知乎-W(02390.HK):预计三季度C端业务表现稳健 广告需求恢复仍有待观察

Zhihu-W (02390.HK): It is expected that the C-side business will perform steadily in the third quarter and the return of advertising demand remains to be seen

中金公司 ·  10/24/2023

Performance preview

We forecast a net loss of $214 million for non-GAAP in 3Q23

We expect Zhihu 3Q23 to have revenue of 1.02 billion yuan, up 11.8% year on year. Bloomberg's unanimous forecast is 1.02 billion yuan; non-GAAP net loss is 214 million yuan, and Bloomberg's unanimous forecast is 251 million yuan. We judge that the gross margin performance in the third quarter was relatively good, and that spending may be relatively prudent.

Key points of interest

It is expected that the C-side business will maintain a relatively good year-on-year growth rate, and the recovery of the B-side advertising business is lagging slightly behind. C-side business: Summer is the peak season for online entertainment content consumption. At the same time, the number of users of the company's independent reading app “The Story of Yan Yan” continues to grow. According to QuestMobile, the product MAU in September 2023 has exceeded 11 million people, and the coincidence rate with Zhihu App users has dropped from 50.3% in May to 22.5% in September. We expect 3Q23 member business revenue of 461 million yuan, a year-on-year increase of 37.3%. The company's vocational education system has been basically completed. Exogenous mergers and acquisitions and endogenous growth together contributed to a year-on-year increase in revenue. We expect revenue from the vocational education business in the third quarter to be 145 million yuan, up 86.0% year on year. B-side business: The third quarter was a low season for the advertising industry, the increase in the external consumption environment was relatively limited, and the company's brand advertising attributes were strong. We judge that the recovery of the marketing services business is lagging behind. We expect 3Q23 marketing service revenue to be 384 million yuan, down 16.8% from the previous year.

Expenses are invested in a targeted manner, and the non-GAAP net loss ratio may be the same month-on-month. We judge that the company continues to benefit from improved operational efficiency and optimization of fixed costs such as bandwidth servers. The gross profit margin for 3Q23 is expected to be 53.8%, which is basically the same over the previous month. We expect the total absolute value of the three expenses (management/development/sales) to decrease slightly from month to month. Among them, investment in large models may cause a certain increase in costs, but the impact is relatively limited. Overall, we expect the 3Q23 non-GAAP net loss ratio to be 21.0%, which is basically the same as the previous month.

Pay attention to the progress of the recovery of the marketing service business in the fourth quarter. In September, Zhihu held the 2023 Business Conference to interpret Zhihu's content marketing value as a professional discussion forum around “new hires”, and launched a new content product “Job Invitation” for backers. At the same time, Double Eleven companies are also closely cooperating on e-commerce platforms. We recommend paying attention to whether the marketing service business will show more obvious positive signs during the industry's peak season in the fourth quarter.

Profit forecasting and valuation

Considering that the recovery of B-side business is relatively lagging behind, we lowered our revenue forecast for 2023 by 1.4% to 4.22 billion yuan. However, due to the large model and other expenses that may be less than expected, we adjusted the non-GAAP net loss in 2023 from 732 million yuan to 674 million yuan, basically maintaining the 2024 profit forecast. Currently, both US stocks and Hong Kong stocks are trading 1.0/0.8 times 2023/2024 P/S. Considering that the company's loss reduction process is progressing steadily, we maintain a target price of $1.55 for USD/HK$24, which is equivalent to 1.5/1.2 times 2023/2024 P/S. The upward space for US/Hong Kong stock prices is 49.0%/61.7%, respectively.


The recovery of the marketing services business fell short of expectations, the growth of the C-side business slowed, and the cost reduction and efficiency increase fell short of expectations.

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