Kingsoft Office(SH:688111) Guotai Junan Securities·2024-11-02 14:39Investment Rating - The report maintains a "Buy" rating for Kingsoft Office with a target price raised to 351.46 CNY, reflecting a slight adjustment based on the company's latest financial results and comparable company valuations [3][10][18]. Core Views - Kingsoft Office has demonstrated steady revenue and profit growth, with subscription revenue reaching a record high. The acceleration of AI commercialization and the recovery of demand in the "Xinchuang" sector are expected to drive the company's business beyond expectations [9][10]. - The company reported a revenue of 3.627 billion CNY for the first three quarters of 2024, representing a year-on-year growth of 10.90%, and a net profit attributable to shareholders of 1.04 billion CNY, up 16.41% year-on-year [10]. - The subscription business has seen a significant increase, with individual subscription revenue growing by 20.50% year-on-year, driven by enhancements in AI features that have improved payment rates and average revenue per user [10][14]. Financial Summary - Revenue and profit forecasts for 2024-2026 are as follows: - Revenue: 5.103 billion CNY (-9.32%), 6.472 billion CNY (-13.74%), 8.074 billion CNY (-15.99%) - Net profit: 1.542 billion CNY (-1.78%), 1.956 billion CNY (-2.90%), 2.518 billion CNY (-2.98%) - Earnings per share (EPS): 3.33 CNY (-0.39), 4.23 CNY (-0.63), 5.44 CNY (-0.65) [15][16]. - The company’s gross margin is expected to stabilize, with projections of 84.90%, 85.09%, and 85.22% for 2024-2026 [15][16]. Business Segments - The domestic personal office service subscription business is projected to grow at rates of 21.90%, 25.40%, and 24.30% for 2024-2026, with gross margins improving slightly [14][17]. - The institutional subscription and service business is expected to face pressure in 2024 but is projected to rebound significantly in 2025 and 2026, with growth rates of 5.00%, 28.00%, and 25.00% respectively [14][17]. - The institutional authorization business is anticipated to decline in 2024 but recover in subsequent years, with growth rates of -3.00%, 30.00%, and 26.00% for 2024-2026 [14][17]. Valuation - The report uses a PE valuation method, indicating that Kingsoft Office is a leading player in the domestic office software sector. The average PE ratio of comparable companies for 2025 is estimated at 83.11, leading to a target price of 351.46 CNY per share [18][19].