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机构：中金公司
研究员：Yanyan XIAO/Yang BAI/Shiqi GE
Kuaishou’s 3Q21 revenue grew 33% YoY to Rmb20.5bn, beating market consensus by 2%. Adjusted net loss widened about Rmb52mn QoQ to - Rmb4.82bn, significantly beating our and the market’s expectations due to slightly higher-than-expected gross margin and lower-than-expected marketing expense ratio.
Trends to watch
User growth well on track; average daily time spent per DAU (daily active user) nearly 120 minutes. 3Q21 user growth of Kuaishou app improved QoQ, with the number of DAUs increasing 18% YoY to 320.4mn and that of MAUs (monthly active users) rising 19% YoY to 572.9mn. This is mainly attributable to the refined operation of the platform after the merger of product and user growth departments in June as well as the seasonal impact of summer vacation and the Tokyo Olympics. DAU/MAU ratio fell 2ppt QoQ to 55.9%. Average daily time spent per DAU on Kuaishou app increased 35% YoY to 119.1 minutes thanks to a consolidated content ecosystem and improving user experience after the adoption of the "scroll up and down" content delivery model. The firm’s 3Q21 daily average traffic (DAU multiplied by daily average time spent) grew 60% YoY, as user acquisition efficiency and full-cycle management capabilities improved. Meanwhile, the content ecosystem such as videos of short plays, knowledge and sports continued to expand. We expect the firm’s DAUs to stay stable QoQ in 4Q21, and full-year DAUs to increase 16% YoY to 308mn in 2021.
Revenue from advertising and e-commerce maintained steady growth; revenue from live streaming stabilized QoQ. The firm’s 3Q21 advertising revenue grew 76% YoY to Rmb10.9bn and advertising revenue per DAU stayed flat QoQ at Rmb34. The advertising business has maintained steady growth despite adverse external headwinds, thanks to the growth of user traffic, the opening-up of new advertising space, an improving advertising system and a growing number of advertisers. We expect 4Q21 advertising revenue to increase 50% YoY to Rmb12.8bn. The firm’s 3Q21 gross merchandise value (GMV) from e- commerce business grew 86% YoY to Rmb175.8bn, with a take rate of about 1%, slightly down QoQ. In 3Q21, the GMV contribution of Kwai Shop rose from 71.4% in 3Q20 to 90.0%, and the proportion of GMV from Kuaishou Selection increased mildly, as the firm improved the supply of products, expanded the network of service providers and enhanced exposure to public domain traffic. We expect the firm to hit its full-year GMV target of Rmb650bn. 3Q21 revenue from live streaming grew 7% QoQ to Rmb7.7bn, after consecutive quarters of QoQ decline since 2Q20, as the firm enhanced the exposure of live streaming to public domain traffic and the improving live streaming guild system boosted quality content supply. The firm upgraded the organizational structure of its overseas business in 3Q21, and various user indicators continued to grow despite tightening investment in the overseas market. The firm is currently experimenting on monetizing its live streaming and advertising businesses overseas.
Profit margin: 3Q21 gross margin fell 2.3ppt QoQ to 41.5%, as revenue sharing with live streaming, ad alliance and e-commerce service providers increased. Selling expense ratio fell 5.1ppt QoQ to 53.8%, mainly due to improving user acquisition efficiency in the domestic market and tightening overseas investments. We expect 4Q21 gross margin to decline slightly QoQ to 40% as the firm encourage business partnerships and selling expense ratio to further improve.
Financials and valuation
Given macroeconomic uncertainties, we lower our revenue forecasts 1% to Rmb79.3bn for 2021 and 10% to Rmb99.1bn for 2022. We cut our adjusted net loss forecasts Rmb2.3bn to -Rmb19.8bn for 2021 and Rmb662mn to -Rmb14.9bn for 2022, as selling expense ratio continues to fall and personnel and investment efficiency improve. We maintain an OUTPERFORM rating and a SOTP-based TP of HK$140, implying 5.0x 2022e P/S with 48% upside. The stock is trading at 3.4x 2022e P/S.
Risks
Risks associated with regulatory and content policies; disappointing user growth and/or commercialization; higher-than-expected expense ratios.