20230721-招银国际-快手-W-01024.HK-Share_gain_to_continue_with_earnings_upside_7页_906kb

Kuaishou (1024 HK) Company Update

Key Points from Analyst Report (July 21, 2023):

1. Upbeat Financial Outlook for 2Q23E:

   • Kuaishou is expected to deliver strong performance for the second quarter of 2023, with revenue growth of 26% YoY (adjusted to +26% from prior guidance).
   • Adjusted net profit is projected at RMB 1.4 billion (up from prior guidance range of RMB 1.1-1.2 billion).
   • Growth driven by:
     • Stronger topline from other services (+55% YoY) and ads business (+28% YoY).
     • Improved gross margin due to higher GPM and narrower overseas losses.
   • User metrics remain healthy, with DAU forecasted at 370 million and stable time spent per user.

2. Ecommerce and Ads Performance:

   • Ecommerce is expected to outperform, with GMV and revenue growth of +34% and +55% YoY, respectively.
   • Driven by enhancements in merchant ROI, higher traffic efficiency from the "Chuanliu Plan," and algorithm optimization.
   • Shelf-based mall features are set to unlock additional TAM, currently in Level I access testing.
   • Ads revenue is projected to grow +28% YoY, with external ads resuming growth due to vertical recovery (e.g., gaming, online services).
   • Livestreaming revenue may face temporary disruption (+16% YoY in 2Q23E, lower than prior +20%), but is expected to normalize to high-single-digit growth in 2H23E.

3. Earnings and Margin Improvements:

   • Gross margin is expected to reach 47.5% in 2Q23E, up from 46.5% in prior guidance.
   • Adjusted net margin improved to 3.7% (with higher revenue growth driving the increase).
   • The analyst trimmed revenue forecasts (0.7-1.0%) but lifted earnings forecasts by 8-9%, leading to an unchanged target price of HK$97.

4. Recommendation and Valuation:

   • Maintain "BUY" rating with an unchanged target price of HK$97.
   • Valuation based on SOTP (Sum of the Parts) unchanged, attributed to higher valuations in ecommerce and ads to offset livestreaming normalization.

Additional Highlights:

• Full-year financial summaries for FY23E-FY25E show sustained revenue growth and margin improvements across all key indicators.
• Financial metrics, including revenue growth and operating margins, are closely tracked by the analyst.