Jinwu Financial News | According to BOC International Development Research Report, Kuaishou (01024)'s total revenue for the first quarter of 2024 was 29.4 billion yuan (same below), up 17% year on year, in line with expectations. Cost and expense optimization was better than expected. The adjusted net profit was 4.4 billion yuan, which greatly exceeded market expectations by 37%. E-commerce GMV increased 28% year over year, in line with expectations, and the share of pan-shelf GMV further increased to ~ 25%. The growth rate of internal circulation advertising revenue is faster than GMV, and the rapid growth of external circulation advertising has benefited from increased marketing in the media information/game/education industry.
According to the bank, e-commerce GMV is expected to increase 25% year on year in the second quarter, and e-commerce revenue will increase 23% year on year. Due to the increase in pan-shelf standard product sales, which slightly affects commission rates, online marketing revenue will increase 23% year over year, and iterations of advertising products such as site-wide promotion will continue to drive internal circulation advertising.
Considering the faster-than-expected cost optimization trend and potential increases in e-commerce and local living allowances, the bank raised its 2024 adjusted net profit forecast by 12% to $18.1 billion (+76%). Based on a price-earnings ratio of 15 times in 2024 and a profit of 19.5 billion yuan from domestic business, the target price was maintained at HK$75. Maintain a buy rating.