Kunlun(SZ:300418) Soochow Securities·2024-11-02 04:00Investment Rating - The report maintains a "Buy" rating for Kunlun Wanwei [1] Core Views - The company achieved a revenue of 3.828 billion yuan in Q1-Q3 2024, representing a year-on-year increase of 4.00%, while the net profit attributable to the parent company was a loss of 627 million yuan, a year-on-year decrease of 290.81% [2] - The company continues to invest in AI applications, with multiple projects showing initial commercial success, including AI social platform Linky and AI music platform Melodio [4] - Due to ongoing R&D investments and fluctuations in investment income, the company's profitability has been under pressure, with a significant increase in R&D and management expense ratios [3][4] Financial Performance Summary - Total revenue for 2024 is projected to be 5.391 billion yuan, with a year-on-year growth of 9.69% [5] - The net profit attributable to the parent company is expected to be a loss of 855.62 million yuan in 2024, reflecting a year-on-year decline of 167.99% [5] - The latest diluted EPS is forecasted to be -0.69 yuan for 2024, with a P/E ratio of 40.80 for the current price [5] Revenue and Profitability Trends - In Q3 2024, the company reported revenue of 1.327 billion yuan, a year-on-year increase of 5.62% and a quarter-on-quarter increase of 2.50% [2] - The adjusted EBITDA for Opera in Q3 2024 was 30.8 million USD, showing a year-on-year increase of 29.66% and a quarter-on-quarter increase of 15.75% [3] - The company’s R&D expense ratio reached 29.17% in Q3 2024, up 7.73 percentage points year-on-year [3] AI Development and Applications - The company is actively exploring various AI applications, including AI short drama platform SkyReels and AI gaming projects [4] - The commercial success of AI applications is beginning to materialize, particularly in the AI social and music sectors [4] Adjusted Financial Forecasts - The revenue forecasts for 2024-2026 have been adjusted to 54 billion yuan, 59 billion yuan, and 64 billion yuan respectively [5] - The EPS estimates for the same period have been revised to -0.69 yuan, 0.06 yuan, and 0.08 yuan respectively [5]