KUAISHOU(01024) 第一上海证券·2024-07-12 06:31Investment 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]