According to a research report from Bocom Intl, Kuaishou (01024) is expected to have Q2 revenue of 30.5 billion yuan, a YoY increase of 10%. The bank maintains its adjusted net income forecast at 4.4 billion yuan, a YoY increase of 63%, corresponding to an adjusted net profit margin of 14.4%. QoQ, it decreased by 0.5 percentage points. The main reason is that the increase in subsidies for e-commerce and local life may slightly increase marketing expenses.
The bank lowered its forecast for Q2/yearly growth in e-commerce GMV to 19%/21% (originally 25%/24%). The main reasons are: 1) The physical e-commerce market grew by only 5.1% in May/June under the influence of a high base, and the promotion effect was not sufficient. 2) Traditional shelf e-commerce platforms have optimized their strategies and attracted some users back. The bank expects the e-commerce commission rate in Q2 to be about 1.22%, which is unchanged YoY. Considering the optimization of AI-enabled marketing products and the promotion of sellers' willingness to invest, the bank expects the income from internal advertising to grow faster than e-commerce GMV, while external advertising will maintain double-digit YoY growth. The decline in live streaming revenue may be lower than previously expected, with a YoY decline of around -13%.
The bank has adjusted its revenue and net income forecasts for 2024. Considering the possible slowdown in GMV growth under intensified industry competition, based on a 12x average PE ratio of comparable companies in 2024 and Kuaishou's estimated net income of 18.2 billion yuan (a YoY increase of 77%) in 2024, it has lowered its target price to HK$55 (from HK$75). The trend of improving revenue structure and driving gross margin remains unchanged. The marketing expense ratio (32% in Q1) still has a large room for optimization compared to 10-25% for other companies. The trend of gradually releasing profit capacity remains unchanged, and the bank maintains a buy rating.