Investment Rating - The report upgrades the rating for Kingsoft Corporation (3888 HK) to **Buy** with a target price of HKD 30 00, implying a potential upside of 17 2% from the current price of HKD 25 60 [1][2][3] Core Views - **Q1 2024 Performance**: Kingsoft reported Q1 2024 revenue of RMB 2 14 billion, up 8% YoY but 4% below expectations Game revenue declined 1% YoY to RMB 910 million, while WPS revenue grew 17% YoY to RMB 1 23 billion Adjusted operating profit increased 27% YoY to RMB 678 million, 8% above expectations, driven by reduced game marketing expenses [1][2] - **Game Business**: The game segment saw stable performance with *JX Online 3* maintaining steady results and *Whiteout Survival* showing improved popularity and revenue The new version of *Whiteout Survival* launched in mid-April is expected to contribute ~15% to Q2 game revenue, with estimated revenue of RMB 100-200 million in the following 30 days [2] - **WPS Growth**: WPS revenue growth was driven by a 25% YoY increase in personal subscriptions and a 14% YoY increase in institutional subscriptions The launch of WPS 365, an AI-powered productivity platform, is expected to boost subscription revenue with AI-enabled services priced at double the traditional subscription rate [2] - **Future Outlook**: The report forecasts a 12% growth in game revenue for 2024, up from the previous estimate of 9%, supported by the upcoming launch of *JX Online 3: Infinite* in June 2024 and the potential of *Whiteout Survival* and *JX Online 3* cross-platform integration [2] Financial Projections - **Revenue and Profit**: The report slightly adjusts revenue forecasts and raises 2024 net profit estimates by 4% The target price is increased to HKD 30 00, based on a 13x 2024 P/E for the game business (up from 10x) and a 25x P/E for WPS [2] - **Valuation**: The valuation is supported by the expected double-digit growth in game revenue and the positive impact of *Whiteout Survival* on Q2 performance [2] Industry Context - The report highlights Kingsoft's position in the gaming and office software sectors, with a focus on the growth potential of its AI-powered WPS platform and the upcoming game releases [2][3]

证券研究报告·海外公司点评·软件服务(HS) 金山软件（03888.HK） 2024Q1 业绩报点评：《尘白禁区》驱动游戏 2024年 05月 23日 指引上修，积极关注 AI 商业化进展 证券分析师 张良卫 买入（维持） 执业证书：S0600516070001 021-60199793 [ 盈Ta 利bl 预e_ 测EP 与S] 估 值 2022A 2023A 2024E 2025E 2026E zhanglw@dwzq.com.cn 证券分析师 周良玖 营业总收入（百万元） 7660 8547 9849 11412 13151 执业证书：S0600517110002 同比(%) 19.86 11.74 15.41 15.87 15.23 021-60199793 归母净利润（百万元） (6,048.19) 483.46 1,147.92 1,299.85 1,592.60 zhoulj@dwzq.com.cn 同比(%) - - 137.44 13.23 22.52 研究助理 陈欣 EPS-最新摊薄（元/股） (4.52) 0.36 0.86 0.97 1.19 执业证书：S0600122070012 P ...

Financial Data and Key Metrics Changes - In Q1 2024, Kingsoft Corporation achieved revenue of RMB 21.37 billion, representing a year-over-year increase of 8.45% but a quarter-over-quarter decrease of 7.50% [2] - The net profit attributable to shareholders for Q1 2024 was RMB 2.85 billion, showing a year-over-year increase of 47.95% and a quarter-over-quarter increase of 38.52% [4] - The adjusted net profit before share-based compensation for Q1 2024 was RMB 3.29 billion, compared to RMB 2.36 billion in the same period last year and RMB 2.57 billion in Q4 2023 [4] Business Line Data and Key Metrics Changes - Revenue from online games and other sources in Q1 2024 was RMB 9.12 billion, a slight year-over-year decrease of 0.78% and a quarter-over-quarter decrease of 11.02%, accounting for 42.66% of total revenue [2] - Revenue from office software and services in Q1 2024 was RMB 12.25 billion, reflecting a year-over-year increase of 16.52% but a quarter-over-quarter decrease of 4.69%, making up 57.34% of total revenue [2] Market Data and Key Metrics Changes - The number of monthly active devices for the main office software products reached 602 million in Q1 2024, representing a year-over-year growth of 2.21% and a quarter-over-quarter growth of 0.67% [5] Company Strategy and Development Direction - Kingsoft is focusing on a strategy centered around "multi-screen, cloud, content, collaboration, and AI," with ongoing investments in AI and collaborative product development [5] - The company aims to enhance product competitiveness through technological innovation and product iteration, while also exploring new game genres and maintaining a strong focus on user feedback [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainable growth of the gaming business, particularly with the success of the game "Dust White Zone," and has adjusted revenue expectations for the year [7] - The company is optimistic about the future of its office software business, driven by the launch of the upgraded WPS 365 platform, which integrates AI solutions for users [5] Other Important Information - The overall gross margin for Q1 2024 was 81.46%, a decrease of 1.04 percentage points year-over-year and 0.62 percentage points quarter-over-quarter [3] - Research and development expenses for Q1 2024 were RMB 7.13 billion, reflecting a year-over-year increase of 7.83% [3] Q&A Session Summary Question 1: What is the outlook for the game "Dust White Zone" and the strategy for future games? - The board believes in the sustainability of "Dust White Zone" growth, with an adjusted revenue forecast for the year indicating a 10% increase, supported by user feedback and operational adjustments [7] Question 2: Can you break down the 10% growth guidance for games and any considerations for stock buybacks? - "Dust White Zone" is expected to contribute significantly to growth, while "Sword Network 3 Unlimited" is anticipated to drive user engagement and growth [7] Question 3: How does management view the competitive landscape in the AI sector and its impact on WPS AI? - The decrease in model costs is seen as beneficial for WPS AI, and management is confident in their competitive position against major players like Microsoft [8]

Financial Performance - For the three months ended March 31, 2024, the company reported revenue of RMB 2,136,875 thousand, an increase of 8% compared to RMB 1,970,307 thousand for the same period in 2023[3] - Operating profit for the same period was RMB 601,578 thousand, reflecting a 31% year-over-year increase from RMB 460,302 thousand[3] - Profit attributable to equity holders of the parent was RMB 284,570 thousand, up 48% from RMB 192,343 thousand in the previous year[3] - The basic and diluted earnings per share were both RMB 0.21, representing a 50% increase compared to RMB 0.14 in the same quarter last year[3] - The revenue for Q1 2024 was RMB 2,136.9 million, an increase of 8% year-on-year but a decrease of 7% quarter-on-quarter[14] - Revenue from office software and services was RMB 1,225.3 million, up 17% year-on-year, driven by growth in domestic personal and institutional subscription businesses[14] - The total revenue for Q1 2024 was RMB 2,136.9 million, reflecting an 8% year-on-year increase, with the office software and services segment generating RMB 1,225.3 million, up 17% year-on-year[29] - The operating profit for Q1 2024 was RMB 601.6 million, showing a significant year-on-year growth of 31%[29] User Metrics - The number of monthly active devices for the main product reached 602 million, a 2% increase year-over-year from 589 million[4] - The cumulative number of paying users increased to 35.49 million, an 18% rise from 29.97 million in the previous year[4] Cash Position - The company reported a net cash position of RMB 20,770,189 thousand as of March 31, 2024, compared to RMB 20,271,193 thousand at the end of the previous year[7] - The total cash and cash equivalents at the end of Q1 2024 were RMB 20,770.2 million, compared to RMB 15,703.4 million at the same time last year[9] - The company reported a strong cash position with cash and bank deposits totaling RMB 20,770.2 million, representing 59% of total assets as of March 31, 2024[25] Expenses - The cost of revenue for Q1 2024 was RMB 396.2 million, a 15% increase year-on-year, primarily due to increased server and bandwidth costs[15] - Gross profit for Q1 2024 was RMB 1,740.7 million, a 7% increase year-on-year, with a gross margin of 81%, down one percentage point from the previous year[15] - R&D expenses for Q1 2024 were RMB 712.8 million, an 8% increase year-on-year, reflecting continued investment in AI and collaborative products[16] - Selling and distribution expenses for Q1 2024 were RMB 261.3 million, a decrease of 26% year-on-year, mainly due to reduced promotional spending for online games[17] - Administrative expenses for Q1 2024 were RMB 160.3 million, a 7% increase year-on-year, driven by employee-related costs[18] Future Outlook - The company plans to continue expanding its product offerings and user base, focusing on innovation in software and services[2] - The company has not disclosed specific guidance for future performance but indicated a positive outlook based on current trends and user growth[2] - The company plans to continue investing in AI and collaboration research and development, focusing on the commercialization of WPS AI across various office scenarios[30] Profitability - Operating profit before share-based compensation for Q1 2024 was RMB 678.0 million, a 27% increase year-on-year[20] - The net profit margin excluding share-based compensation for Q1 2024 was 15%, compared to 12% in Q1 2023 and 11% in Q4 2023[24] - The income tax expense for Q1 2024 was RMB 42.3 million, a 63% increase year-on-year but a 66% decrease from the previous quarter[22] Cash Flow - The net cash flow from operating activities for Q1 2024 was RMB 329.0 million, compared to RMB 362.6 million in the same period last year[9] - The net cash generated from operating activities for Q1 2024 was RMB 329.0 million, compared to RMB 362.6 million in Q1 2023 and RMB 1,733.6 million in Q4 2023[27] Capital Expenditure - The capital expenditure for Q1 2024 was RMB 114.6 million, compared to RMB 79.6 million in Q1 2023 and RMB 131.2 million in Q4 2023[28] Product Development - The flagship game "Jian Wang 3" continues to show resilience, with the mobile version "Jian Wang 3 Wu Jie" entering multiple rounds of testing, expected to launch in June 2024[29]

Financial Performance - Total revenue for 2023 reached RMB 8,533.6 million, a 12% year-on-year increase[11] - Office software and services revenue grew to RMB 4,556.5 million, up 17% year-on-year[11] - Online games and other business revenue increased to RMB 3,977.1 million, a 6% year-on-year growth[11] - Operating profit for 2023 was RMB 2,226.9 million, a 19% year-on-year increase[11] - Gross profit for 2023 was RMB 7,030.3 million[10] - Net profit attributable to owners of the parent company for 2023 was RMB 483.5 million[10] - Proposed final dividend for 2023 is RMB 171.4 million[10] - Total revenue for 2023 was RMB 8,533.6 million, a 12% YoY increase, with office software and services contributing 53% and online games and others contributing 47%[21] - Revenue from office software and services grew 17% YoY to RMB 4,556.5 million, driven by domestic personal and institutional subscription growth[21] - Revenue from online games and other businesses increased 6% YoY to RMB 3,977.1 million, supported by strong performance of "JX3" and new game launches[21] - Revenue cost in 2023 was RMB 1,503.3 million, a 3% YoY increase, driven by server and bandwidth costs due to business expansion, partially offset by reduced channel costs for online games[22] - Gross profit in 2023 was RMB 7,030.3 million, a 14% YoY increase, with a gross margin of 82%, up by 1 percentage point YoY[22] - Operating profit before share-based compensation costs in 2023 increased by 19% YoY to RMB 2,540.8 million[27] - Net profit attributable to the parent company in 2023 was RMB 483.5 million, compared to a loss of RMB 6,049.4 million in the previous year[31] - Annual profit for 2023 was RMB 1,215,188 thousand, a significant improvement from a loss of RMB 5,341,887 thousand in 2022[111] - Total assets increased to RMB 35,194,712 thousand in 2023 from RMB 31,887,955 thousand in 2022[111] - Total liabilities rose to RMB 8,621,455 thousand in 2023 from RMB 7,731,488 thousand in 2022[111] - The company's loss attributable to owners of the parent for the year ended December 31, 2023, was RMB 483.5 million[104] Expenses and Costs - Research and development costs for 2023 were RMB 2,683.6 million[10] - Sales and distribution expenses for 2023 were RMB 1,470.5 million[10] - Administrative expenses for 2023 were RMB 661.4 million[10] - R&D costs in 2023 were RMB 2,683.6 million, a 5% YoY increase, primarily due to increased employee-related expenses and efforts to optimize AI and collaboration products[23] - Sales and distribution expenses in 2023 were RMB 1,470.5 million, an 18% YoY increase, mainly due to higher marketing expenditures[24] - Administrative expenses in 2023 were RMB 661.4 million, a 7% YoY increase, driven by higher employee-related costs[25] - Employee costs (including directors and senior management salaries) were RMB 3,765.5 million in 2023, up from RMB 3,486.7 million in 2022[108] Product and Business Updates - WPS AI, based on large language models, was launched in Q4 2023, targeting AIGC, Copilot, and Insight, and has entered public testing in China[12] - WPS 365 was upgraded for organizational clients, offering content creation, collaboration, and digital asset management, with a focus on government and enterprise scenarios[13] - Domestic third-party commercial advertising business was officially shut down in December 2023, while overseas business continued to grow, especially in desktop and large-screen users[14] - Flagship game "JX3" achieved record annual revenue in 2023, with new content updates and a global launch of the sci-fi game "Jie Xian Ji"[15] - In 2023, the company's core business advanced steadily, with a focus on digital economy opportunities and product innovation around "multi-screen, cloud, content, collaboration, and AI"[16] - Monthly active devices for WPS Office and Kingsoft PowerWord reached 598 million in December 2023, a 4% YoY increase[17] - Cumulative paying users reached 35.49 million by the end of 2023, an 18% YoY increase[17] Corporate Governance and Leadership - Zou Tao, aged 48, serves as the Executive Director, CEO, and a member of the Environmental, Social, and Governance Committee of the company. He is also the Chairman of Kingsoft Office and the Acting CEO of Kingsoft Cloud[40] - Lei Jun, aged 54, is the Non-Executive Director, Chairman of the Board, and a member of the Remuneration Committee. He co-founded Xiaomi Corporation and serves as its Chairman and CEO[41] - Qiu Bojun, aged 59, is a Non-Executive Director and a co-founder of Kingsoft. He was instrumental in developing WPS 1.0 and has held various leadership roles within the company[42] - Yao Leiwen, aged 41, is a Non-Executive Director and a member of the Nomination Committee. He is also the Deputy General Manager of the Investment Department at Tencent Holdings[43] - Wang Shunde, aged 63, is an Independent Non-Executive Director and serves as the Chairman of the Nomination Committee and the Remuneration Committee. He has extensive experience in financial management and has held key positions at Alibaba Group and Xiaomi Corporation[44][45] - Chen Zuotao, aged 53, is an Independent Non-Executive Director and has served as an independent director at Kingsoft Office. He holds multiple leadership roles in various energy and investment companies[46] - Chen has extensive investment and management experience in strategic emerging industries such as energy conservation, environmental protection, new energy, and new materials, with notable investments including Xiaomi Group (listed on HKEX in July 2018, stock code: 1810) and others[47] - Chen has received multiple awards and recognitions, including the "EY Entrepreneur Of The Year 2020 China" award in December 2020 and the "Golden Quality - Outstanding Entrepreneur" award in December 2021[48] - Wu Wenjie holds a Ph.D. in Finance from the University of Hong Kong, a Master's in Finance from the Hong Kong University of Science and Technology, and is a CFA charterholder since 2004[50] - Guo Weiwei, Senior Vice President and CEO of Seasun Holdings Limited, has been with the company since 2004 and is the producer of the "JX Online 3" series[51] - Li Yi, acting CFO and Vice President, has been responsible for the company's financial affairs since joining in 2007 and has extensive experience in financial management and investment[52] - Gong Daojun, Vice President, joined Kingsoft in 2004 and has held various positions including Vice President of Seasun and Company Secretary[52] - Peng Bo, Assistant President and Legal Director, has been with the company since 2004 and oversees legal compliance, intellectual property, and human resources[53] - Sun Hongyin, Vice President, joined Kingsoft in 1998 and has been responsible for the development and operation of multiple classic game products[53] - The company maintains high corporate governance standards, with quarterly updates to the Board on performance, status, and prospects, ensuring effective communication among directors and management[55] - The Board reviews and monitors the company's corporate governance policies, compliance with laws and regulations, and the training and development of directors and senior management[55] - The company focuses on innovation and R&D to improve products and services, emphasizing long-term business growth over short-term returns[56] - The company has established anti-corruption and whistleblowing policies, encouraging employees to report unethical behavior[56] - All directors confirmed compliance with the standard code for securities transactions during the fiscal year ending December 31, 2023[57] - The board of directors consists of 7 members, including 1 executive director, 3 non-executive directors, and 3 independent non-executive directors[60] - Independent non-executive directors constitute one-third of the board and provide professional opinions on the company's long-term development[60] - Directors have access to legal counsel and independent professional advice at the company's expense[61] - All directors participated in continuous professional development during the fiscal year to enhance their knowledge and skills[62] - The company secretary completed at least 15 hours of relevant professional training during the fiscal year[62] - The company held a total of 8 board meetings and 1 shareholders' meeting in 2023, with all directors attending 4 out of 4 board meetings and 1 out of 1 shareholders' meeting, except for Mr. Deng Yuanjun who resigned on April 20, 2023, and attended 1 out of 4 board meetings and 0 out of 1 shareholders' meeting[65] - The company's board of directors adopted a diversity policy, with 14% female representation on the board and 33% female representation among all employees[68] - The audit committee consists of three independent non-executive directors, including Ms. Wu Wenjie (Chair), Mr. Wang Shunde, and Mr. Chen Zuotao, all of whom have appropriate professional accounting qualifications or relevant financial management expertise[69] - The audit committee's responsibilities include providing opinions on the appointment, reappointment, and removal of external auditors, approving their remuneration and engagement terms, and reviewing the effectiveness of the company's financial reporting system, risk management, and internal control systems[70][71] - The audit committee held 4 meetings in 2023, with members attending all sessions except for Mr. Deng Yuanjun who attended 1 out of 4 meetings before resigning on April 20, 2023, and Mr. Chen Zuotao who attended 3 out of 4 meetings after being appointed on the same date[73] - The remuneration committee reviewed and approved the service contracts and remuneration packages (including year-end bonuses, incentive shares, and share options) for executive directors and senior management, and assessed the performance of executive directors[75] - The remuneration committee held 1 meeting in 2023, with all members attending except for Mr. Chen Zuotao who did not attend any meetings after being appointed on April 20, 2023[76] - The nomination committee recommended candidates for the position of independent non-executive directors and reviewed the board's structure, size, and composition[78] - The nomination committee held 1 meeting in 2023, with all members attending[79] - The environmental, social, and governance (ESG) committee reviewed the company's ESG policies and practices, and monitored the appropriateness and effectiveness of the overall risk management and internal control systems related to ESG[82] - The ESG committee held 1 meeting in 2023, with all members attending except for Mr. Chen Zuotao who did not attend any meetings after being appointed on April 20, 2023[83] Shareholder and Investor Relations - The company's senior management actively communicated with investors through various activities, including global analyst meetings, webcasts, and investor roadshows[95] - The company's investor relations team is dedicated to maintaining open and continuous communication with shareholders, investors, and analysts[95] - The company's website provides up-to-date information on business operations, financial data, corporate governance, annual reports, interim reports, announcements, and press releases[94] - The company proposed a final dividend of HK$0.14 per ordinary share for the year ended December 31, 2023, totaling approximately HK$189.1 million (2022: HK$176.6 million)[102] - The company's distributable reserves as of December 31, 2023, were RMB 6,161.3 million[105] - The company's total charitable and other donations for the year ended December 31, 2023, amounted to RMB 9.8 million (2022: RMB 1.4 million)[106] - The company's share registrar will suspend share registration services from May 17, 2024, to May 22, 2024, and from June 4, 2024, to June 7, 2024[103] Share Options and Incentive Plans - The 2021 Share Option Plan allows for the issuance of up to 137,020,371 shares, representing approximately 9.63% of the issued shares as of the report date[123] - The 2011 Share Option Plan expired on December 8, 2021, with 2,529,800 shares still available for issuance, representing approximately 0.19% of the issued shares[123] - The maximum number of shares that may be issued upon the exercise of all stock options granted shall not exceed 40,000,000 ordinary shares of Xishanju, unless otherwise approved by the company and Xishanju shareholders at the general meeting[124] - Under the 2011 Stock Option Plan, the maximum number of shares that may be issued to any eligible participant within any 12-month period is limited to 1% of the company's issued shares at any time. Any additional stock options exceeding this limit require shareholder approval at the general meeting[125] - The vesting period for the 2021 Stock Option Plan ranges from 1 to 5 years from the offer date, subject to early termination provisions as stipulated in the plan or determined at the discretion of the board[125] - The exercise price for stock options under the 2011 Stock Option Plan is determined by the board and cannot be lower than the highest of: (i) the closing price of the company's shares on the stock exchange on the offer date, (ii) the average closing price of the company's shares on the stock exchange for the five trading days immediately preceding the offer date, and (iii) the par value of the shares[127] - The 2011 Stock Option Plan expired on December 8, 2021, and no stock options were available for grant under this plan as of January 1, 2023, or December 31, 2023[128] - As of December 31, 2023, there were 2,529,800 unexercised stock options under the 2011 Stock Option Plan held by executive director Zou Tao, with an exercise price of HK$20.25 per share[128] - The total number of unexercised stock options under the 2011 Stock Option Plan as of December 31, 2023, was 2,529,800, with 600,000 stock options exercised during the period[128] - The weighted average closing price of the company's shares immediately before the exercise date of stock options under the 2011 Stock Option Plan (March 23, 2023) was HK$30.5[128] - The number of share options available for grant under the 2021 Share Option Scheme as of January 1, 2023, and December 31, 2023, was 131,520,371[129] - The number of shares available for future grants under the Share Award Plan as of January 1, 2023, and December 31, 2023, was 87,081,807 and 86,450,807, representing approximately 6.39% and 6.33% of the total issued shares, respectively[131] - The total number of unexercised share options under the 2021 Share Option Scheme as of December 31, 2023, was 5,500,000[129] - The total number of unexercised share awards under the Share Award Plan as of December 31, 2023, was 4,182,220[133] - The total number of unexercised share awards for the five highest-paid employees as of December 31, 2023, was 2,080,000[133] - The share price immediately before the grant date of share options on July 4, 2022, was HKD 30.60[129] - The share price immediately before the grant date of share awards on March 25, 2022, July 1, 2022, and July 19, 2022, was HKD 24.2, HKD 30.6, and HKD 27.9, respectively[133] - The total number of share awards granted to other employees during 2023 was 2,079,400[133] - The total number of share awards that expired during 2023 was 637,340[133] - The total number of share awards that vested during 2023 was 3,259,500[133] - The weighted average closing price of the company's shares before the vesting dates of the reward shares under the share reward plan in 2022 was HKD 27.86[134] - The weighted average closing price of the company's shares before the vesting dates of the reward shares under the share reward plan in 2023 was HKD 31.97[134] - The fair value of the reward shares granted under the share reward plan in 2023 totaled RMB 52,420,000, calculated based on the closing prices on the respective grant dates[134] - The number of shares that may be issued under all plans during the reporting period divided by the weighted average number of issued shares during the reporting period was approximately 0.00%[136] - The maximum number of shares authorized to be issued under the 2021, 2022, and 2023 Kingsoft Office Share Reward Plans was 870,000, 1,000,000, and 1,000,000 shares, respectively, accounting for 0.19%, 0.22%, and 0.22% of the total issued shares as of December 31, 2023[138] - The total number of shares that may be issued under the 2021, 2022, and 2023 Kingsoft Office Share Reward Plans divided by the weighted average number of issued shares during the reporting period was 0.22%[138] - The grant prices for the restricted shares under the 2021, 2022, and 2023 Kingsoft Office Share Reward Plans were RMB 45.86, RMB 45.86, and RMB 150.00, respectively[139] - The weighted average closing price of Kingsoft Office shares before the exercise dates of the restricted shares under the 2021 Kingsoft Office Share Reward Plan in 2023 was RMB 383.37[140] - During the reporting period, 279,873 restricted shares were vested, of which 248,523 were

Investment Rating - The report maintains a "Buy" rating for the company [1][20]. Core Insights - The company is expected to benefit from the commercialization of WPS AI and the upcoming launch of "Jian Wang 3 Wu Jie" [1][20]. - The financial performance for Q4 2023 shows a revenue of 23.10 billion RMB, a year-over-year increase of 9.4%, and a quarter-over-quarter increase of 12.2% [5][10]. - The report forecasts revenue growth for FY2024-2026, with expected revenues of 94 billion, 106 billion, and 114 billion RMB respectively, and net profits of 10 billion, 12 billion, and 15 billion RMB [20]. Financial Performance Summary - **Q4 2023 Financial Metrics**: - Revenue: 23.10 billion RMB (YoY +9.4%, QoQ +12.2%) - Operating Profit: 7.15 billion RMB - Net Profit: 4.38 billion RMB - Net Profit Attributable to Parent: 2.05 billion RMB [5][10]. - **Revenue Breakdown**: - Office Software and Services: 12.86 billion RMB (YoY +18%, QoQ +17%) - Online Games and Others: 10.24 billion RMB (YoY +0.2%, QoQ +6.6%) [6][19]. - **Profitability Metrics**: - Gross Margin: 82.1% (YoY -0.3pct, QoQ +0.7pct) - Operating Margin: 30.9% (YoY +1.7pct, QoQ +12.7pct) - Net Margin: 18.9% (YoY +7.6pct, QoQ +10.6pct) [12][14]. Business Segment Analysis - **Office Software**: - Revenue growth driven by personal and institutional subscriptions, with a focus on enhanced member benefits and digital transformation needs [14][15]. - The launch of WPS AI is expected to boost user engagement and conversion rates [14][15]. - **Online Games**: - Revenue growth attributed to the success of "Jian Xia World: Origin" and upcoming titles like "Jian Wang 3 Wu Jie" [19][20]. - The flagship game "Jian Wang 3" continues to perform well, contributing to stable revenue streams [19]. Earnings Forecast and Valuation - The report projects earnings per share (EPS) of 0.7, 0.9, and 1.1 RMB for FY2024-2026, with corresponding price-to-earnings (P/E) ratios of 31, 25, and 21 [20]. - The target market capitalization is estimated at 399 billion RMB, with a target price of 30 and 33 HKD [20].

计算机/软件开发 公 司 研 金山软件（03888.HK） 《剑网 3》全平台互通在即，WPS AI 商业化推进 究 2024年03月24日 ——港股公司信息更新报告 投资评级：买入（维持） 吴柳燕（分析师） 李祎晗（联系人） wuliuyan@kysec.cn liyihan@kysec.cn 证 书编号：S0790521110001 证书编号：S0790123080037 日期 2024/3/22  《剑网3》全平台互通在即，WPS AI商业化落地有利平台估值提升 港 当前股价(港元) 25.000 考虑到《剑网3》手游版即将上线、WPS AI付费测试稳步推进，我们提升公司 股 一年最高最低(港元) 42.350/18.400 公 净利润预测至7.86/11.59亿元（前值7.31/11.57亿元），新增2026年利润预测15.76 司 总市值(亿港元) 334.79 亿元，同比增速分别为62.6%/47.4%/36%，对应2024-2026年摊薄后EPS 0.6/ 0.9/ 信 流通市值(亿港元) 334.79 息 1.2 元，当前股价对应2024-2026 年38.8/26.3/19.3倍 PE。《 ...

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company achieved a total revenue of 2.31 billion yuan in Q4 2023, representing a year-over-year increase of 9.36% and a quarter-over-quarter increase of 12.16%. The net profit attributable to the parent company was 205 million yuan, with a year-over-year increase of 339.60% and a quarter-over-quarter increase of 621.03%, which aligns with previous expectations [2][3] Revenue Breakdown - **Gaming Business**: The revenue from online games and other sources was 1.024 billion yuan in Q4 2023, showing a year-over-year increase of 0.21% and a quarter-over-quarter increase of 6.56%. The revenue contribution from the newly launched game "Sword of the World: Origin" is expected to enhance performance, while the flagship game "Sword Network 3" continues to achieve record annual revenue [3] - **Office Business**: The revenue from office software and services was 1.286 billion yuan in Q4 2023, reflecting a year-over-year increase of 17.94% and a quarter-over-quarter increase of 17.06%. Growth was driven by increased subscriptions from both individual and institutional clients, with a notable rise in monthly active devices for the main office software product [3] Financial Forecasts - The report adjusts the earnings forecasts for the company, projecting EPS of 0.84 yuan for 2024, 0.96 yuan for 2025, and 1.19 yuan for 2026. The corresponding P/E ratios at the current stock price are expected to be 27, 24, and 19 times respectively [3][9]

Investment Rating - Buy (Maintained) [1] Core Views - The company has consistently maintained stable dividends, with its gaming business showing steady growth and office AI commercialization expected to gradually advance [1] - In 4Q23, the company achieved revenue of RMB 2.31 billion, a 9% YoY increase and a 12% QoQ increase Full-year 2023 revenue reached RMB 8.53 billion, up 12% YoY, with office business revenue growing 17% YoY and gaming business revenue increasing 6% YoY [1] - Full-year operating profit for 2023 was RMB 2.23 billion, up 19% YoY, with an OP Margin improvement of 1.6 percentage points to 26.1%, leading to a turnaround in net profit attributable to shareholders to RMB 480 million [1] - The dual subscription model in the office business provided strong growth momentum, with C-end subscription revenue up 29% YoY and B-end subscription revenue up 38% YoY in 2023 [1] - The company's gaming business is expected to see a low-to-high revenue trend in 2024, with multiple game launches planned, including the mobile game "JX3: Infinite" and other classic titles [2] - The company's 2024/25 net profit attributable to shareholders is forecasted to increase by 5%/22% to RMB 1.05 billion/RMB 1.69 billion, with a new 2026 forecast of RMB 2.31 billion [2] Financial Performance - 2023 full-year revenue: RMB 8.53 billion, up 12% YoY [1] - 2023 full-year operating profit: RMB 2.23 billion, up 19% YoY [1] - 2023 full-year net profit attributable to shareholders: RMB 480 million, a turnaround from previous losses [1] - 2023 office business revenue: RMB 4.56 billion, up 17% YoY [1] - 2023 gaming business revenue: RMB 3.98 billion, up 6% YoY [2] - 2024E/2025E/2026E revenue: RMB 9.93 billion/RMB 11.47 billion/RMB 13.21 billion [7] - 2024E/2025E/2026E net profit attributable to shareholders: RMB 1.05 billion/RMB 1.70 billion/RMB 2.31 billion [7] Office Business - Office business revenue in 2023: RMB 4.56 billion, up 17% YoY, driven by C-end and B-end subscription growth [1] - C-end subscription revenue grew 29% YoY, while B-end subscription revenue grew 38% YoY [1] - MAU for main products increased by 4.36% YoY to 598 million, with cumulative paying individual users up 18.43% YoY to 35.49 million [1] - WPS 365 was upgraded to provide enhanced content creation, collaboration, and digital asset management capabilities [1] - WPS AI entered public testing in 4Q23, laying the foundation for future commercialization [1] Gaming Business - Gaming business revenue in 2023: RMB 3.98 billion, up 6% YoY, driven by the flagship game "JX3" and new titles [2] - Multiple game launches are planned for 2024, including "JX3: Infinite" and other classic titles [2] - Gaming revenue is expected to show a low-to-high trend in 2024, with mid-to-high single-digit growth for the full year [2] Valuation and Forecasts - 2024E/2025E/2026E revenue: RMB 9.93 billion/RMB 11.47 billion/RMB 13.21 billion [7] - 2024E/2025E/2026E net profit attributable to shareholders: RMB 1.05 billion/RMB 1.70 billion/RMB 2.31 billion [7] - 2024E/2025E/2026E EPS: RMB 0.36/RMB 0.79/RMB 1.27 [7] - 2024E/2025E/2026E P/E ratio: 18x/13x/10x [7] Market Data - Current share price: HKD 24.80 [3] - Total market capitalization: HKD 33.21 billion [4] - 52-week high/low: HKD 42.35/HKD 18.40 [4] - 3-month turnover rate: 41.9% [4]

交银国际研究 公司更新 互联网 收盘价 目标价 潜在涨幅 2024年3月20日 港元23.55 港元26.00↓ +10.4% 金山软件 (3888 HK) 4 季度游戏收入不及预期，WPS 将开启 AI 商业化，维持中性  4季度游戏收入不及预期：收入同比增9%至23.1亿元人民币，较我们预期低 个股评级 2%，主要因游戏收入低于预期。游戏收入同比持平，较预期低8%，WPS收入 中性 同比增18%，超预期4%。调整后经营利润同比增17%至7.9亿元，较我们预 期高6%，主要因毛利超预期，预计与端游/手游收入结构变化有关。调整后净 1年股价表现 利润同比增38%至5.6亿元，较预期高6%。2023年总收入增12%（游戏/WPS 分别增6%/17%），调整后净利润为20亿元，同比增33%。2023年度派息每 3888 HK 恒生指数 40% 股0.14港元（2022年为0.13港元），股息率0.59%。 30% 20% 10%  4季度业绩要点：我们认为游戏收入增速的变化主要与2022年4季度游戏收 0% 入高基数有关，《剑网3无界》开启测试，该游戏今年上线之前预计游戏收 -10% -20% 入表现稳定。W ...