Summary of Kingsoft Corp Ltd Conference Call Company Overview - **Company**: Kingsoft Corp Ltd (3888.HK) - **Industry**: Greater China IT Services and Software - **Market Cap**: RMB 37,510 million - **Current Stock Price**: HK$30.80 - **Price Target**: HK$33.00, indicating a 7% upside potential Key Points from the Conference Call Games Segment - The new game "Goose Goose Duck" exceeded expectations with 5 million users on the first day, double the internal forecast [9] - Management anticipates overall improvement in the games segment for 2026 after a challenging 2025, aided by a strong game pipeline [9] - The game has a high Daily Active Users (DAU) count but low Average Revenue Per User (ARPU), focusing on user scale in the first half of 2026 and commercialization in the second half [9] - Expected profit margin for "Goose Goose Duck" is between 15-20% after revenue sharing with partners [9] - Other games in the pipeline include "Jian Xia World 4" and a licensed version of "Angry Birds" [9] Office Business - Revenue growth in the office segment is expected to be higher, but margins will be lower in 2026 [1] - The company is focusing on the Xinchuang initiative and increasing overseas contributions to stabilize or improve revenue growth [9] AI and Cloud Services - AI product development is progressing, but monetization on the B2C side remains challenging, similar to other B2C applications [9] - Kingsoft is increasing R&D investment in AI, which may lead to slight margin pressure [9] - The demand for AI computing is accelerating, but supply chain capabilities pose a challenge [9] Financial Metrics and Projections - **2026 Revenue Projections**: Expected to be RMB 10,825 million, up from RMB 9,761 million in 2025 [6] - **2026 EPS Projections**: Expected to be RMB 1.01, compared to RMB 0.75 in 2025 [6] - **Capex**: Anticipated to be higher than in 2025 due to increased investment in GPU [9] Customer Contributions - Xiaomi currently contributes 25% of revenue, but this is expected to decrease in 2026 as demand from other customers rises [9] Risks and Challenges - Risks include slower-than-expected processing of localization tenders and failure to improve payment ratios for WPS [11] - The GPU investment cash back cycle has lengthened to 24-36 months due to price competition [9] Additional Insights - Management's KPIs are focused on increasing paying users and AI members rather than ARPU [9] - The company is optimistic about long-term opportunities in the gaming and AI sectors, despite current challenges [9] This summary encapsulates the key insights and projections from Kingsoft Corp Ltd's recent conference call, highlighting both opportunities and risks within the company's operational landscape.