Investment Rating - The report maintains a "Buy" rating for the company, Kuaishou (1024 HK), with a target price adjusted to HKD 55.00, indicating a potential upside of 17.6% from the current closing price of HKD 46.75 [1][2][8]. Core Insights - The report anticipates a 10% year-on-year revenue growth for Q2 2024, projecting revenues of RMB 30.5 billion. Adjusted net profit is expected to increase by 63% year-on-year to RMB 4.4 billion, with an adjusted net profit margin of 14.4% [1]. - The e-commerce GMV growth forecast has been revised down to 19% for Q2 and 21% for the full year, primarily due to a slowdown in market growth and increased competition in the live-streaming e-commerce sector [1]. - Advertising revenue is expected to grow rapidly, driven by AI-enabled marketing products, with a projected year-on-year increase of 22% to RMB 17.5 billion in Q2 2024 [1]. Financial Overview - Revenue projections for the company are as follows: RMB 113.47 billion in 2023, RMB 127.70 billion in 2024, RMB 143.03 billion in 2025, and RMB 158.26 billion in 2026, reflecting a compound annual growth rate (CAGR) of approximately 10.7% [2][9]. - The adjusted net profit is forecasted to be RMB 10.27 billion in 2023, RMB 18.22 billion in 2024, RMB 22.62 billion in 2025, and RMB 27.49 billion in 2026, indicating a significant recovery from previous losses [2][9]. - The company’s gross margin is expected to improve, reaching 55% by 2024, with a gradual increase in operating profit margin projected to 19.5% by 2026 [9][10]. Market Position and Competitive Landscape - The report highlights that Kuaishou's daily active users (DAU) have remained stable, but growth has lagged behind competitors like Taobao and JD during promotional periods, indicating increased competition in the e-commerce space [1][4]. - The report notes that the advertising market remains robust, with continued investment from various sectors, including media and gaming, contributing to Kuaishou's advertising revenue growth [1][6].

Investment Rating - The report assigns an "Accumulate" rating to Kuaishou [2][7]. Core Views - The report highlights that Kuaishou's advertising and e-commerce businesses continue to grow under the empowerment of AI, while the live streaming segment faces some adjustment pressure. The total revenue growth for FY24Q2 is expected to approach double digits, with an adjusted net profit of 4.4 billion RMB [6][9]. Financial Summary - The adjusted revenue forecast for Kuaishou for FY2024 and FY2025 is set at 127.6 billion RMB and 141.7 billion RMB, respectively, reflecting year-on-year growth of 12.5% and 11.0%. The adjusted net profit for the same periods is projected to be 18.5 billion RMB and 25.1 billion RMB, indicating year-on-year growth of 78% and 36% [7][9]. - For FY24Q2, Kuaishou is expected to achieve revenue of 30.4 billion RMB, a year-on-year increase of 9.7%. Online marketing revenue is anticipated to reach 17.3 billion RMB, up 21% year-on-year, while live streaming revenue is projected at 8.7 billion RMB, down 13% year-on-year [9][10]. - The gross margin is expected to reach 54.2%, with an adjusted net profit of 4.4 billion RMB, representing a year-on-year increase of 63% [9][10]. User Engagement Metrics - The report estimates that Kuaishou's daily active users (DAU) will reach 393 million in FY24Q2, a year-on-year increase of 4.5%, while monthly active users (MAU) are expected to hit 690 million, up 2.4% year-on-year. The average daily usage time per user is projected to be around 124 minutes [9][10]. Business Segments - The online marketing segment is expected to drive revenue growth, with a forecast of 17.3 billion RMB for FY24Q2, primarily supported by internal advertising revenue and a recovery in external circulation [9][10]. - Other business revenues are projected to reach 4.4 billion RMB, reflecting a year-on-year increase of 29%. During the 618 shopping festival in 2024, the gross merchandise volume (GMV) for e-commerce is expected to grow by 16% [10].

Investment Rating - The report maintains a "Buy" rating for the company [1][2] Core Insights - The company is accelerating its AI commercialization efforts, with significant advancements in its self-developed AI models and applications [1] - The AI model developments include a language model achieving GPT-4 level performance, a recommendation model expected to increase user watch time by 400 million minutes daily, and a visual generation model ranking second globally [1] - The company has seen an 8-fold increase in monthly active users for its AIGC services and a 64-fold increase in GMV from January to June 2024 [1] - During the 618 shopping festival, the company's short video e-commerce performance outpaced the overall market, with GMV growth of 16% compared to competitors [1] Financial Projections - The adjusted net profit estimates for 2024, 2025, and 2026 are projected at 170.15 billion, 248.16 billion, and 316.27 billion CNY respectively [2] - The company is valued at 15x PE for 2024, leading to a target price of 64.05 HKD per share, equating to a market value of 2,552 billion CNY or 2,795 billion HKD [2][8] Company Performance Metrics - The company reported a revenue of 94,183 million CNY in FY2022, with a projected growth to 155,230 million CNY by FY2026 [7] - The adjusted net profit for FY2024 is expected to be 170.15 billion CNY, with a significant increase in profitability projected in subsequent years [7][10] - The gross margin is expected to improve from 44.7% in FY2022 to 57.3% by FY2026 [7]

Investment Rating - The report assigns a **Buy** rating to Kuaishou-W (1024) with a target price of **HKD 60**, representing a **26% upside** from the current price [1] Core Views - Kuaishou is positioned as a leading content community and social platform with **700 million MAUs**, leveraging its "short video + live streaming" ecosystem to drive sustainable growth through advertising, e-commerce, and live streaming [1] - The company's **online marketing business** is a key revenue driver, benefiting from refined operations, upgraded intelligent marketing products, and algorithm optimization [1] - E-commerce GMV has grown rapidly from **RMB 96.6 million in 2018 to RMB 1.18 trillion in 2023**, with a projected **18% CAGR from 2024 to 2026** [1] - Kuaishou has achieved significant **cost reduction and efficiency improvements**, with adjusted net profit turning positive in 2023, reflecting strong operational resilience [1] Business Model and Growth Drivers Content Ecosystem - Kuaishou has built a **diverse content ecosystem** centered around short videos and live streaming, fostering a vibrant community with **7 billion MAUs** [1][7] - The platform emphasizes **user engagement**, with average daily usage time reaching **129.5 minutes** in Q1 2024 [1] Online Marketing - Online marketing revenue grew **27.4% YoY in Q1 2024**, contributing **56.6% of total revenue** [10] - **Internal loop advertising**, driven by e-commerce, is a major growth driver, with penetration of smart marketing products reaching **30% in Q1 2024** [10][11] E-commerce - Kuaishou's e-commerce business has seen rapid growth, with **GMV reaching RMB 1.18 trillion in 2023** [1][14] - The company is expanding into **pan-shelf scenarios**, integrating live streaming, short videos, and traditional e-commerce to enhance conversion efficiency [1][14] - **Monthly active buyers** reached **126 million in Q1 2024**, with a penetration rate of **18.6%** [14] Live Streaming - Live streaming revenue has declined as a percentage of total revenue, from **95.3% in 2017 to 34.4% in 2023**, but remains a foundational business [12] - The company is diversifying into new verticals such as recruitment and real estate to reduce reliance on traditional live streaming [12] Financial Performance - Revenue grew from **RMB 8.3 billion in 2017 to RMB 113.5 billion in 2023**, with a **54.5% CAGR** [1] - Gross margin improved from **31.3% in 2017 to 50.6% in 2023**, driven by cost optimization and a shift toward higher-margin businesses [1] - Adjusted net profit turned positive in 2023, reaching **RMB 10.3 billion**, with further growth expected to **RMB 26.3 billion by 2026** [1][20] Industry Context Short Video and Live Streaming - Short video users account for **96.4% of China's internet users**, with platforms like Kuaishou and Douyin dominating the market [26] - The **live streaming e-commerce market** is expected to grow at an **18% CAGR from 2024 to 2026**, reaching **RMB 49.2 trillion in 2023** [33] Advertising Market - China's internet advertising market grew **7.6% YoY in 2023**, reaching **RMB 714.6 billion**, with Kuaishou benefiting from both internal and external loop advertising [27] E-commerce Market - Live streaming e-commerce penetration reached **31.9% in 2023**, with Kuaishou's **pan-shelf strategy** expected to drive further growth [33][36] Strategic Initiatives AI and Technology - Kuaishou has developed its own large language model, **KwaiYii**, and other AI tools to enhance content creation and advertising efficiency [42] - AI-driven solutions are being applied across various business segments, including **digital humans and smart customer service** [42] Overseas Expansion - Overseas revenue grew **193.2% YoY in Q1 2024**, with a focus on key markets like Brazil and Indonesia [15][16] - The company aims to achieve **break-even in overseas operations by 2025** [42] Share Repurchase - Kuaishou plans to repurchase up to **HKD 16 billion worth of shares over the next three years**, starting with **HKD 6 billion in 2024** [44]

Investment Rating - The report maintains a BUY rating for Kuaishou with an unchanged target price (TP) of HK$97 [2][4]. Core Insights - Kuaishou's shelf-based ecommerce performed strongly during the 618 promotion, with orders and paying users increasing by 65% and 57% year-on-year (YoY) respectively [2]. - The company is expected to achieve ecommerce growth of 25% YoY in GMV and 24% YoY in other services revenue for Q2 2024 [2]. - Kuaishou's self-developed video generation model, "Kling," was launched, showcasing advancements in AI technology [2]. Financial Performance - Revenue for FY22 was RMB 94,183 million, with a YoY growth of 16.2%, and is projected to reach RMB 125,544 million in FY24E, reflecting a growth of 10.6% [3][7]. - Adjusted net profit is expected to improve significantly from RMB 10,271 million in FY23A to RMB 17,247 million in FY24E, marking a growth of 67.9% [3][8]. - The diluted EPS is forecasted to increase from RMB 2.31 in FY23A to RMB 3.74 in FY24E, indicating a growth of 61.8% [3][8]. Market Position and Growth - Kuaishou's GMV share from pan shelf-based ecommerce is estimated to exceed 25%, indicating a strong market position [2]. - Active merchants grew by 26% YoY, with small and medium enterprises (SMEs) increasing by 28% YoY during the 618 promotion [2]. - The consumer electronics and furniture categories saw GMV surges of over 83% YoY, with brand pan shelf-based GMV increasing by over 177% YoY [2].

20 June 2024 | 11:48PM HKT 2131d4eaf4cb4d50b1d51c8af07b64b4 更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 Kuaishou Technology (1024.HK): Highlights from June 18 shopping festival; Robust pan-shelf based GMV yet overall moderating; Buy Assessing the potential ceiling and lessons from China Lincoln Kong, CFA +852-2978-6603 | lincoln.kong@gs.com Goldman Sachs (Asia) L.L.C. Ronald Keung, CFA +852-2978-0856 | ronald.keung@gs.com Goldman Sachs (Asia) L.L.C. Steve Qiu +852-2978-2672 | steve.qiu@gs.com Goldman Sachs (Asia) L.L.C. L ...

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Investment Rating - The report maintains a "Strong Buy" rating for Kuaishou-W (01024.HK) [1] Core Insights - Kuaishou achieved a revenue of 29.408 billion yuan in Q1 2024, representing a year-on-year growth of 16.6%, with a net profit of 4.12 billion yuan, a significant turnaround from a loss of 0.876 billion yuan in the same period last year [1] - The company's online marketing services revenue reached 16.650 billion yuan, up 27.4% year-on-year, driven by enhanced smart marketing solutions and increased customer engagement [1] - E-commerce revenue surged by 47.6% year-on-year to 4.183 billion yuan, attributed to refined operational strategies and an increase in active paying users and merchants [1] - The average daily active users reached a record high of 394 million, with a daily usage time of 129.5 minutes, indicating strong user engagement [1] - The e-commerce gross merchandise volume (GMV) grew by 28.2% year-on-year to 288.1 billion yuan, supported by improved consumer experience and an increase in active merchants [1] Financial Summary - For Q1 2024, Kuaishou's total sales cost was 13.288 billion yuan, with a gross margin of 54.8%, an increase of 8.4 percentage points year-on-year [1] - Operating profit for Q1 2024 was 3.994 billion yuan, with domestic operations contributing 3.991 billion yuan in profit, a significant increase from 0.963 billion yuan in Q1 2023 [1] - The report forecasts net profits for 2024, 2025, and 2026 to be 15.179 billion yuan, 19.952 billion yuan, and 25.576 billion yuan respectively, indicating strong growth potential [4][5]