2024-05-24 10:01Investment Rating - The report maintains a "Buy" rating for Kuaishou Technology with a target price adjusted to HKD 71, indicating a potential upside of 20% from the current price of HKD 59.15 [7][19]. Core Insights - Kuaishou's Q1 2024 revenue reached RMB 29.4 billion, a year-on-year increase of 16.6%, exceeding market expectations by 1.3%. The adjusted net profit was RMB 4.39 billion, surpassing market forecasts by 37% [6][7]. - The company announced a share buyback plan of up to HKD 16 billion over the next three years, representing about 6% of its current market capitalization, aimed at enhancing shareholder returns [6]. - The overall user engagement remains healthy, with Daily Active Users (DAU) at 394 million, up 5.2% year-on-year, and Monthly Active Users (MAU) reaching 697 million, a 6.6% increase [6]. Revenue and Profitability - The gross margin improved by 8.4 percentage points to 54.8%, primarily due to changes in revenue structure and reduced bandwidth costs [6]. - Advertising revenue for Q1 2024 was RMB 16.7 billion, reflecting a 27% year-on-year growth, driven by strong performance in e-commerce and external advertising [6]. - E-commerce revenue and other income reached RMB 4.2 billion, a significant 48% increase year-on-year, with Gross Merchandise Value (GMV) at RMB 288 billion, up 28% [6][8]. User Engagement and E-commerce Growth - Monthly average purchasing users increased by 22.4% to 126 million, and the number of active merchants grew by 70% year-on-year [6]. - Brand merchandise GMV in the short video segment grew over 110% year-on-year, while the general merchandise segment saw an increase of over 80% [6]. - The report anticipates a 25% year-on-year growth in e-commerce GMV for Q2 2024, supported by the ongoing enhancement of the e-commerce ecosystem [6]. Financial Forecasts - The report projects revenues of RMB 126.95 billion for FY24, with adjusted net profits expected to reach RMB 16.96 billion, reflecting a 65% increase from FY23 [8][12]. - The adjusted P/E ratios for FY24 and FY25 are forecasted at 17x and 14x, respectively, indicating a positive outlook on profitability [7][8].