital Corporation Limited, which is a subsidiary of China Merchants Bank.
• The report is prepared for the use of clients of CMBIGM and its affiliates only.
• Distribution is restricted in certain jurisdictions, including the United Kingdom and the United States, where it is only available to specific investors.