KINGSOFT(03888) 东吴证券·2024-11-20 08:24Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported Q3 2024 revenue of 2.915 billion yuan, a year-over-year increase of 41.52% and a quarter-over-quarter increase of 17.83%, with net profit attributable to shareholders of 413 million yuan, a year-over-year increase of 1351.11% and a quarter-over-quarter increase of 5.11%, exceeding expectations [1][2] Summary by Sections Gaming Business - The gaming segment achieved revenue of 1.708 billion yuan in Q3 2024, representing a year-over-year increase of 77.66% and a quarter-over-quarter increase of 32.81%, accounting for 58.60% of total revenue. The strong performance was driven by the successful launch of "Jian Wang 3: Wujie" mobile game and the 15th anniversary events of "Jian Wang 3," which led to record high daily active users [2] - The company has revised its full-year gaming revenue guidance from over 20% growth to 30% growth, supported by a robust pipeline of new games [2] Office Business - The office segment generated revenue of 1.207 billion yuan in Q3 2024, with a year-over-year increase of 9.88% and a quarter-over-quarter increase of 1.61%, accounting for 41.40% of total revenue. The growth was primarily due to the launch of WPS AI 2.0, which enhanced user engagement and conversion rates [3] - The monthly active users for the main office products reached 618 million, reflecting a year-over-year increase of 4.9% [3] Cost Control and Profitability - The company maintained good cost control, with sales, management, and R&D expenses of 365 million, 166 million, and 861 million yuan respectively. The year-over-year changes were -17.26%, -11.32%, and +28.12% respectively [4] - The company reported a share of losses from joint ventures amounting to 428 million yuan, primarily attributed to long-term asset impairments at a joint venture [4] Earnings Forecast and Valuation - The earnings per share (EPS) estimates for 2024-2026 have been raised to 1.11, 1.38, and 1.68 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 24, 20, and 16 times based on the current stock price. The outlook remains positive due to the strong growth in gaming and the ongoing AI strategy in the office business [5]