EBSCN·2025-08-05 08:49Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to 84.3 HKD from the current price of 74.60 HKD [3]. Core Insights - The company is expected to see stable performance driven by improvements in advertising and user engagement, with a projected DAU of 409 million and MAU of 710 million for Q2 2025, reflecting year-over-year growth of 3.5% and 3.2% respectively [1]. - Revenue forecasts for Q2 2025 include online marketing revenue of 196.9 billion RMB (up 12.4% YoY) and e-commerce GMV of 3,465 billion RMB (up 13.5% YoY) [1]. - The company is enhancing its AI capabilities, with the "可灵" (Keling) AI service expected to continue its high growth trend, contributing to other revenue streams [1]. User Engagement - The report highlights improvements in user engagement metrics, with daily active users (DAU) expected to reach 409 million and average daily usage time of 123.8 minutes [1]. - The launch of new content formats, such as vertical screen anime short dramas, is anticipated to further boost user retention and interaction [1]. Financial Performance - Total revenue for Q2 2025 is projected at 345.3 billion RMB, with an adjusted net profit of 51.1 billion RMB, reflecting a net profit margin of 14.8% [1]. - The gross margin is expected to remain stable at 55.3%, supported by growth in high-margin advertising and e-commerce businesses [1]. Profitability Forecast - The adjusted net profit forecasts for 2025-2027 are slightly revised to 201.5 billion RMB, 241.9 billion RMB, and 277.6 billion RMB respectively, indicating a positive outlook for profitability [1]. - The report notes that the company’s advertising and e-commerce segments are expected to benefit from operational efficiencies and AI enhancements [1]. Valuation Adjustments - The valuation multiples for 2025 have been adjusted to 0.8x PS for live streaming, 2.9x PS for online marketing, and 0.2x PSG for e-commerce, reflecting the potential of the AI segment [1].