Kingsoft Office(SH:688111) KAIYUAN SECURITIES·2025-03-02 09:33Investment Rating - The investment rating for Kingsoft Office (688111.SH) is maintained at "Buy" [1] Core Views - The company has exceeded market expectations with its performance, leading to an upward adjustment in the net profit forecast for 2024-2026 to 1.645 billion, 2.064 billion, and 2.542 billion yuan respectively, with corresponding EPS of 3.56, 4.46, and 5.50 yuan per share [4][5] - The continuous upgrade of the WPS AI product is expected to open up new growth opportunities, reinforcing the "Buy" rating [4] Financial Performance Summary - For the year 2024, the company is expected to achieve a revenue of 5.121 billion yuan, representing a year-on-year growth of 12.4%, and a net profit of 1.645 billion yuan, up 24.84% [5] - The fourth quarter alone is projected to generate a revenue of 1.494 billion yuan, a 16.2% increase year-on-year, and a net profit of 605 million yuan, reflecting a 42.7% growth [5] - The company’s gross margin is expected to remain stable around 85%, with a net margin projected to increase to 32.1% in 2024 [8] Product Development and Market Position - The integration of WPS AI 2.0 with Deepseek marks a shift from "assistive tools" to "cognitive partners," enhancing user engagement and conversion rates [6] - New features such as AI writing assistant, AI reading assistant, and AI data assistant are expected to significantly improve user experience and retention [6] Valuation Metrics - The current price-to-earnings (P/E) ratios for 2024, 2025, and 2026 are projected at 97.3, 77.6, and 63.0 respectively, indicating a favorable valuation trend as earnings grow [8] - The projected return on equity (ROE) is expected to rise to 14.6% in 2024 and further to 16.8% by 2026 [8]