2024Q2 revenue is growing steadily. Kuaishou achieved revenue of 31 billion yuan in 2024Q2, YOY +11.6%.
Among them, advertising/livestreaming/e-commerce and other revenue was 17.5/9.3/4.2 billion yuan, yoy +22.1%/-6.7%/+21.3%. Q2 Kuaishou DAU and MAU were 0.395/0.692 billion, yoy +5.1%/2.8%.
The company's Q2 gross profit margin was 55.3%, yoy+5.1pct. The company's Q2 sales, management and R&D expense rates were 32.4%/2.6%/9.1%, yoy+1.3/-0.8/-2.3pct, respectively. The company's Q2 adjusted net profit of 4.7 billion yuan, adjusted net profit margin of 15.1%, yoy+5.4pct.
E-commerce: There is a high increase in forms such as shelf/search. Q2 E-commerce GMV reached 305.3 billion yuan, yoy +15%.
From a user perspective, the average monthly number of 2024Q2 buyers reached 0.131 billion, yoy +14.1%. From a merchant perspective, the average number of retail sellers increased by more than 50% year-on-year in Q2.
Product form perspective: 1) Kuaishou accelerated the pan-shelf e-commerce layout. Q2 Pan-shelf accounted for more than 25% of the total GMV, order volume increased 65% year-on-year during the 618 period, the average number of daily sales merchants in the mall increased by more than 50% year-on-year, and the average number of daily buyers increased by more than 70% year-on-year. 2) The Q2 short video e-commerce GMV growth rate was close to 70% year-on-year. We expect the e-commerce GMV growth rate to slow down with the market in the second half of the year, but supplementing forms such as shelf/search/short video and improving supply are expected to drive the penetration of e-commerce users and increase the frequency of purchases.
Advertising: Marketing product upgrades, strong growth in internal and external circulation. Q2 Kuaishou advertising revenue yoy +22%, accounting for 56.5% of total revenue. Kuaishou focuses on promoting the application of intelligent marketing solutions in various scenarios. In terms of internal circulation, Kuaishou continues to upgrade intelligent marketing launch products. The total consumption of Q2 merchants using sitewide promotion products or smart hosting products for marketing promotion reached 40% of the total internal circulation consumption. In terms of external circulation, the year-on-year growth rate in Q2 was faster than in Q1, and industries such as media information, e-commerce platforms, and local lifestyle performed well. UAX marketing products account for more than 30% of total recycling consumption.
Ecological governance of live streaming, smooth progress of innovative business. Due to continued promotion of content ecosystem governance, Q2 live streaming revenue fell 6.7% year on year, and we expect short-term live streaming growth to remain under pressure. In terms of new business, according to the performance report, the average number of daily sales merchants and products of Kuaishou Local Life increased 22% and 3% month-on-month in Q2.
The average number of daily resume submissions for the Quick Hire business also increased by more than 130%.
AI: Empower business and accelerate applications. While continuing to iterate on Kuaishou's Italian language models, visually generate large models, and recommend large models, Kuaishou is also strengthening the integration of AI and business. 2024H1 is close to 0.02 million merchants connected to Kuaishou AI, and the maximum daily consumption of AIGC marketing materials from marketing customers reached 20 million yuan in the second quarter. The company said that in the future, in addition to strengthening C-side membership payments, it will also explore B-side monetization opportunities on the other.
Investment advice: We expect revenue of 126.5/135.5/144.4 billion yuan for 2024-2026, an increase of 12%/7%/7%, and adjusted net profit to mother of 17.4/23.3/28.9 billion yuan, an increase of 69%/34%/24%. We consider a reasonable target price of HK$70, corresponding to 12 x 2025e P/E, maintaining a “buy” rating.
Risk warning: The number of Kuaishou users has fallen short of expectations, demand for advertising has declined, changes in the macro environment have exceeded expectations, and the impact of industry policies on business has exceeded expectations.