知乎-W(02390.HK):盈利路径已现 入局AI探索新空间

Zhihu-W (02390.HK): The profit path has now entered AI to explore new spaces

中金公司 ·  06/06/2023  · Researches

First coverage

Investment highlights

For the first time, it covered Zhihu-W (02390) and gave it an outperforming industry rating. The target price was HK$24.00, corresponding to 1.3/1.1 times 2023/2024 P/S based on the relative valuation method. We believe that the company's community is developing ecologically healthily, various business lines are progressing steadily, and that a break-even path is already in place; while costs are manageable, we will launch a collaborative self-developed “Zhihaitu AI” Chinese model to explore more functions and possibilities. The current market capitalization reference book cash and equivalents are undervalued, and business development also provides greater flexibility. The reasons are as follows:

Commercialization is based on high-quality ecology, B-end C-end dual-wheel drive. We believe that the Zhihu community is developing healthily under the “Ecological First” strategy, and MAU is expected to reach 120 million people by 2023. The company's commercial layout starts from user needs and is highly integrated with the community ecosystem to achieve mutual transformation of good content and good business, and the ecological value is gradually released. 1) Marketing services: The company integrates advertising and CCS business teams to improve marketing capabilities. Growth is expected to return to growth in the second half of the year with the recovery of the external environment. In the medium to long term, content marketing trends will not change, and there is still great growth flexibility. 2) Paying members:

The company's membership payment rate continues to rise, revenue is growing rapidly and contributing to stable cash flow. Recently, the “Yanyan Story” was launched with additional short story reading. Member revenue is expected to grow steadily, driven by a double increase in supply and demand; 3) Vocational education: The company perfects the curriculum system through external acquisitions and uses AI technology to empower education efficiency. The revenue share quickly rose to 10%, and the second growth curve gradually became clear.

Cost reductions and increased efficiency are gradually being realized, and break-even in 2024 can be expected. We believe that the company's break-even path is gradually becoming clear. On the cost side, along with revenue growth, the share of fixed costs such as cloud services, bandwidth, and payment costs will decline, content costs will remain stable, and gross margin is expected to rise steadily to 55% in 2024; on the cost side, sales expenses management and control results are gradually showing, and management and R&D expenses are relatively stable. Considering AI technology-related R&D investment, it is expected that the sales/management/R&D expenses ratio will fall to 35%/8%/16% in 2024. Achieving a break-even balance at the non-GAAP operating level can be expected.

AI empowers community experience optimization, and big models open up value space. On April 13, Zhihu released a large AI model for Zhihu to develop multiple application scenarios for the Zhihu community. We believe that the Zhihu community has rich high-quality vertical content, and empowering users through AI is expected to enhance the user experience and release content value. At the same time, corpus positioning is scarce in the industry, and training big language models based on application and data layer advantages is expected to achieve good results and create industry-leading basic models.

What's the biggest difference between us and the market? We believe that the market value of companies with cash in hand is underestimated, and we are more optimistic about the company's C-side business growth potential, the certainty of break-even balance, and the potential benefits that AI brings to the community.

Potential catalysts: commercial growth exceeds expectations, break-even points are ahead of schedule, and AI technology is clearly improving efficiency.

Profit forecasting and valuation

For the first time, Zhihu-W covered the outperforming industry rating and target price of HK$24, corresponding to 1.3/1.1 times 2023/2024 P/S, with potential upside of 40.8%, maintaining Zh.US (ZH.US) outperforming the industry rating and target price of $1.55, corresponding to 1.3/1.1 times 2023/2024 P/S, with a potential 49.0% upward space. Currently, Hong Kong/US stocks are trading 0.9/0.7 times 2023/2024 P/S.


The recovery of the marketing services business fell short of expectations, growth in the C-side business slowed, cost reduction and efficiency fell short of expectations, and AIGC replaced some user needs.

The translation is provided by third-party software.

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