Brief performance review
On August 20, 2024, the company disclosed the results announcement for the second quarter of 2024. In 2024Q2, revenue was 31 billion yuan, up 11.6% year on year, and non-IFRS net profit was 4.68 billion yuan, up 73.7% year on year.
Management analysis
Adhere to the strategy of improving quality and efficiency, and profit margins have reached a record high. 2024Q2's gross margin reached 55.32%, +5.1pct year over year and +0.5pct month-on-month. Expense side: sales expenses 10.04 billion yuan, sales expense ratio 32.4%, year-on-year +1.29pct, month-on-month; R&D expenses 2.8 billion yuan, R&D expenses 9.1%, -2.32pct, month-on-month -0.61 pct; management expenses 0.79 billion yuan, management expenses rate 2.6%, year-on-year -0.85pct, month-on-month +0.99pct.
The company built an AI product matrix on the basis of the trillion-dollar parameter model. In the first half of the year, nearly 0.02 million merchants used the AI matrix to achieve optimal operation.
DAU has grown with high quality, and user operation efficiency has improved. 2024Q2, Kuaishou DAU reached 0.395 billion, up 5.1% year on year, MAU reached 0.692 billion, up 2.7% year on year, and average user usage time was 122 minutes, up 9.5% year on year. The company creates an active community atmosphere to improve long-term user retention, and refined operation strategies promote user retention and increase ROI.
Online marketing: Intelligent marketing solutions drive advertising revenue growth, and external circulation advertising has grown significantly. 2024Q2's online marketing revenue was 17.5 billion yuan, up 22.1% year on year, and the daily peak consumption of AIGC materials for 2024Q2 marketing customers reached 20 million yuan. Internal circulation advertising: Achieving steady growth, full-site promotion solutions or smart hosting products account for 40% of consumption, and minimalist automated marketing solutions for small and medium-sized merchants drive consumption of +60% for small and medium-sized businesses; external circulation advertising: the year-on-year growth rate has further increased month-on-month, and industries such as media, e-commerce platforms, and local lifestyle have grown significantly. The UAX penetration rate of external circulation intelligent marketing products continues to increase, accounting for more than 30% of consumption.
E-commerce: In the short term, it has been challenged by weak consumer demand, and diversified global management capabilities have improved.
In 2024Q2, the company's e-commerce GMV reached 305.3 billion yuan, a year-on-year increase of 15%. Monthly active buyers reached 0.131 billion, up 14.1% year on year, and the number of monthly sales merchants increased by more than 50% year on year.
Pan-shelf e-commerce GMV accounted for more than 25%, search e-commerce GMV increased by more than 80% year over year, and short video e-commerce GMV increased nearly 70% year over year.
Live streaming: Iterate refined operating models to achieve a healthy ecosystem. In 2024Q1, the company's live streaming business revenue was 9.3 billion yuan, down 6.7% year on year.
Profit Forecasts, Valuations, and Ratings
We expect the company's NON-IFRS net profit for 2024/2025/2026 to be 18/25.2/31.5 billion yuan, respectively, and the current stock price corresponding to 2024/2025/2026 NON-IFRS PE will be 9.84/7.03/5.62X respectively, maintaining a “buy” rating.
Risk warning
Advertising recovery falls short of expected risk; e-commerce GMV growth falls short of expected risk due to weak consumption; user growth falls short of expected risk.