KINGSOFT(03888) 交银国际·2025-03-20 03:08Investment Rating - The report assigns a "Buy" rating for Kingsoft Corporation (3888 HK) with a target price raised from HKD 33 to HKD 50, indicating a potential upside of 18.1% [2][11]. Core Insights - The report highlights that Kingsoft's Q4 profits exceeded expectations, with a projected 31% revenue growth in the gaming segment for 2024, driven by new game releases. The operating profit margin for the gaming business is expected to improve by 15 percentage points to 42% [2][6]. - The application of AI features in WPS is anticipated to continue driving rapid growth in WPS 365 and personal subscription services. The report adjusts profit forecasts based on a 10x/25x P/E ratio for gaming/WPS businesses and an increase in Kingsoft Cloud's market value [2][6]. - The report notes that WPS had a total of 41.7 million paid users by the end of 2024, a 17% year-on-year increase, with AI functionalities enhancing user engagement and conversion rates [6]. Financial Performance Summary - For 2025, the revenue forecast is set at RMB 11,495 million, reflecting a 4% increase from the previous estimate. The gaming segment is expected to generate RMB 5,475 million, a 6% increase, while WPS is projected to reach RMB 6,019 million, a 3% increase [5][13]. - The gross profit for 2025 is estimated at RMB 9,542 million, with a gross margin of 83%, up from 80% in the previous forecast [5][13]. - Adjusted operating profit is forecasted at RMB 4,079 million for 2025, with an adjusted operating margin of 35% [5][13]. Stock Performance - Kingsoft's stock has shown a year-to-date increase of 25.85%, with a 52-week high of HKD 46.90 and a low of HKD 20.10 [4][11].