Kunlun(300418) 国信证券·2024-08-26 13:29Investment Rating - The report maintains an "Outperform" rating for the company [3][15]. Core Insights - The company experienced stable revenue growth, with a reported revenue of 2.501 billion yuan in the first half of 2024, representing a year-on-year increase of 3.16%. However, the net profit attributable to shareholders was a loss of 389 million yuan, a significant decline of 208.64% year-on-year [1][4]. - The company's overseas business continues to grow, accounting for 88.2% of total revenue, with a year-on-year increase of 9.02% [1][8]. - Research and development (R&D) expenses surged to 757 million yuan, a 115.7% increase year-on-year, indicating a strong commitment to advancing AI and metaverse initiatives [1][6]. Summary by Sections Financial Performance - In the second quarter of 2024, the company achieved a revenue of 1.294 billion yuan, with a year-on-year growth of 7.1%. The net profit attributable to shareholders was a loss of 202 million yuan, reflecting a decline of 238.0% year-on-year [1][4]. - The company’s adjusted net profit for the first half of 2024 was a loss of 407 million yuan, down 230.6% year-on-year, primarily due to fluctuations in investment income and increased R&D expenses [1][4]. Business Segments - The search and advertising segments showed positive growth, with revenues of 623 million yuan and 890 million yuan, respectively, marking increases of 17.31% and 22.89% year-on-year [1][8]. - The gaming and overseas social business segments saw revenue declines of 18.37% and 5.92% year-on-year, respectively [1][8]. R&D and Innovation - The company is advancing its AI capabilities, with the TianGong model reaching version 3.0, featuring 400 billion parameters, making it one of the largest and most powerful open-source models globally [1][6]. - The company is actively developing several AI applications, including AI games and social platforms, with daily active users surpassing 500,000 for its AI social product [1][6]. Future Outlook - The company forecasts net profits for 2024, 2025, and 2026 to be -21 million yuan, 373 million yuan, and 573 million yuan, respectively, with corresponding diluted EPS of -0.02 yuan, 0.31 yuan, and 0.47 yuan [2][9]. - The current stock price corresponds to a PE ratio of -1546 for 2024, 85 for 2025, and 56 for 2026, indicating significant volatility in earnings expectations [2][9].