Kingsoft Office(SH:688111) Ping An Securities·2024-03-21 16:00Investment Rating - The report maintains a "Recommendation" rating for Kingsoft Office (688111.SH) [2][10]. Core Viewpoints - The company achieved a revenue of 4.556 billion yuan in 2023, representing a year-on-year growth of 17.27%, and a net profit of 1.318 billion yuan, up 17.92% year-on-year [6][7]. - The subscription business performed well, with individual office service subscription revenue reaching 2.653 billion yuan, a significant increase of 29.42% year-on-year [9]. - The launch of WPS AI is expected to drive future growth, focusing on AIGC, Copilot, and Insight applications [9][10]. Financial Performance Summary - Revenue and Profit: In 2023, the company reported a total revenue of 4.556 billion yuan, with a net profit of 1.318 billion yuan. The fourth quarter alone saw a revenue of 1.286 billion yuan, up 17.99% year-on-year, and a net profit of 424 million yuan, up 39.44% year-on-year [6][7][9]. - Gross Margin and Expenses: The gross margin for 2023 was 85.30%, remaining stable compared to the previous year. The operating expense ratio decreased by 3.86 percentage points to 61.22% [7][9]. - R&D Investment: R&D expenses amounted to 1.472 billion yuan, a 10.60% increase year-on-year, with an R&D expense ratio of 32.32% [7][9]. - Cash Flow: The net operating cash flow for 2023 was 2.058 billion yuan, reflecting a year-on-year growth of 28.36% [7][14]. Business Segment Performance - Individual Subscription Services: Revenue from individual office service subscriptions was 2.653 billion yuan, with a total of 35.49 million annual paying users, an increase of 18.43% year-on-year [9]. - Institutional Subscription Services: Revenue from institutional subscriptions and services reached 957 million yuan, growing by 38.36% year-on-year [9]. - WPS AI Launch: The introduction of WPS AI is anticipated to enhance user experience and drive future revenue growth, with public testing initiated in Q4 2023 [9][10]. Future Projections - The company expects net profits for 2024, 2025, and 2026 to be 1.682 billion yuan, 2.270 billion yuan, and 3.071 billion yuan respectively, with corresponding EPS of 3.64 yuan, 4.91 yuan, and 6.65 yuan [10][12].