KUAISHOU TECHNOLOGY(1024.HK)：SOLID 3Q23; PROGRESSIVELY ENHANCED MONETISATIONS ON DIFFERENTIATED AND EXTENSIVE USERS WITH IMPROVED MINDSHARE-格隆汇

机构：中银国际
研究员：Raphael CHEN

　　3Q23 total revenue grew healthily at 21% YoY to RMB27.9bn, 1% above consensus and in line with BOCIe. Users remain solid with MAUs/ DAUs both continuing to achieve record high at 685m/ 387m respectively. Online ad, eC & others and live streaming remain resilient with revenue logging 27% YoY, 37% YoY and 9% YoY respectively.
　　Non-IFRS NPM further expanded to 11.4% on GPM expansion and disciplined opex. We expect Co. will be committed to execute their strategies for key and various innovative businesses to achieve sustainable growth in users, revenue and profitability on differentiated and extensive user base and improved mindshare. Maintain BUY and TP of HK$78.0 on 17.0x 2024E Non-IFRS EPS.
　　Key Factors for Rating
　　Enhanced monetisation diversities and capabilities on improved user mindshare. We remain confident on Kuaishou’s sustainable high quality growth in users, revenue across all 3 integrated key business segments and profitability down the road due to Co.’s committed executions. These primarily include user acquisition, content/ SKUs/ consumption scenarios enrichment, product/ service iteration, infrastructure built-up, ecosystem integration, algorithm optimisation, segmented operations, progressive monetisation, standardised mechanisms, organisation restructure, tech digitisation, efficiency initiatives and AIGC applications. Thus, we largely keep our 2023-25 revenue and earnings estimations unchanged for key business segments. n 3Q23 results: another solid quarter with remarkable users and profitability. Total revenue grew 21% YoY to RMB27.9bn, 1% above consensus and in line with BOCIe. MAUs/ DAUs continued to achieve record high at 685m/ 387m respectively with D/M ratio of 56.5%. DTSPU notably improved to around 130 mins mainly due to optimised algorithm and enriched contents, leading to 7% YoY increase of total time spent. Online ad revenue rose 27% YoY driven by robust internal ad and accelerated external ad. Media especially short plays, game especially mini game, education & training and healthcare exhibited strong growth. eC GMV gained 30% YoY primarily driven by over 120m monthly eC buyers, increased purchase frequency and AOV, within which shelf based eC channels contributed nearly 20% of GMV and search GMV increased by ~70% YoY.
　　Streaming revenue grew healthily at 9% YoY leveraging AIGC applications and Co. has achieved good progress regarding live streaming+ scenarios, especially Kwai Hire and Ideal Housing. Overseas strategies remain consistent in key countries.
　　GPM further expanded 5.4ppts YoY/ 1.5ppts QoQ to 51.7%, above consensus.
　　OPM was 7.9%, with domestic OPM reaching 11.6% and overseas operating loss continuing to shrink to -RMB635m. Adjusted EBITDA reached 17.8%. Non-IFRS NPM improved to 11.4%, beating consensus by 9.6%. As of Oct 23, Co. has utilised c.17% of their HK$4bn share buyback quota till 2024 AGM.
　　Key Risks for Rating
　　Downside risks: 1) regulations; 2) slower-than-expected macro and ad recovery; 3) ineffective strategy executions; 4) content supply and source; 5) ineffective overseas monetisation; 6) main shareholders’ share distribution.
　　Valuation
　　Maintain BUY and our TP of HK$78.0, derived from unchanged 17.0x 2024E Non-IFRS EPS of HK$4.61 with latest FX rate, implying 2.8x 2023E P/S and 0.3x 2024E PEG.