KINGSOFT(HK:03888) EBSCN·2024-05-27 08:02Investment Rating - The report maintains a "Buy" rating for the company [3][4]. Core Insights - The company achieved a revenue of 2.137 billion RMB in Q1 2024, representing an 8% year-on-year increase, while operating profit rose by 31% to 602 million RMB, leading to a net profit of 285 million RMB, a 48% increase year-on-year [2]. - The commercialization of WPS AI has begun, with the number of active devices exceeding 600 million. The office business generated 1.225 billion RMB in revenue, a 17% year-on-year increase, driven by a 25% increase in C-end subscription revenue [2]. - The gaming segment saw a revenue of 912 million RMB in Q1 2024, a 1% year-on-year decline, but new game launches are expected to boost revenue by 10% for the year [3]. Summary by Sections Financial Performance - Q1 2024 revenue: 2.137 billion RMB, up 8% YoY, down 7% QoQ - Operating profit: 602 million RMB, up 31% YoY, OP Margin at 28.2%, up 4.8 percentage points - Net profit: 285 million RMB, up 48% YoY [2]. Office Business - Revenue from office business: 1.225 billion RMB, up 17% YoY - C-end subscription revenue: 735 million RMB, up 25% YoY - B-end subscription revenue: 242 million RMB, up 14% YoY - B-end authorization revenue: 194 million RMB, up 6% YoY [2]. Gaming Business - Q1 2024 gaming revenue: 912 million RMB, down 1% YoY - Anticipated new game launches, including "Sword Net 3 Unlimited," expected to enhance revenue by 10% for the year [3]. - The game "Dust White Zone" has shown significant growth in user engagement and revenue since its launch [3]. Profit Forecast and Valuation - Projected net profits for 2024-2026: 1.051 billion RMB, 1.695 billion RMB, and 2.307 billion RMB respectively - Revenue projections for 2024-2026: 9.927 billion RMB, 11.467 billion RMB, and 13.213 billion RMB respectively [4][7].