Investment Rating - The report maintains a "Buy" rating for Kingsoft Corporation (03888 HK) with a target price of HKD 41 60 per share [5] Core Views - Kingsoft reported strong Q3 2024 results with revenue of RMB 2 91 billion (+41 5% YoY) and operating profit of RMB 1 14 billion (+204% YoY) The operating margin improved to 39 3% (+21 0pct YoY +7 2pct QoQ) Adjusted net profit attributable to shareholders also showed significant growth [2] - The gaming segment contributed RMB 1 71 billion in Q3 2024 (+77 7% YoY +32 8% QoQ) driven by the resilience of "JX3" and the upcoming launch of "Jie Xian Ji" which has garnered global attention with nearly 3 million pre-registrations and a peak ranking of 17th on Steam's wishlist [3] - The office segment generated RMB 1 21 billion in Q3 2024 (+10 5% YoY) with WPS AI features driving C-end subscription revenue growth of 17 2% YoY The B-end business benefited from the recovery in the domestic institutional licensing market and the expansion of SaaS transformation [3] Financial Forecasts - Revenue is projected to grow to RMB 10 37 billion in 2024 and RMB 12 29 billion in 2025 with operating profit expected to reach RMB 3 52 billion and RMB 4 18 billion respectively Net profit attributable to shareholders is forecasted at RMB 1 58 billion in 2024 and RMB 2 21 billion in 2025 [3] - The gaming segment is expected to contribute RMB 5 17 billion in 2024 (+30 0% YoY) while the office segment is projected to generate RMB 5 20 billion (+14 2% YoY) [11] - The company's gross margin is forecasted to remain stable at around 82 9% in 2024 and 83 0% in 2025 with operating margins improving to 34 0% in both years [11] Business Highlights - Gaming: "JX3" continues to show strong performance with the mobile version "JX3 Wujie" exceeding user expectations and driving growth in both mobile and PC revenues New games such as "Jie Xian Ji" "JXQ Zero" and "JX World 4" are expected to launch in 2025 [3] - Office: WPS AI features including AI Docs and WPS Lingxi are enhancing the AI office ecosystem The launch of the WPS HarmonyOS version further supports the development of AI-driven office solutions [3] Valuation - The sum-of-the-parts (SOTP) valuation assigns a 12x PE multiple to the gaming business and a 35x PE multiple to the office business resulting in a fair value of HKD 41 60 per share [3][14]

Investment Rating - Buy (Maintained) [2] Core Views - The company's gaming revenue has consistently exceeded expectations, and the WPS B-end business is showing signs of recovery [6] - The company's 2024Q3 revenue was 2.915 billion yuan, a year-on-year increase of 41.5%, with net profit attributable to the parent company reaching 413 million yuan, significantly surpassing expectations [6] - The gaming business, driven by "JX3," saw a year-on-year increase of 77.7% to 1.71 billion yuan in 2024Q3 [6] - WPS B-end business is expected to recover, with institutional subscription revenue stabilizing and showing a 23.8% quarter-on-quarter increase [6] - The company's 2024-2026 net profit forecasts have been revised upward to 1.796/2.052/2.450 billion yuan, with year-on-year growth rates of 271.5%/14.3%/19.4% respectively [6] Financial Performance - 2024Q3 revenue: 2.915 billion yuan, up 41.5% YoY [6] - 2024Q3 net profit: 413 million yuan, compared to 28.49 million yuan in the same period last year [6] - Gaming revenue in 2024Q3: 1.71 billion yuan, up 77.7% YoY [6] - WPS B-end subscription revenue: Stabilized with a 23.8% quarter-on-quarter increase [6] - 2024-2026 net profit forecasts: 1.796/2.052/2.450 billion yuan, with YoY growth rates of 271.5%/14.3%/19.4% [6] Gaming Business - "JX3" drove a 77.7% YoY increase in gaming revenue to 1.71 billion yuan in 2024Q3 [6] - "JX3 Wujie" achieved full-platform data inheritance and interoperability, with 11.46 million monthly active users in its first month of public testing [6] - New expansion for "JX3" was released in late October 2024, expected to drive continued rapid growth in Q4 [6] - "Jie Xian Ji" began public testing in August 2024, with over 3 million global pre-registrations and ranked 17th on Steam's wishlist [6] WPS Business - WPS B-end business showed signs of recovery, with institutional subscription revenue stabilizing and increasing 23.8% quarter-on-quarter [6] - WPS AI 2.0 enhanced user experience, improving payment stickiness and conversion rates [6] - Institutional authorization revenue increased by 9.0% YoY and 9.4% quarter-on-quarter, indicating recovery in the Xinchuang business [6] - WPS Hongmeng version began public testing in October 2024, expected to drive future growth in the B-end business [6] Valuation Metrics - 2024-2026 diluted EPS: 1.34/1.54/1.83 yuan [6] - 2024-2026 P/E ratios: 22.0/19.3/16.1x [6] - 2024-2026 P/B ratios: 1.7x [6] - 2024-2026 ROE: 9.1%/10.3%/12.3% [6]

Investment Rating - The report maintains a "Buy" rating for Kingsoft Corporation (3888 HK) [1] Core Views - Kingsoft achieved strong revenue growth in Q3 2024, with total revenue reaching RMB 2 915 billion (YoY +41 5%, QoQ +17 8%) and net profit attributable to shareholders of RMB 413 million (YoY +1351 1%, QoQ +5 1%) [1][3] - The company's gaming business showed remarkable growth, with revenue reaching RMB 1 708 billion (YoY +77 7%, QoQ +32 8%), driven by the success of "JX3" and "JX3 Boundless" [3] - Office software and services revenue reached RMB 1 207 billion (YoY +9 9%, QoQ +1 6%), supported by AI-powered product innovations and domestic subscription growth [3] Financial Performance - Gross profit reached RMB 2 454 billion (YoY +46 4%, QoQ +20 2%), with a gross margin of 84 2% (YoY +2 8pct, QoQ +1 7pct) [3] - Operating expenses improved significantly, with sales expense ratio at 12 5% (YoY -8 9pct, QoQ -2 8pct), R&D expense ratio at 29 5% (YoY -3 1pct, QoQ -0 4pct), and administrative expense ratio at 5 7% (YoY -3 4pct, QoQ -0 6pct) [3] - The company's market capitalization stood at HKD 39 013 70 million as of November 19, 2024 [3] Office Software Business - Kingsoft continued to optimize WPS AI, launching WPS AI 2 0 with four new assistants to enhance user experience and subscription conversion [3] - The company expanded its SaaS transformation with WPS 365, targeting large-scale private enterprises and local state-owned enterprises [3] - AI innovations included text companion, AI Docs intelligent document library, and the WPS Lingxi AI assistant, further advancing the AI office ecosystem [3] Gaming Business - "JX3 Boundless" exceeded expectations in terms of returning users, while the annual expansion pack for "JX3" introduced new features that enhanced player engagement [3] - The sci-fi mecha game "JXJ" completed its first public test in August, generating significant global interest with nearly 3 million pre-registrations and ranking 17th on Steam's wishlist [3] - The mobile game "JXQZ Zero" has obtained its license and is planned for release next year [3] Valuation and Forecast - The report raises revenue forecasts for FY2024-2026 to RMB 10 3/11 6/12 8 billion, with net profit attributable to shareholders expected to reach RMB 1 45/1 81/2 05 billion [6] - The target price is set at RMB 36 (HKD 39), based on a SOTP valuation method, implying a target market capitalization of RMB 47 5 billion [6] - The company's PE ratio is projected to be 25/20/18x for FY2024-2026, with EPS of RMB 1 1/1 4/1 5 [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported Q3 2024 revenue of 2.915 billion yuan, a year-over-year increase of 41.52% and a quarter-over-quarter increase of 17.83%, with net profit attributable to shareholders of 413 million yuan, a year-over-year increase of 1351.11% and a quarter-over-quarter increase of 5.11%, exceeding expectations [1][2] Summary by Sections Gaming Business - The gaming segment achieved revenue of 1.708 billion yuan in Q3 2024, representing a year-over-year increase of 77.66% and a quarter-over-quarter increase of 32.81%, accounting for 58.60% of total revenue. The strong performance was driven by the successful launch of "Jian Wang 3: Wujie" mobile game and the 15th anniversary events of "Jian Wang 3," which led to record high daily active users [2] - The company has revised its full-year gaming revenue guidance from over 20% growth to 30% growth, supported by a robust pipeline of new games [2] Office Business - The office segment generated revenue of 1.207 billion yuan in Q3 2024, with a year-over-year increase of 9.88% and a quarter-over-quarter increase of 1.61%, accounting for 41.40% of total revenue. The growth was primarily due to the launch of WPS AI 2.0, which enhanced user engagement and conversion rates [3] - The monthly active users for the main office products reached 618 million, reflecting a year-over-year increase of 4.9% [3] Cost Control and Profitability - The company maintained good cost control, with sales, management, and R&D expenses of 365 million, 166 million, and 861 million yuan respectively. The year-over-year changes were -17.26%, -11.32%, and +28.12% respectively [4] - The company reported a share of losses from joint ventures amounting to 428 million yuan, primarily attributed to long-term asset impairments at a joint venture [4] Earnings Forecast and Valuation - The earnings per share (EPS) estimates for 2024-2026 have been raised to 1.11, 1.38, and 1.68 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 24, 20, and 16 times based on the current stock price. The outlook remains positive due to the strong growth in gaming and the ongoing AI strategy in the office business [5]

Investment Rating - The report maintains a **Buy** rating for Kingsoft Corporation (3888 HK) with a target price of HKD 33 00, implying a potential upside of 13 0% from the current closing price of HKD 29 20 [1][4] Core Views - Kingsoft's Q3 2024 performance exceeded expectations, driven by strong growth in gaming revenue, with total revenue increasing by 42% YoY to RMB 2 92 billion and adjusted operating profit surging by 168% YoY to RMB 1 20 billion [1] - The gaming segment saw a significant YoY/QoQ growth of 78%/33%, primarily due to the success of *JX3: Infinite* and the October update for *JX3*, which boosted user engagement and revenue [2] - WPS revenue grew by 10% YoY, with personal subscriptions increasing by 17% YoY, while B2B SaaS transformation impacts are gradually diminishing [2] - The report forecasts a 30% YoY growth in gaming revenue for 2024, with new game releases in 2025 expected to sustain healthy growth trends [2] - WPS is expected to focus on AI+ collaboration, with AI product upgrades and feature optimizations enhancing user stickiness and paid conversions [2] Financial Model Updates - Revenue forecasts for 2024E, 2025E, and 2026E have been revised upwards by 6%, 7%, and 6% respectively, with gaming revenue expected to grow by 13%, 16%, and 14% over the same periods [3] - Adjusted operating profit margins are projected to improve, reaching 35%, 36%, and 37% for 2024E, 2025E, and 2026E respectively [3] - Adjusted net profit margins are expected to rise to 26%, 24%, and 25% for 2024E, 2025E, and 2026E, reflecting strong profitability [3] Industry and Peer Comparison - Kingsoft is categorized under the gaming sector, with peers such as Tencent Holdings (700 HK) and NetEase (NTES US) also holding Buy ratings [11] - The report covers a broad range of internet and education companies, with notable Buy ratings for companies like Baidu (BIDU US), Bilibili (BILI US), and Pinduoduo (PDD US) [11] Financial Performance Overview - Kingsoft's Q3 2024 revenue reached RMB 2 92 billion, with gaming and other business revenue contributing RMB 1 71 billion, up 78% YoY, and WPS revenue at RMB 1 21 billion, up 10% YoY [6] - Adjusted operating profit for Q3 2024 stood at RMB 1 20 billion, with an operating margin of 41%, up 19 percentage points YoY [6] - The company's gross margin improved to 84% in Q3 2024, up 3 percentage points YoY, driven by higher gaming revenue and operational efficiencies [6]

Revenue and Profit Performance - Revenue for the three months ended September 30, 2024, was RMB 2,914.785 million, a 42% year-over-year increase and an 18% quarter-over-quarter increase[3] - Operating profit for the three months ended September 30, 2024, was RMB 1,144.118 million, a 204% year-over-year increase and a 44% quarter-over-quarter increase[3] - Net profit attributable to the parent company's shareholders for the three months ended September 30, 2024, was RMB 413.449 million, a 1,351% year-over-year increase and a 5% quarter-over-quarter increase[3] - Revenue for Q3 2024 reached RMB 2,914.8 million, a 42% YoY increase and an 18% QoQ growth[34] - Revenue for Q3 2024 reached RMB 2,914.8 million, a 42% YoY increase and an 18% QoQ growth[54] - Gross profit for the three months ended September 30, 2024, was RMB 2,454.444 million, a 46% year-over-year increase[8] - Gross profit for Q3 2024 was RMB 2,454.4 million, up 46% YoY and 20% QoQ, with a gross margin of 84%, up 3 percentage points YoY and 1 percentage point QoQ[35] - Operating profit before share-based compensation for Q3 2024 was RMB 1,202.4 million, up 168% YoY and 37% QoQ[41] - Net profit attributable to the parent company for Q3 2024 was RMB 413.4 million, compared to RMB 28.5 million in Q3 2023 and RMB 393.4 million in Q2 2024[45] Office Software and Services - Revenue from office software and services was RMB 1,206.815 million for the three months ended September 30, 2024, a 10% year-over-year increase[8] - Office software and services revenue for Q3 2024 was RMB 1,206.8 million, up 10% YoY and 2% QoY, driven by WPS AI 2.0 enhancements[34] - Office software and services revenue for Q3 2024 was RMB 1,206.8 million, up 10% YoY and 2% QoQ[54] - Domestic individual office subscription business continues to optimize WPS AI product features, enhancing user stickiness and payment conversion[55] - Domestic institutional subscription business steadily advances SaaS transformation with WPS 365, targeting large-scale private enterprises and local state-owned enterprises[55] - WPS AI innovations include text companion writing, AI Docs intelligent document library, and WPS Lingxi AI assistant, with the release of WPS HarmonyOS version[55] Online Games and Other Revenue - Revenue from online games and others was RMB 1,707.970 million for the three months ended September 30, 2024, a 78% year-over-year increase[8] - Online games and other revenue for Q3 2024 was RMB 1,708.0 million, a 78% YoY increase and 33% QoQ growth, boosted by strong performance of "JX3" and the successful launch of "JX3 Infinite"[34] - The company's gaming and other business revenue for Q3 2024 was RMB 1,708.0 million, a 78% YoY increase and a 33% QoQ growth[54] - "JX3" game shows strong resilience, with "JX3: Infinite" exceeding expectations in returning user numbers[55] - "JX3" annual expansion released in October, introducing new classes, level caps, and innovative gameplay[55] - Sci-fi mecha game "JX3: Limit Breaker" completed its first public test in August, with nearly 3 million global pre-registrations and ranking 17th on Steam wishlists[55] - Mobile game "JX3: Zero" has obtained a license and is planned for release next year[55] Research and Development - Research and development costs for the three months ended September 30, 2024, were RMB 860.931 million, a 28% year-over-year increase[8] - R&D costs for Q3 2024 were RMB 860.9 million, a 28% YoY increase and a 16% QoQ growth, driven by increased headcount for AI and collaboration product development[36] - The company will continue long-term investment in AI and collaboration to meet user needs in various office scenarios[56] User Metrics - Monthly active devices for the main office software products reached 618 million in September 2024, a 5% year-over-year increase and a 3% quarter-over-quarter increase[5] - Cumulative paying users for the main office software products reached 38.15 million in September 2024, a 15% year-over-year increase[5] Financial Position and Cash Flow - Total non-current assets as of September 30, 2024, were RMB 8,292.9 million, slightly down from RMB 8,301.5 million at the end of 2023[11] - Total current assets as of September 30, 2024, were RMB 28,143.5 million, up from RMB 26,893.2 million at the end of 2023[11] - Net cash generated from operating activities for Q3 2024 was RMB 1,387.3 million, compared to a net cash outflow of RMB 552.4 million in the same period last year[20] - Cash and cash equivalents at the end of Q3 2024 were RMB 2,202.5 million, down from RMB 2,430.9 million at the beginning of the quarter[23] - Total equity as of September 30, 2024, was RMB 27,668.9 million, up from RMB 26,573.3 million at the end of 2023[18] - The company's cash and bank deposits as of September 30, 2024, were RMB 20,483.1 million, slightly up from RMB 19,747.7 million at the end of 2023[25] - Cash and bank deposits, along with restricted cash, totaled RMB 20,483.1 million and RMB 3.2 million respectively, accounting for 56% of the company's total assets[48] - Net cash generated from operating activities for Q3 2024 was RMB 1,387.3 million, compared to a net cash outflow of RMB 552.4 million in Q3 2023 and a net cash inflow of RMB 1,045.2 million in Q2 2024[51] - Capital expenditures for Q3 2024 were RMB 108.6 million, down from RMB 159.7 million in Q3 2023 and RMB 49.7 million in Q2 2024[52] Earnings Per Share - Basic earnings per share for the three months ended September 30, 2024, were RMB 0.31, a 1,450% year-over-year increase[3] Overseas and AI Business - Overseas business maintains healthy growth[55] - The gaming business focuses on innovation and quality improvement to deliver exceptional global gaming experiences[56]

Financial Performance - For the six months ended June 30, 2024, total revenue reached RMB 4,610,641 thousand, a 10.7% increase from RMB 4,163,797 thousand in the same period of 2023[12]. - Operating profit for the six months ended June 30, 2024, was RMB 1,395,615 thousand, up 22.9% from RMB 1,136,015 thousand in the same period of 2023[14]. - The company reported a net profit of RMB 1,198,130 thousand for the six months ended June 30, 2024, a significant increase from RMB 605,725 thousand in 2023[14]. - The basic earnings per share for the six months ended June 30, 2024, was RMB 0.51, compared to RMB 0.18 in the same period of 2023[14]. - The gross profit for Q2 2024 was RMB 2,042.0 million, an 11% increase year-on-year and a 17% increase quarter-on-quarter, with a gross margin of 83%[21]. - The profit attributable to the company's owners for H1 2024 was RMB 677.9 million, compared to RMB 249.5 million in the same period last year[46]. - The company reported a profit of RMB 677,923,000 for the six months ended June 30, 2024, contributing to a total comprehensive income of RMB 706,576,000[138]. User Growth and Engagement - The number of cumulative paying users increased by 15% year-over-year, reaching 38.15 million as of June 30, 2024, compared to 33.24 million in 2023[9]. - Monthly active devices for key products remained stable at 602 million as of June 30, 2024, compared to 584 million in the same period of 2023[9]. Research and Development - Research and development costs for the six months ended June 30, 2024, were RMB 1,454,051 thousand, an increase from RMB 1,326,711 thousand in 2023[14]. - R&D expenses for Q2 2024 amounted to RMB 741.3 million, an 11% increase year-on-year and a 4% increase quarter-on-quarter[22]. - R&D expenses for H1 2024 were RMB 1,454.1 million, a 10% increase year-over-year, mainly due to increased investments in collaboration and AI[37]. - The company has continued to invest in the research and development of WPS Office software and gaming services, indicating a focus on innovation and market expansion[153]. Market Strategy and Future Plans - The company plans to continue expanding its market presence and investing in new product development to drive future growth[12]. - The company will continue to explore new market opportunities to enhance its existing business and expand into new markets[57]. - The company plans to invest approximately RMB 1,900 million in the construction of the Wuhan Park by June 30, 2024, to enhance R&D capabilities and attract talent[57]. Financial Position and Assets - As of June 30, 2024, the company's cash and bank deposits amounted to RMB 19,713.9 million, representing 55% of total assets, with a debt-to-asset ratio of 24%[48]. - Total assets as of June 30, 2024, amounted to RMB 27,961,806 thousand, a decrease from RMB 30,314,274 thousand as of December 31, 2023[134]. - The total net assets reached RMB 27,003,005,000 as of June 30, 2024, compared to RMB 26,573,257,000 at the end of December 2023[136]. - The company’s total equity increased to RMB 25,912,070 thousand as of June 30, 2024, up from RMB 24,156,467 thousand at the beginning of the year, reflecting a growth of about 7%[139]. Shareholder Information and Incentive Plans - As of June 30, 2024, the company’s issued share capital was 1,339,184,157 shares, with Lei Jun holding a total of 308,157,048 shares, representing 23.01% of the issued share capital[60]. - The 2024 Share Option Plan was approved on May 23, 2024, allowing for the issuance of up to 133,916,711 shares, which is 10% of the issued shares as of that date[68]. - The company aims to attract and retain talent through the implementation of the 2021 Share Option Plan and the Share Award Scheme[74][79]. - The total number of unexercised share options under the 2021 Share Option Plan as of June 30, 2024, is 5,500,000, with an exercise price of HKD 31.69 per share[76]. Cash Flow and Financial Activities - Operating cash flow for the six months ended June 30, 2024, was RMB 1,374,262 thousand, down from RMB 2,307,572 thousand in the same period last year, indicating a decline of about 40%[141]. - The company experienced a significant increase in cash outflows for investment activities, totaling RMB 6,787,751 thousand, compared to RMB 1,482,629 thousand in the previous year, representing an increase of approximately 358%[143]. - The net cash flow from financing activities was a negative RMB 869,442 thousand, contrasting with a positive cash flow of RMB 989,023 thousand in the same period last year[146]. Dividend and Share Repurchase - The company declared a final dividend of RMB 170,337,000 for the year ended December 31, 2023[138]. - The company repurchased a total of 18,688,600 shares at a total cost of approximately HKD 385.62 million during the six months ended June 30, 2024[113]. - The company paid dividends to equity holders of the parent amounting to RMB 170,337 thousand, slightly increasing from RMB 162,831 thousand in the previous year[146].

Investment Rating - The report maintains a **Buy** rating for Kingsoft Corporation (3888 HK) with a target price of HKD 30.00, representing a potential upside of **46.0%** from the current closing price of HKD 20.55 [1] Core Views - Kingsoft's Q2 2024 revenue increased by **13% YoY** to RMB 2.47 billion, with adjusted operating profit up **14% YoY** to RMB 880 million, driven by better-than-expected gaming performance [1] - Gaming revenue grew **20% YoY**, while WPS revenue growth slowed to **6% YoY** due to the transition of B2B business to SaaS model [1] - The launch of **JX3: Infinite** mobile game in June 2024 achieved over **11 million daily active users**, with **62% being returning players**, expected to drive significant revenue growth in Q3 2024 [1] - WPS upgraded its AI strategy with the release of **WPS AI 2.0** in July 2024, enhancing user experience and stickiness for both individual and enterprise customers [1] Financial Performance Summary - Q2 2024 revenue breakdown: Gaming contributed RMB 1.286 billion (+20% YoY), while WPS contributed RMB 1.188 billion (+6% YoY) [5] - Adjusted operating profit margin improved to **35%** in Q2 2024, up from 32% in Q1 2024 [5] - WPS's contract liabilities increased by **24% YoY**, indicating a solid foundation for long-term growth despite the short-term slowdown in revenue growth [1] Business Segment Analysis - WPS revenue growth slowed to **6% YoY** in Q2 2024, compared to **17% YoY** in Q1 2024, due to the SaaS transition [1] - WPS subscription revenue breakdown: Personal subscriptions grew **20% YoY**, while institutional licensing and subscriptions declined by **2%** and **27% YoY**, respectively [1] - Gaming revenue growth was driven by mobile games, partially offset by a decline in **JX3** PC game revenue due to a high base in the previous year [1] Future Outlook - The report expects gaming revenue to accelerate in Q3 2024, driven by the strong performance of **JX3: Infinite** and the upcoming expansion pack in October 2024 [1] - Full-year gaming revenue is expected to achieve **double-digit growth**, supported by the strong performance of mobile games [1] - WPS's AI upgrades and SaaS transition are expected to enhance long-term growth prospects, despite short-term revenue headwinds [1] Financial Forecasts - 2024E revenue forecast adjusted to RMB 9.668 billion, a **2% decrease** from the previous forecast of RMB 9.882 billion [4] - 2025E revenue forecast adjusted to RMB 10.586 billion, a **6% decrease** from the previous forecast of RMB 11.304 billion [4] - Adjusted operating profit margin is expected to improve to **35%** in 2025E, up from **31%** in the previous forecast [4]

Investment Rating - The report assigns a "Buy" rating to Kingsoft Corporation (3888) with a target price of HKD 28, indicating a potential upside of 30.5% from the current price [1][2]. Core Insights - Kingsoft's revenue for the first half of 2024 reached RMB 4.61 billion, representing an 11% year-on-year growth. The office software and services segment contributed RMB 2.41 billion, also up 11%, driven by growth in personal office subscriptions, despite a decline in institutional licensing [1]. - The gaming segment generated RMB 2.2 billion, a 10% increase, attributed to successful game content innovations, particularly for "Jian Wang 3" and "Chen Bai Jin Qu" [1]. - The company reported a significant increase in net profit attributable to shareholders, reaching RMB 680 million, a 171.7% year-on-year growth [1]. - Kingsoft Office is enhancing its AI collaboration strategy, with a focus on the WPS 365 platform aimed at organizational clients, integrating upgraded versions of WPS Office and AI solutions [1]. - The gaming business is adopting a premium strategy, with the mobile version of "Jian Wang 3" launched in June 2024, achieving a monthly active user count of 11.46 million in its first month [1]. Financial Summary - For the fiscal year ending December 31, 2024, total revenue is projected to be RMB 9.65 billion, reflecting a 13% increase from 2023 [3]. - The net profit for 2024 is forecasted at RMB 1.17 billion, indicating a 142.8% growth compared to 2023 [3]. - The report anticipates continued growth in profits for 2025 and 2026, with projections of RMB 1.5 billion and RMB 1.8 billion, respectively [3][4]. Key Financial Metrics - The gross margin for the first half of 2024 was 82%, slightly down from the previous year [1]. - The company had cash and cash equivalents of RMB 19.7 billion as of June 2024, with a net operating cash inflow of RMB 1.37 billion for the first half [1]. - The diluted earnings per share for 2024 is expected to be RMB 0.86, with a projected price-to-earnings ratio of 24.9 based on the target price [3].

Investment Rating - The report maintains a "Buy" rating for Kingsoft Corporation (03888.HK) [1] Core Views - Kingsoft Corporation's Q2 2024 performance exceeded expectations with total revenue of 2.474 billion yuan, a year-on-year increase of 12.78% and a quarter-on-quarter increase of 15.77%. The net profit attributable to shareholders reached 393 million yuan, showing a significant year-on-year increase of 587.84% and a quarter-on-quarter increase of 38.23% [2][3] Summary by Sections Gaming Business - The gaming segment achieved revenue of 1.286 billion yuan in Q2 2024, reflecting a year-on-year growth of 19.89% and a quarter-on-quarter growth of 41.09%. The increase is primarily driven by the performance of games like "Dust White Zone" and "Jian Wang 3: Wujie," leading to an upward revision of the annual revenue guidance from a 10% year-on-year increase to over 20% [3][4] Office Business - The office segment generated revenue of 1.188 billion yuan in Q2 2024, with a year-on-year increase of 5.97% but a quarter-on-quarter decline of 3.07%. The growth in personal office subscriptions continues, with a total of 38.15 million paid users, up 15% year-on-year. The company has also upgraded its AI strategy, launching WPS AI 2.0, which includes new AI office assistants for personal and enterprise users [3][4] Financial Forecast and Valuation - The report has revised the EPS forecasts for 2024-2026 to 0.99, 1.13, and 1.40 yuan respectively, reflecting an increase from previous estimates. The corresponding P/E ratios at the current stock price are projected to be 19, 16, and 13 times [4][9]