Event: The company announced 2024Q1 results. 2024Q1, the company achieved operating income of 29.408 billion yuan (yoy +16.6%), net profit of 4.120 billion yuan (loss of 876 million yuan in the same period last year), and adjusted net profit of 4.388 billion yuan (42 million yuan in the same period last year).
Comment:
Revenue growth was strong, and online marketing and e-commerce were outstanding. 2024Q1, the company achieved revenue of 29.408 billion yuan, up 16.6% year on year, according to business composition: 1) Online marketing service revenue of 16.650 billion yuan, up 27.4% year on year, mainly due to the platform's commitment to promote the application of intelligent marketing solutions and upgrade full-stack product promotion capabilities, driving an increase in the number of marketing customers and marketing customer investment consumption; 2) Live streaming revenue of 8.575 billion yuan, a decrease of 8.0% year on year, mainly due to the platform's continuous efforts to further establish a long-term sustainable live streaming ecosystem; 3) Revenue from other services (including e-commerce) RMB 4.183 billion, an increase of 47.6% over the previous year, mainly due to the platform's continuous refinement of operating strategies and expansion of the e-commerce market to drive an increase in the number of active e-commerce paying users and merchants, thereby driving the growth of e-commerce business and increasing the total number of commodity transactions.
The results of cost reduction and efficiency are remarkable, and overall profitability continues to improve. 2024Q1, the company's sales cost was 13.288 billion yuan, gross profit margin was 54.8%, up 8.4 pcts year on year, mainly due to reduced bandwidth costs and server hosting costs; sales expenses of 9.384 billion yuan, up 7.6% year on year, mainly due to the increase in the company's promotion expenses, the sales expense ratio was 31.9%, accounting for a decrease of 2.7 pcts; management expenses of 462 million yuan, management expense ratio of 1.6%; R&D expenses of 2.84 billion yuan, down 1.9 pcts year on year, mainly due to reduced employee benefits expenses. 2024Q1, the company's operating profit was 3,994 million yuan, with operating profit of 3,991 billion yuan (2023Q1 profit of 963 million yuan), foreign business operating loss of 268 million yuan (2023Q1 loss of 823 million yuan), and undistributed project profit of 271 million yuan (2023Q1 loss of 838 million yuan). As a result of cost reduction and efficiency measures, 2024Q1's domestic business profit increased significantly. In 2024, the company's domestic and foreign business will continue to improve expenditure efficiency, and overall profitability is expected to continue to increase.
The average number of daily activities reached a new high, and the high-quality content of the platform community has strong appeal. 2024Q1, the Kuaishou platform had an average daily activity of 394 million people, an increase of 3%; the average monthly activity was 697 million, a decrease of 0.4% over the previous month, and the average daily usage time of daily active users was 129.5 minutes, an increase of 4% over the previous month. The average number of daily active users reached a record high, mainly due to the company optimizing the channel structure for user growth and focusing on creating differentiated high-quality IP content with Kuaishou characteristics to attract users to open Kuaishou apps, enhance user experience and usage time, and increase user stickiness.
E-commerce continues to grow rapidly, and multiple parties are working together to build an e-commerce ecosystem. 2024Q1, the platform's e-commerce business GMV was 288.1 billion yuan, an increase of 28.2% over the previous year, mainly due to the all-round improvement of the platform's consumer experience, a significant increase in the number of buyers; the optimization and upgrading of investment policies to comprehensively cover different supply types. The number of merchants increased, and the desire of anchors to launch broadcasts increased. 2024Q1, the average number of monthly sales merchants on the platform increased by about 70% year on year; the brand product GMV increased by more than 110% year on year in the short video market and more than 80% year on year in the pan-shelf market. We believe that by strengthening commercial power, expanding the exposure and recommendation of more high-quality products; improving infrastructure, algorithms, content and business scenarios, the Kuaishou platform e-commerce ecosystem has a high room for development.
Profit prediction and rating: Optimistic about the company's development path of a short video platform differentiated from Douyin.
We expect the company's net profit to be 15.179 billion yuan, 19.052 billion yuan, and 25.576 billion yuan respectively in 2024-2026, maintaining the “Highly Recommended” rating.
Risk warning: (1) User growth falls short of expectations; (2) competition in the short video industry intensifies.