Analyst - Media&Entertainment Sector, Blue Lotus Research Institute

Stan Zhao

Analyst - Media&Entertainment Sector

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>On December 16th, Kuaishou launched a subscription service for its micro drama channel, we believe it marks a key step towards improving monetization;</li>
<li>The penetration rate of heavy micro drama users on the platform has steadily increased, and leveraging their loyalty and monetization efficiency may improve with the subscription model.</li>
<li>The new model could better help mitigate the macroeconomic risks posed by advertising and the content quality risks of its long-tail partners.</li>
</ul>


On December 16th, Kuaishou launched a subscription service for its micro drama channel, we believe it marks a key step towards improving monetization;
The penetration rate of heavy micro drama users on the platform has steadily increased, and leveraging their loyalty and monetization efficiency may improve with the subscription model.
The new model could better help mitigate the macroeconomic risks posed by advertising and the content quality risks of its long-tail partners.


Monetization Upgrade Kickstarts Kuaishou's Microdrama Business

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kuaishou-technology" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> and <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education (9901 HK)</a> will be added to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a> in December while <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> will be deleted.</li>
<li>Estimated one-way turnover is 2.7% and the estimated round-trip trade is HK$10.89bn (US$1.4bn) with over 1 day of ADV to trade in the adds and the delete.</li>
<li>The index committee has net added 1 stock to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a> this year to go from 82 to 83 constituents. Reaching the 100-member target will drag into 2026.</li>
</ul>



Kuaishou Technology (1024 HK) and New Oriental Education (9901 HK) will be added to the Hang Seng Index in December while New World Development (17 HK) will be deleted.
Estimated one-way turnover is 2.7% and the estimated round-trip trade is HK$10.89bn (US$1.4bn) with over 1 day of ADV to trade in the adds and the delete.
The index committee has net added 1 stock to the Hang Seng Index this year to go from 82 to 83 constituents. Reaching the 100-member target will drag into 2026.


Hang Seng Index (HSI) Rebalance: Still Baby Steps to Get to 100 Members

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

<ul>
<li>Kuaishou reported C3Q24 revenue, IFRS operating profit,and IFRS net income in-line with our estimates and consensus.The only negative was that C4Q24 guidance for operating margin missed consensus and our estimate;</li>
<li>Within mid-sized Internet platforms, Kuaishou lacks fresh secular driver, putting its stock under pressure. Advertising and GMV growth still outpace the industry and some peers. The stock is undervalued;</li>
<li>We maintain our BUY rating and slightly revised down TP to HK$72 to make up for the higher-than-expected OPEX guidance.</li>
</ul>


Kuaishou reported C3Q24 revenue, IFRS operating profit,and IFRS net income in-line with our estimates and consensus.The only negative was that C4Q24 guidance for operating margin missed consensus and our estimate;
Within mid-sized Internet platforms, Kuaishou lacks fresh secular driver, putting its stock under pressure. Advertising and GMV growth still outpace the industry and some peers. The stock is undervalued;
We maintain our BUY rating and slightly revised down TP to HK$72 to make up for the higher-than-expected OPEX guidance.


[Kuaishou (1024 HK, BUY, TP HK$72) TP Change]: C3Q24 Review: Value Stocks Face Picky Investors

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Kuaishou reported 3Q24 results: total revenue grew by 11% YoY to RMB31.1bn, in line with Bloomberg consensus estimates of RMB31.0bn; adjusted net profit increased by 24% YoY to RMB3.95bn, also in line with consensus estimates.</li><li>Average DAUs grew by 5% YoY to 408mn in 3Q24 on improved user stickiness, achieving Kuaishou’s medium DAUs target of 400mn. Looking into 4Q24E, we expect Kuaishou’s core commercial business revenue (online marketing &amp; other services) to maintain solid YoY growth of 16%, primarily driven by resilient growth of external marketing service revenue and e-commerce GMV.</li><li>As Kuaishou stepped up investments in key growth initiatives such as e-commerce, short play and AI, we lower our FY25-26E earnings forecasts by 5-8%. We trim our SOTP-derived TP to HK$85.6 (previous: HK$92.0). Maintain BUY</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Kuaishou reported 3Q24 results: total revenue grew by 11% YoY to RMB31.1bn, in line with Bloomberg consensus estimates of RMB31.0bn; adjusted net profit increased by 24% YoY to RMB3.95bn, also in line with consensus estimates.Average DAUs grew by 5% YoY to 408mn in 3Q24 on improved user stickiness, achieving Kuaishou’s medium DAUs target of 400mn. Looking into 4Q24E, we expect Kuaishou’s core commercial business revenue (online marketing &amp; other services) to maintain solid YoY growth of 16%, primarily driven by resilient growth of external marketing service revenue and e-commerce GMV.As Kuaishou stepped up investments in key growth initiatives such as e-commerce, short play and AI, we lower our FY25-26E earnings forecasts by 5-8%. We trim our SOTP-derived TP to HK$85.6 (previous: HK$92.0). Maintain BUYContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kuaishou (1024 HK) - Inline 3Q24 Results; Resilient Core Commercial Business

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Both online marketing and “other revenues” grew strongly in 3Q24.</li>
<li>Both the gross margin and the operating margin improved over the same period last year.</li>
<li>We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.</li>
</ul>


Both online marketing and “other revenues” grew strongly in 3Q24.
Both the gross margin and the operating margin improved over the same period last year.
We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.


KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved

China

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

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Kuaishou Technology (1024 HK)

Monetization Upgrade Kickstarts Kuaishou's Microdrama Business

Kuaishou transitions from IAP to a subscription model for micro dramas to improve monetization efficiency and mitigate risks. We estimate it can...

Blue Lotus Research Institute

Hang Seng Index (HSI) Rebalance: Still Baby Steps to Get to 100 Members

Kuaishou and New Oriental Ed are adds and NWD is a delete. Positioning is generally low and the stocks could move in the short-term before relative...

Brian Freitas

[Kuaishou (1024 HK, BUY, TP HK$72) TP Change]: C3Q24 Review: Value Stocks Face Picky Investors

Kuaishou's revenue and profit meet expectations, but lower operating margin guidance weighs on stock. Undervalued with strong growth potential,...

Blue Lotus Research Institute

Kuaishou (1024 HK) - Inline 3Q24 Results; Resilient Core Commercial Business

Kuaishou reported 3Q24 results: total revenue grew by 11% YoY to RMB31.1bn, in line with Bloomberg consensus estimates of RMB31.0bn; adjusted net...

CMB International

KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved

Both online marketing and “other revenues” grew strongly in 3Q24. Margins improved over the same period last year. We believe total revenue will...

Ming Lu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Monetization Upgrade Kickstarts Kuaishou's Microdrama Business

​Kuaishou transitions from IAP to a subscription model for micro dramas to improve monetization efficiency and mitigate risks. We estimate it can...

Blue Lotus Research Institute

Hang Seng Index (HSI) Rebalance: Still Baby Steps to Get to 100 Members

Kuaishou and New Oriental Ed are adds and NWD is a delete. Positioning is generally low and the stocks could move in the short-term before relative...

Brian Freitas

[Kuaishou (1024 HK, BUY, TP HK$72) TP Change]: C3Q24 Review: Value Stocks Face Picky Investors

​Kuaishou's revenue and profit meet expectations, but lower operating margin guidance weighs on stock. Undervalued with strong growth potential,...

Blue Lotus Research Institute

Kuaishou (1024 HK) - Inline 3Q24 Results; Resilient Core Commercial Business

Kuaishou reported 3Q24 results: total revenue grew by 11% YoY to RMB31.1bn, in line with Bloomberg consensus estimates of RMB31.0bn; adjusted net...

CMB International

KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved

Both online marketing and “other revenues” grew strongly in 3Q24. Margins improved over the same period last year. We believe total revenue will...

Ming Lu

Kuaishou transitions from IAP to a subscription model for micro dramas to improve monetization efficiency and mitigate risks. We estimate it can...

Kuaishou's revenue and profit meet expectations, but lower operating margin guidance weighs on stock. Undervalued with strong growth potential,...