Kuaishou (1024 HK) Company Update Summary
Core Content
CMB International Securities has released an updated equity research report on Kuaishou, highlighting its resilient growth and improving efficiency despite challenges posed by a soft macroeconomic environment and an epidemic resurgence. The report forecasts Kuaishou's revenue growth and narrowing loss in FY22E and 4Q21E, with a target price of HK$136, reflecting a +51.8% upside from the current price of HK$89.6.
Main Points
4Q21E Performance Outlook
- DAU (Daily Active Users) is expected to remain stable YoY at +18%.
- Revenue is forecasted to increase by +26% YoY.
- Live streaming revenue is expected to grow +1% YoY, while ads revenue will grow significantly +51% YoY.
- E-commerce GMV is projected to rise +28% YoY.
- Adj. NPM (Net Profit Margin) is forecasted at -16%, which is better than the consensus of -23%.
- S&M/Rev ratio is expected to decrease, and GPM (Gross Profit Margin) will remain stable at 42%.
FY22E Forecast
- Revenue growth is expected at +32% YoY for ads and +39% YoY for e-commerce GMV, which is higher than the industry average of +14%.
- Livestreaming revenue will grow +1% YoY.
- Adj. NPM is forecasted at -15%, with GPM increasing by 1 ppts YoY.
- Kuaishou is expected to focus on trust e-commerce and brand e-commerce to improve AAC penetration, AOV, and frequency.
- Regulatory impact is expected to be limited, with algorithm guidance affecting less than 1% of users and streamers tax having a lower impact compared to Taobao due to lower concentration.
Key Financial Forecasts
| Metric |
FY21E |
FY22E |
FY23E |
Forecasted Growth |
| Revenue (RMB mn) |
79,539 |
96,052 |
114,462 |
+20.8% / +19.2% |
| Gross Profit (RMB mn) |
33,018 |
41,276 |
50,588 |
+25.0% / +22.6% |
| Adj. Net Profit (RMB mn) |
(18,268) |
(14,573) |
(11,631) |
+14.9% / +10.2% |
| Adj. EPS (RMB) |
(4.13) |
(3.30) |
(2.63) |
+14.9% / +10.2% |
| P/S (Price-to-Sales) |
3.2x |
2.7x |
- |
- |
Financial Performance Comparison
| Metric |
CMBIS Forecast |
Consensus |
Difference (%) |
| Revenue |
79,539 |
80,127 |
-0.7% |
| Gross Profit |
33,018 |
33,417 |
-1.2% |
| Adj. Net Profit |
(18,268) |
(20,412) |
+5.7ppts |
| Adj. EPS |
(4.13) |
(5.09) |
+5.7ppts |
| Gross Margin |
41.5% |
42.3% |
-0.8ppts |
| Operating Margin |
-32.7% |
-37.1% |
+4.4ppts |
| Adj. Net Margin |
-23.0% |
-28.7% |
+5.7ppts |
Valuation
- Valuation (P/S) is at 3.2x for FY22E, which is considered attractive.
- Enterprise Value is estimated at HK$494,706 million, based on a SOTP (Sum of the Parts) approach.
- Adj. NPM is expected to improve from -28.7% in FY21E to -15.2% in FY22E.
- Operating leverage and disciplined cost control are highlighted as key drivers of the improved margin outlook.
Analyst Ratings and Recommendations
- Rating: BUY (Maintained).
- Target Price: HK$136.
- Upside: +51.8% from current price.
- Analyst: Sophie Huang.
- Contact: (852) 3900 0889 | sophiehuang@cmbi.com.hk.
Shareholding and Stock Data
| Metric |
Value (HK$) |
| Market Cap |
362,023 million |
| Avg 3 mths t/o |
1,837.3 million |
| 52w High/Low |
417.8 / 62.3 |
| Total Issued Shares |
3,461 million |
Shareholding Structure
| Holder |
Percentage |
| Tencent |
21.1% |
| 5Y Capital |
16.3% |
| Morningside |
10.9% |
Share Performance
| Period |
Absolute Return (%) |
Relative Return (%) |
| 1-mth |
-6.7 |
-5.7 |
| 3-mth |
-8.5 |
-2.4 |
| 6-mth |
-47.3 |
-39.3 |
Key Financial Ratios
| Metric |
FY19A |
FY20A |
FY21E |
FY22E |
FY23E |
| Revenue Growth (%) |
92.7 |
50.2 |
35.3 |
20.8 |
19.2 |
| Gross Margin (%) |
41.5 |
43.0 |
44.2 |
42.3 |
48.2 |
| Operating Margin (%) |
-32.7 |
-20.2 |
-14.8 |
-37.1 |
-19.4 |
| Adj. Net Margin (%) |
-23.0 |
-15.2 |
-10.2 |
-28.7 |
-14.2 |
| ROE (%) |
34.6 |
73.2 |
55.3 |
12.3 |
9.8 |
Summary of CMBIS Ratings
- BUY: Stock with potential return of over 15% over next 12 months.
- HOLD: Stock with potential return of +15% to -10% over next 12 months.
- OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
- MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
Important Disclosures
- The report is prepared for the use of intended recipients only and may not be reproduced, reprinted, sold, redistributed, or published without prior written consent.
- CMBIS may have investment banking relationships with the issuers covered in this report.
- There are potential conflicts of interest, and CMBIS does not assume any responsibility for the report's objectivity.
- This report is not an offer or solicitation to buy or sell any security and is not intended for distribution to other persons without prior written consent.
