Kingsoft Office(SH:688111) Dongxing Securities·2025-10-29 02:35Investment Rating - The report maintains a "Strong Buy" rating for Kingsoft Office [4] Core Views - Kingsoft Office has shown robust growth in its WPS software business, benefiting from the recovery in the domestic IT industry, with Q3 revenue growth exceeding expectations [2][3] - The company continues to invest in R&D, particularly in AI, collaboration, and internationalization, which has led to improved profitability and cash flow [3] Financial Performance Summary - For the first three quarters of 2025, Kingsoft Office achieved revenue of 41.78 billion yuan, a year-on-year increase of 15.21%, with net profit attributable to shareholders reaching 11.78 billion yuan, up 13.32% [1] - In Q3 alone, the company reported revenue of 15.21 billion yuan, a 25.33% increase year-on-year, and a net profit of 4.31 billion yuan, reflecting a 35.42% growth [1] - The gross margin for Q3 was 86.46%, an increase of 0.99 percentage points year-on-year, with a net profit margin of 28.35%, up 2.15 percentage points [3] Business Segment Performance - The personal business segment generated revenue of 8.99 billion yuan in Q3, a year-on-year increase of 11.18%, accounting for approximately 59% of total revenue [8] - The institutional business, particularly the WPS 365 platform, saw significant growth, with revenue of 2.01 billion yuan in Q3, up 71.61% year-on-year [8] - The WPS software business also benefited from increased demand from private enterprises and local state-owned enterprises, with revenue growth driven by government procurement and project execution [8] Future Outlook - The company is expected to continue its growth trajectory, with projected net profits of 18.15 billion yuan, 22.28 billion yuan, and 28.15 billion yuan for 2025, 2026, and 2027, respectively [9] - The current stock price corresponds to a PE ratio of 86, 70, and 55 for the years 2025, 2026, and 2027, indicating a favorable valuation outlook [9]