20221212-招银国际-Focus_shifting_to_monetization_and_margin_8页_929kb

报告摘要

Company Overview: Zhihu is a Chinese online community platform that has been shifting its focus from short-term revenue growth to margin improvement and long-term monetization strategies, particularly through vocational training.
Current Valuation: The stock is currently trading at US$1.32, with a new target price (TP) of US$2.3, implying a P/S multiple of 2.2x for FY23E. This is seen as attractive compared to the industry average of 2.2x.
Earnings Summary: Zhihu's revenue and profit figures show a mixed performance in 4Q22E, but there are signs of improvement in the long-term, with a forecast of improved margins and stronger growth in vocational training.

4Q22E Performance:
- Revenue is forecasted to grow by 3% YoY, but ads and CCS (content-commerce solutions) are expected to face challenges, with declines of 22% and 30% YoY respectively.
- Paid membership and vocational training are expected to show strong growth, with forecasts of +77% and +301% YoY respectively.
- Adjusted net profit margin (adj. NPM) is expected to improve by 3ppts QoQ due to higher gross margin (GPM) and disciplined sales and marketing (S&M) spending.
- Management aims to achieve quarterly breakeven by 4Q23E.
Vocational Training as Long-Term Driver:
- The vocational training business is growing rapidly, leveraging Zhihu's "knowledge-inspiring" community.
- Management guided that vocational training will contribute over 20% to revenue in the long run (vs. 9% in 3Q22).
- Revenue is forecasted to grow at 10.2%, 65.5%, and 82.5% in FY22E, FY23E, and FY24E respectively.
- It is expected to account for 7%, 11%, and 16% of total revenue in FY22E, FY23E, and FY24E respectively.
Margin Improvement Focus:
- Zhihu is focusing on improving margins, with a target to achieve quarterly breakeven in 4Q23E.
- The company is improving efficiency and reducing costs across all business lines to enhance profitability.

Revenue Trends:
- Revenue is expected to grow at a 22% CAGR from FY22E to FY24E.
- The revenue mix is shifting, with a decrease in the proportion of advertising and CCS and an increase in paid membership and vocational training.
Financial Performance:
- Revenue in FY22E is forecasted at RMB3,553 million, with YoY growth of 21.4%.
- Adjusted net profit is expected to improve significantly, with a forecast of RMB124 million in FY24E, showing a 100% improvement from FY22E's RMB-1,302 million.
- The gross margin is expected to increase from 48.4% in FY22E to 52.2% in FY24E.
Stock Performance:
- The stock is currently trading at US$1.32, with a market cap of US$848 million.
- The 12-month price performance is shown in the attached chart, with a 12-month return of -25.8%.
- The 1-month return is 32.0%, and the 3-month return is 6.5%.
Valuation and Investment Outlook:
- The company is maintained as a "BUY" with a new TP of US$2.3.
- The TP is based on a DCF valuation model, which implies a 2.2x P/S multiple for FY23E.
- Zhihu's valuation is seen as attractive, largely below the industry average.

Focus on Quality User Growth: Zhihu is shifting its focus to enhancing the community ecosystem and improving user experience.
User Volatility: There may be short-term user volatility, with MAU expected to decline by 4% YoY to 97 million.
Content Diversification: The company is expanding its content offerings and enhancing its community ecosystem to support growth in paid membership and vocational training.

Despite the challenges posed by macroeconomic conditions and the resurgence of the epidemic, Zhihu is expected to recover and improve its margins.
Vocational training is highlighted as a key long-term growth driver, with significant revenue growth potential.
The company's valuation is seen as attractive, and the "BUY" recommendation is maintained based on its improved financial outlook and strategic focus on monetization and margin.

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