BOCOM International·2025-08-21 14:01Investment Rating - The report assigns a "Buy" rating for the company, Kingsoft (3888 HK), with a target price adjusted from HKD 46.00 to HKD 42.00, indicating a potential upside of 24.3% from the current price of HKD 33.80 [2][9][11]. Core Insights - The company's revenue faced pressure in Q2 due to a high base effect from key games, resulting in a 7% year-on-year decline. Game revenue specifically dropped by 26%, while the office software and services segment grew by 14% [6][12]. - The adjusted operating profit decreased by 48% year-on-year, primarily due to the decline in game revenue, increased marketing expenses for new games, and higher investments in AI [6][12]. - The AI monthly active users reached nearly 30 million, a 50% year-on-year increase, and is expected to continue growing rapidly in the second half of the year [6][12]. Financial Performance Summary - For 2025, the new revenue forecast is RMB 10,512 million, a 6% decrease from the previous estimate of RMB 11,184 million. The gaming segment's revenue is expected to be RMB 4,692 million, down 12% from the prior forecast [5][12]. - The gross profit is projected at RMB 8,652 million, reflecting a 7% decrease from the previous estimate, with a gross margin of 82% [5][12]. - The adjusted net profit for 2025 is forecasted at RMB 2,371 million, a 13% decrease from the previous estimate of RMB 2,724 million [5][12]. Q2 Performance Overview - In Q2 2025, the company's revenue was RMB 2,307 million, down 7% year-on-year, with game revenue at RMB 952 million, down 26% [7][12]. - The office software and services revenue was RMB 1,356 million, up 14% year-on-year, driven by strong performance in WPS 365 and personal business segments [6][7]. - The operating profit for Q2 was RMB 383 million, a 52% decline year-on-year, with an operating margin of 17% [7][12].