Orient Securities·2024-03-28 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 61.28 HKD per share, based on a 15x PE valuation for 2024 [2][12][13]. Core Insights - The company achieved a net profit of 10.3 billion CNY in 2023, marking a turnaround from losses, with expectations for continued profitability in 2024 [1][2]. - The e-commerce segment is projected to maintain a growth rate of over 25% year-on-year in 2024, driven by the expansion of product offerings and user engagement [1][2]. - Advertising revenue grew by 20.6% year-on-year in Q4 2023, with expectations for a 26% growth in Q1 2024, supported by strong internal marketing initiatives [1][2]. User Growth and Engagement - Daily Active Users (DAU) increased by 4.5% year-on-year to 383 million, while Monthly Active Users (MAU) rose by 9.4% to 700 million, reaching a historical high [1]. - The average daily usage time per user was 124.5 minutes, despite a 7% year-on-year decline [1]. - The number of users utilizing the search function on the platform grew by over 16% year-on-year, indicating enhanced user engagement [1]. Financial Performance - The company reported a total revenue of 182 billion CNY in Q4 2023, with advertising accounting for 55.9% of total revenue [1]. - Adjusted net profit for Q4 2023 was 43.62 billion CNY, exceeding Bloomberg consensus estimates [1][2]. - The gross margin improved to 53.1% in Q4 2023, reflecting a shift towards higher-margin advertising and e-commerce businesses [1]. E-commerce and Advertising Growth - The e-commerce Gross Merchandise Volume (GMV) reached 403.9 billion CNY in Q4 2023, representing a year-on-year growth of 29.3% [1]. - The penetration rate of monthly paying users in the e-commerce segment increased to 18.6%, up 2 percentage points year-on-year [1]. - Internal advertising initiatives significantly reduced the cost of customer acquisition, contributing to robust revenue growth [1]. Future Projections - The company expects to achieve an average DAU of 400 million in the second half of 2024 [1]. - Adjusted net profit forecasts for 2024 and 2025 are set at 161.23 billion CNY and 225.35 billion CNY, respectively [2][11]. - Revenue projections for 2024 are adjusted to 127.86 billion CNY, reflecting a slight decrease from previous estimates due to strategic adjustments in the live-streaming business [7][11].