Users: The number of active users is growing steadily, and content such as skits helps users stay highly engaged. The estimated 24Q1 Kuaishou DAU is 391 million (yoy +4.5%), MAU 690 million (yoy +5%), DAU/MAU= 56.9% (yoy-0.3pcts), and the average daily usage time per DAU is 124.9 minutes (yoy -1.5%). With the exception of the Spring Festival, 24Q1 is not a peak season for users as a whole, but the company is expected to maintain a high level of user stickiness through a diverse supply of content represented by skits. Empowered by AI technology, improved accuracy of recommendation algorithms brings a better user experience.
Commercialization: Kuaishou's 24Q1 online marketing revenue is estimated at 16.50 billion yuan (yoy +26.3%). The e-commerce ecosystem continues to improve, and Kuaishou's refined operation strategy and product marketing capabilities based on industry attributes continue to improve. The high growth of Kuaishou e-commerce GMV is expected to continue to drive strong growth in internal circulation advertising. Against the backdrop of a gradual recovery in consumption, some advertisers' budgets are expected to recover, and external circulation effect advertisements are expected to maintain their recovery momentum. The total number of user hours in a single quarter is estimated to be about 74.3 billion hours (yoy +2.9%).
Kuaishou's other revenue for 24Q1 (mainly e-commerce) is estimated at 4.01 billion yuan (yoy +41.4%). The e-commerce GMV is expected to reach 290.4 billion yuan (yoy +29%), and the e-commerce monetization rate is 1.38% (yoy+0.12pcts).
During Kuaishou's “38 Shopping Festival” in '24, order volume increased 28% year on year, and Pan-Shelf GMV increased 145% year over year. Big promotions, wide shelves, and live brand broadcasts are expected to drive e-commerce GMV to continue to grow in 24 years.
Kuaishou's 24Q1 live streaming business revenue is estimated to be 8.44 billion yuan (yoy -9.5%). Industry regulation is expected to be normalized, and Kuaishou will take the initiative to make certain content adjustments and platform governance. Live streaming provides low-level technical capabilities for the company's other “live streaming +” businesses, including quick recruitment, ideal home, etc., and is still an important part of the company's business.
Finance: Gross margin expectations improved significantly, customer acquisition costs & labor efficiency continued to be optimized. Kuaishou is expected to achieve total revenue of 28.94 billion yuan (yoy +14.8%) in 24Q1, adjusted net profit of 3.44 billion yuan (vs. consistent forecast of 3.1 billion yuan, 23Q12 million yuan), and an adjusted net interest rate of 11.9% (yoy+11.7pcts).
1) The 24Q1 gross profit margin is expected to be 52.8% (yoy+6.4pcts), and high-margin e-commerce and advertising businesses are growing strongly. 2) The estimated 24Q1 sales/management/R&D expense ratio is 32.5%/3.0%/10.4% (yoy-2.1pcts/ -0.6 pcts/ -1.2 pcts, respectively). During the peak customer acquisition season for short videos during the Spring Festival, the company maintained a cost reduction and efficiency strategy, and the overall customer acquisition ROI improved. 24Q1 is expected to maintain a steady customer acquisition cost for each new user. Human efficiency optimization has continued to be promoted. Since 21Q2, equity incentive expenses have continued to decrease, and 23Q4 equity incentive expenses were yoy-41.3%.
Profit forecasting, valuation and ratings: Live e-commerce still has dividends. Driven by it, 24Q1 is expected to maintain rapid growth in internal circulation advertising and e-commerce businesses. The company has already entered the profit release period. Under the optimization of platform governance, organizational structure, and investment strategies, user acquisition and retention efficiency continues to improve, and the adjusted net profit margin is expected to continue to improve in subsequent quarters. We raised the adjusted net profit forecast for 2024-25 to 161.0/ 23.32 billion yuan (+2.4%/+0.8% compared to the previous forecast), and added an adjusted net profit forecast of 29.73 billion yuan for 2026. The emotional connection and trust formed between Kuaishou fans and celebrities is stronger, and it has long-term monetization potential. It maintains a target price of HK$89.1 and maintains a “buy” rating.
Risk warning: User growth falls short of expected risk, advertising revenue growth falls short of expected risk, e-commerce monetization progress falls short of expected risk, risk of deviation between third-party data and actual data