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]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][4]. Core Views - The gaming sector is entering a product upcycle, and the WPS B-end subscription is expected to return to growth, driving overall revenue recovery. The net profit forecasts for 2024-2026 have been raised to 1.228 billion, 1.412 billion, and 1.802 billion respectively, with year-on-year growth rates of 153.9%, 15.0%, and 27.6% [4][5]. - The company's Q2 2024 revenue reached 2.474 billion, a year-on-year increase of 12.8%, aligning with Bloomberg consensus expectations. The gaming business saw a significant recovery, with a year-on-year growth rate of 19.9% in Q2 2024, driven by the launch of "Jian Wang 3: Wujie" and contributions from "Chen Bai Jin Qu" [4][5]. - The B-end revenue decline in Q2 2024 led to a slowdown in WPS growth, but the B-end subscription business is expected to return to growth. The personal subscription revenue grew by 19.8%, while institutional subscription revenue declined by 2% due to a shift from annual to monthly payment models [4][5]. Financial Summary and Valuation Metrics - Revenue (in million) for 2024E is projected at 9,751, with a year-on-year growth of 14.3%. Net profit for 2024E is expected to be 1,228 million, reflecting a significant turnaround from a loss of 6,048 million in 2022 [5]. - The gross margin is projected to be 82.6% in 2024E, with a net margin of 12.6%. The return on equity (ROE) is expected to reach 6.22% in 2024E [5]. - The diluted EPS for 2024E is forecasted at 0.92, with corresponding P/E ratios of 20.9, 18.1, and 14.2 for 2024-2026 [5].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因依賴該等內容而引致之任何損失承擔任 何責任。 Kingsoft Corporation Limited 金山軟件有限公司 （於開曼群島持續經營的有限公司） （股份代號：03888） （可換股債券代號：40210） 截至二零二四年六月三十日止三個月及六個月 業績公告 金山軟件有限公司（「本公司」）董事（「董事」）會（「董事會」）公佈本公司及其附屬公司（「本 集團」或「金山」）截至二零二四年六月三十日止三個月及六個月之未經審計業績。該等 中期業績已由本公司審核委員會（「審核委員會」）審閱。 1 財務資料 簡明合併損益表 截至二零二四年六月三十日止三個月及六個月 | | | 截至六月三十日止三個月 | | 截至六月三十日止六個月 | | | --- | --- | --- | --- | --- | --- | | | | 二零二四年 | 二零二三年 | 二零二四年 | 二零二三年 | | | | 人民幣千元 | 人民幣千元 | 人民幣千元 | 人民幣千 ...

Investment Rating - The report maintains a "Buy" rating for the company [3][4]. Core Insights - The company achieved a revenue of 2.137 billion RMB in Q1 2024, representing an 8% year-on-year increase, while operating profit rose by 31% to 602 million RMB, leading to a net profit of 285 million RMB, a 48% increase year-on-year [2]. - The commercialization of WPS AI has begun, with the number of active devices exceeding 600 million. The office business generated 1.225 billion RMB in revenue, a 17% year-on-year increase, driven by a 25% increase in C-end subscription revenue [2]. - The gaming segment saw a revenue of 912 million RMB in Q1 2024, a 1% year-on-year decline, but new game launches are expected to boost revenue by 10% for the year [3]. Summary by Sections Financial Performance - Q1 2024 revenue: 2.137 billion RMB, up 8% YoY, down 7% QoQ - Operating profit: 602 million RMB, up 31% YoY, OP Margin at 28.2%, up 4.8 percentage points - Net profit: 285 million RMB, up 48% YoY [2]. Office Business - Revenue from office business: 1.225 billion RMB, up 17% YoY - C-end subscription revenue: 735 million RMB, up 25% YoY - B-end subscription revenue: 242 million RMB, up 14% YoY - B-end authorization revenue: 194 million RMB, up 6% YoY [2]. Gaming Business - Q1 2024 gaming revenue: 912 million RMB, down 1% YoY - Anticipated new game launches, including "Sword Net 3 Unlimited," expected to enhance revenue by 10% for the year [3]. - The game "Dust White Zone" has shown significant growth in user engagement and revenue since its launch [3]. Profit Forecast and Valuation - Projected net profits for 2024-2026: 1.051 billion RMB, 1.695 billion RMB, and 2.307 billion RMB respectively - Revenue projections for 2024-2026: 9.927 billion RMB, 11.467 billion RMB, and 13.213 billion RMB respectively [4][7].

2024 年 05 月 25 日 公司研究 评级：买入 (维持 ) 研究所： [Table_Title] 《剑网 》全平台版上线在即， 稳步开 3 WPS AI 证券分析师： 陈梦竹 S0350521090003 chenmz@ghzq.com.cn 证券分析师： 尹芮 S0350522110001 启商业化 yinr@ghzq.com.cn ——金山软件（ ） 财报点评 3888.HK 2024Q1 最近一年走势 事件 : 5月22日，公司公告2024Q1季报，实现营收21.37亿元（YoY+8.5%， QoQ-7.5%），营业利润6.02亿元，净利润5.22亿元，归母净利润2.85 亿元。 我们的观点：  1、主要财务指标分析：2024Q1 实现营业收入 21.37 亿元 （YoY+8.5%，QoQ-7.5%），其中办公软件及服务业务12.25亿元 相对恒生指数表现 2024/05/24 （YoY+16.5%，QoQ-4.7%），网络游戏及其他业务 9.12 亿元 表现 1M 3M 12M （YoY-0.8%，QoQ-11.0%）。毛利润 17.41 亿元（YoY+7.1%， 金山软件 -0.6% 17 ...

Investment Rating - The investment rating for Kingsoft Corporation (03888.HK) is "Buy" (maintained) [2][5]. Core Insights - The gaming business is expected to see a rebound in growth in Q2 2024, and the progress of WPS AI commercialization is favorable for platform valuation enhancement. The net profit forecasts for 2024-2026 have been raised to 923 million, 1.166 billion, and 1.583 billion RMB respectively, reflecting year-on-year growth rates of 91.0%, 26.3%, and 35.8% [5][6]. - The company's Q1 2024 revenue increased by 8.5% year-on-year, with gaming revenue experiencing a slight decline of 0.8% year-on-year due to a lack of major updates for "Jian Wang 3" [6][7]. - The WPS office business showed steady growth in Q1 2024, with a 16.5% year-on-year increase, driven by a 24.0% rise in individual customer subscription revenue [7]. Financial Summary and Valuation Metrics - The projected operating revenue for 2024 is 9.652 billion RMB, with a year-on-year growth of 13.1%. The net profit for 2024 is expected to be 923 million RMB, representing a significant recovery from a loss of 6.048 billion RMB in 2022 [8]. - The gross margin is projected to improve to 83.7% in 2024, while the net margin is expected to reach 9.6% [8]. - The diluted EPS for 2024 is forecasted at 0.7 RMB, with corresponding P/E ratios of 34.3, 27.2, and 20.0 for 2024, 2025, and 2026 respectively [8].

Investment Rating - The investment rating for the company is "Buy" with a current price of 25.95 HKD and a target value of 38.73 HKD [1][4]. Core Insights - The company reported a year-on-year revenue increase of 8.5% and a significant rise in net profit to 2.85 billion RMB, driven by a decrease in sales expense ratio and reduced losses from Kingsoft Cloud [1][3]. - The gaming segment showed stable performance with "Jian Wang 3" maintaining its position, while "Chen Bai Jin Qu" exceeded expectations [1][4]. - The office software segment is expected to benefit from AI commercialization and an upgraded membership system, leading to an increase in average revenue per user (ARPU) and paid user numbers [1][3]. Revenue and Profit Forecast - The company forecasts total revenue of 100.69 billion RMB and net profit of 10.57 billion RMB for 2024, with a projected revenue growth of approximately 10% for the gaming business and significant growth in the office segment [1][4]. - The expected revenue for 2025 is 123.21 billion RMB, with net profit anticipated to reach 14.18 billion RMB [1][4]. Business Segmentation - The gaming segment is projected to generate 4.395 billion RMB in revenue for 2024, while the office segment is expected to reach 5.674 billion RMB [3][6]. - The gaming segment's revenue contribution is expected to decline from 49.1% in 2022 to 42.7% in 2024, while the office segment's contribution will increase from 50.9% to 57.3% in the same period [3][4]. Financial Ratios - The company is expected to maintain a gross margin of around 82% over the next few years, with a projected operating margin of 24.9% for 2024 [4][8]. - The net profit margin is forecasted to improve significantly from -79.2% in 2022 to 10.5% in 2024 [4][8]. Valuation Metrics - The company is valued at a price-to-earnings (P/E) ratio of 10x for the gaming segment and 40x for the office segment, with a total valuation of approximately 47.94 billion RMB [6][7]. - The estimated fair value per share is 38.73 HKD, based on a sum-of-the-parts (SOTP) valuation approach [6][7].

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][5][10] Core Views - The gaming business is expected to see a rebound in growth in Q2 2024, and the progress of WPS AI commercialization is favorable for platform valuation enhancement [5][6] - The net profit forecasts for 2024-2026 have been raised to 923 million, 1.166 billion, and 1.583 billion respectively, with year-on-year growth rates of 91.0%, 26.3%, and 35.8% [5][7] - The current stock price corresponds to a P/E ratio of 34.3, 27.2, and 20.0 for 2024-2026 [5][7] Financial Summary - Revenue for 2024 is projected to be 9.652 billion, with a year-on-year growth of 13.1% [7] - The gaming business revenue is expected to grow approximately 10% year-on-year in 2024, driven by new game launches and updates [6][7] - WPS Office business achieved a year-on-year growth of 16.5% in Q1 2024, with personal customer subscription revenue increasing by 24.0% [6][7]

Financial Data and Key Metrics - Revenue for Q1 2024 reached RMB 2,137 million, a YoY increase of 8.45% and a QoQ decrease of 7.50% [2] - Net profit attributable to shareholders was RMB 285 million, a YoY increase of 47.95% and a QoQ increase of 38.52% [2] - Adjusted net profit attributable to shareholders (excluding share-based compensation costs) was RMB 329 million, compared to RMB 236 million in the same period last year and RMB 257 million in Q4 2023 [2] - Monthly active devices for the company's office software products reached 602 million, a YoY increase of 2.21% and a QoQ increase of 0.67% [2] Business Line Data and Key Metrics - Online games and other revenue was RMB 912 million, a YoY decrease of 0.78% and a QoQ decrease of 11.02%, accounting for 42.66% of total revenue [3] - Office software and services revenue was RMB 1,225 million, a YoY increase of 16.52% and a QoQ decrease of 4.69%, accounting for 57.34% of total revenue [3] - The growth in office software revenue was driven by domestic personal and institutional subscription services, as well as institutional licensing, partially offset by a decline in advertising revenue [3] Market Data and Key Metrics - The company's flagship game "JX3" maintained steady growth, while the mobile version "JX3: Beyond Boundaries" is expected to launch in June 2024, offering a multi-platform gaming experience [7] - The sci-fi mecha game "Xianji" received a license in March 2024 and is undergoing testing and optimization in both domestic and overseas markets [7] Company Strategy and Industry Competition - The company is focusing on its "multi-screen, cloud, content, collaboration, AI" strategy, with continuous investment in AI and collaboration product development [7] - WPS AI began initial commercialization in March, and the upgraded WPS 365 platform was launched in April, providing a comprehensive AI office solution [7] - The company remains confident in its competitive position against Microsoft's Copilot, citing strong user loyalty and a solid foundation in the domestic market [9] Management Commentary on Operating Environment and Future Outlook - The company achieved steady financial performance in Q1 2024, with operating profit reaching RMB 601.6 million, a YoY increase of 31% [7] - Management emphasized the importance of user feedback and long-term operational strategies, particularly in the gaming segment [8] - The company is optimistic about the growth potential of its AI-driven office solutions and expects further advancements in both C-end and B-end markets [8] Other Important Information - The company's gross margin for Q1 2024 was 81.46%, a YoY decrease of 1.04 percentage points and a QoQ decrease of 0.62 percentage points [4] - R&D expenses increased by 7.83% YoY to RMB 713 million, driven by continued investment in AI and collaboration products [4] - Sales and marketing expenses decreased by 25.59% YoY to RMB 261 million, primarily due to reduced promotional spending in the gaming segment [4] Q&A Summary Q1: Sustainability of "Chen Bai" and WPS AI progress - The company is confident in the sustained growth of "Chen Bai" due to its deep expertise in the niche market and has raised its full-year revenue guidance for the game [8] - WPS AI's C-end testing met expectations, and the company is focusing on model optimization and B-end integration with existing clients [8] Q2: Breakdown of gaming growth and share repurchase plans - "Chen Bai" is expected to contribute significantly to gaming revenue growth, while "JX3: Beyond Boundaries" will drive user base expansion [8] - The company has a share repurchase plan of up to HKD 1 billion, with flexibility based on market conditions [8] Q3: AI competition and cost impact - The company views the reduction in AI model costs as beneficial and is considering lowering membership fees for WPS AI [9] - Management is not concerned about competition from Microsoft's Copilot, citing strong user loyalty and a solid domestic market presence [9]