KINGSOFT(HK:03888) KAIYUAN SECURITIES·2024-05-24 08:02Investment Rating - The investment rating for Kingsoft Corporation (03888.HK) is "Buy" (maintained) [2][5]. Core Insights - The gaming business is expected to see a rebound in growth in Q2 2024, and the progress of WPS AI commercialization is favorable for platform valuation enhancement. The net profit forecasts for 2024-2026 have been raised to 923 million, 1.166 billion, and 1.583 billion RMB respectively, reflecting year-on-year growth rates of 91.0%, 26.3%, and 35.8% [5][6]. - The company's Q1 2024 revenue increased by 8.5% year-on-year, with gaming revenue experiencing a slight decline of 0.8% year-on-year due to a lack of major updates for "Jian Wang 3" [6][7]. - The WPS office business showed steady growth in Q1 2024, with a 16.5% year-on-year increase, driven by a 24.0% rise in individual customer subscription revenue [7]. Financial Summary and Valuation Metrics - The projected operating revenue for 2024 is 9.652 billion RMB, with a year-on-year growth of 13.1%. The net profit for 2024 is expected to be 923 million RMB, representing a significant recovery from a loss of 6.048 billion RMB in 2022 [8]. - The gross margin is projected to improve to 83.7% in 2024, while the net margin is expected to reach 9.6% [8]. - The diluted EPS for 2024 is forecasted at 0.7 RMB, with corresponding P/E ratios of 34.3, 27.2, and 20.0 for 2024, 2025, and 2026 respectively [8].