快手-W：Bullish on earnings upside

Investment Rating - The report maintains a "BUY" rating for Kuaishou with a target price of HK$97, indicating a potential upside of 66.8% from the current price of HK$58.15 [2][3][4] Core Insights - Kuaishou reported a strong quarterly performance with revenue and net profit growth of 17% and 10,348% year-over-year, respectively, surpassing consensus estimates [2][3] - The company is expected to benefit from a new HK$16 billion share repurchase program, which is anticipated to enhance its market valuation [2] - The forecast for Q2 2024 includes a revenue increase of 9.5% year-over-year, driven by resilient advertising and other services revenue growth of 22.5% and 24%, respectively [2][3] Financial Performance Summary - For FY24E, revenue is projected at RMB 125,544 million, reflecting a year-over-year growth of 10.6% [3][17] - Adjusted net profit is expected to reach RMB 17,247 million in FY24E, with a significant increase in diluted EPS to RMB 3.74 [3][15] - The gross margin is forecasted to improve to 54.2% in FY24E, while the operating margin is expected to be 11.6% [15][18] Segment Performance - The revenue breakdown for Q1 2024 shows a decline in livestreaming revenue by 8%, while advertising and other services grew by 27% and 48%, respectively [2][5] - The company anticipates continued strong momentum in its advertising and e-commerce segments for Q2 2024, with total revenue expected to grow by 9.5% year-over-year [2][3] Market Position and Valuation - Kuaishou's market capitalization is approximately HK$254 billion, with significant shareholding from Tencent Holdings (18.8%) and Morningside Venture Capital (15.6%) [4][18] - The report highlights a favorable valuation with a P/S ratio of 1.9 and a P/E ratio of 13.8 for FY24E, indicating potential for further rerating [3][4]