KINGSOFT(03888) 光大证券·2024-03-21 16:00Investment Rating - Buy (Maintained) [1] Core Views - The company has consistently maintained stable dividends, with its gaming business showing steady growth and office AI commercialization expected to gradually advance [1] - In 4Q23, the company achieved revenue of RMB 2.31 billion, a 9% YoY increase and a 12% QoQ increase Full-year 2023 revenue reached RMB 8.53 billion, up 12% YoY, with office business revenue growing 17% YoY and gaming business revenue increasing 6% YoY [1] - Full-year operating profit for 2023 was RMB 2.23 billion, up 19% YoY, with an OP Margin improvement of 1.6 percentage points to 26.1%, leading to a turnaround in net profit attributable to shareholders to RMB 480 million [1] - The dual subscription model in the office business provided strong growth momentum, with C-end subscription revenue up 29% YoY and B-end subscription revenue up 38% YoY in 2023 [1] - The company's gaming business is expected to see a low-to-high revenue trend in 2024, with multiple game launches planned, including the mobile game "JX3: Infinite" and other classic titles [2] - The company's 2024/25 net profit attributable to shareholders is forecasted to increase by 5%/22% to RMB 1.05 billion/RMB 1.69 billion, with a new 2026 forecast of RMB 2.31 billion [2] Financial Performance - 2023 full-year revenue: RMB 8.53 billion, up 12% YoY [1] - 2023 full-year operating profit: RMB 2.23 billion, up 19% YoY [1] - 2023 full-year net profit attributable to shareholders: RMB 480 million, a turnaround from previous losses [1] - 2023 office business revenue: RMB 4.56 billion, up 17% YoY [1] - 2023 gaming business revenue: RMB 3.98 billion, up 6% YoY [2] - 2024E/2025E/2026E revenue: RMB 9.93 billion/RMB 11.47 billion/RMB 13.21 billion [7] - 2024E/2025E/2026E net profit attributable to shareholders: RMB 1.05 billion/RMB 1.70 billion/RMB 2.31 billion [7] Office Business - Office business revenue in 2023: RMB 4.56 billion, up 17% YoY, driven by C-end and B-end subscription growth [1] - C-end subscription revenue grew 29% YoY, while B-end subscription revenue grew 38% YoY [1] - MAU for main products increased by 4.36% YoY to 598 million, with cumulative paying individual users up 18.43% YoY to 35.49 million [1] - WPS 365 was upgraded to provide enhanced content creation, collaboration, and digital asset management capabilities [1] - WPS AI entered public testing in 4Q23, laying the foundation for future commercialization [1] Gaming Business - Gaming business revenue in 2023: RMB 3.98 billion, up 6% YoY, driven by the flagship game "JX3" and new titles [2] - Multiple game launches are planned for 2024, including "JX3: Infinite" and other classic titles [2] - Gaming revenue is expected to show a low-to-high trend in 2024, with mid-to-high single-digit growth for the full year [2] Valuation and Forecasts - 2024E/2025E/2026E revenue: RMB 9.93 billion/RMB 11.47 billion/RMB 13.21 billion [7] - 2024E/2025E/2026E net profit attributable to shareholders: RMB 1.05 billion/RMB 1.70 billion/RMB 2.31 billion [7] - 2024E/2025E/2026E EPS: RMB 0.36/RMB 0.79/RMB 1.27 [7] - 2024E/2025E/2026E P/E ratio: 18x/13x/10x [7] Market Data - Current share price: HKD 24.80 [3] - Total market capitalization: HKD 33.21 billion [4] - 52-week high/low: HKD 42.35/HKD 18.40 [4] - 3-month turnover rate: 41.9% [4]