Finance report from Kingwu: Soochow Securities issued a research report stating that Kingsoft (03888) achieved revenue of 2.474 billion yuan in Q2 2024, with a year-on-year increase of 12.78% and a quarter-on-quarter increase of 15.77%. The net income attributable to the parent company was 0.393 billion yuan, with a year-on-year increase of 587.84% and a quarter-on-quarter increase of 38.23%, surpassing the bank's expectations.
The bank stated that the company's gaming business achieved revenue of 1.286 billion yuan in Q2 2024, with a year-on-year increase of 19.89% and a quarter-on-quarter increase of 41.09%. The year-on-year growth was mainly attributed to the contribution of games like 'Dust White Forbidden Zone', partially offset by the natural decline of 'SwordNet 3'; the significant increase in comparison was mainly due to the launch of 'SwordNet 3 Unbounded' on the mobile end in June 2024, bringing incremental revenue. 'SwordNet 3 Unbounded' and the company's flagship PC game 'SwordNet 3' share data across all platforms, successfully recalling a large number of old players after its launch, achieving a historical high in DAU across all platforms of 'SwordNet 3'. Looking ahead, based on the successful recall of old players on the mobile end, the continuous steady contribution of 'SwordNet 3' to income is optimistic. It has achieved the highest daily revenue across all platforms since its launch on July 8, 2024, driving the full-year game revenue guidance to be revised from the previous year-on-year increase of 10% to more than 20%. In terms of new games, the sci-fi mecha game 'Solve Limit Machine' completed its first domestic test in August 2024, with current official website reservations reaching 0.947 million. It continues to monitor the progress of the product and is optimistic about the steady rise of the company's old games, gradual realization of new games, and driving the growth of the gaming business performance.
The bank further pointed out that the recovery effect of the 'SwordNet 3' revenue across all platforms exceeded the bank's expectations. Therefore, the bank raised the EPS for 2024-2026 to 0.99/1.13/1.40 yuan (previously 0.86/0.97/1.19 yuan), corresponding to current stock price PEs of 19/16/13 times. Bullish on the steady growth of the company's gaming business, continuous advancement of the office business AI strategy, and maintains a 'buy' rating.