Basic conclusion
Advertising: the market share of short video advertising is increasing, and the gap between short video advertising and Douyin is narrowing, and internal circular advertising is making efforts to promote business growth. 1) Internal circular advertising: it continues to grow when the conversion rate of advertising purchase and live e-commerce business are on the rise. According to the National Gold Index, the Kuaishou Technology Advertising conversion Index increased by 257% from January 19 to May 22. Advertising is needed in the stages of brand cold start and GMV climbing, and the demand for internal circulation advertising is expected to increase. 2) external circulation advertising: the demand of advertisers is gradually weakened under the repeated epidemic situation and policy influence, and it is expected to recover in the follow-up. 3) according to our estimates, the number of daily active users and advertising revenue per unit time of Douyin in 19 years are 8.9 times that of the company, respectively, and the ratio is 3.82.9 times in 21 years. The gap continues to narrow, and the subsequent advertising value will continue to release. Advertising revenue is expected to be 51.7 billion yuan in 22 years, + 21.2% of the same period last year.
Live e-commerce: compared with Douyin, the repurchase rate is higher, and the monetization rate of 1% is relatively low, which is expected to increase after entering the steady state. According to our estimates, the penetration rate of live e-commerce in 21 years is 11.12%. We believe that the high-efficiency model of "goods looking for people" will continue to improve its penetration in the medium and long term. Company side: 1) the repurchase rate continues to rise: according to the company announcement, the user repurchase rate rose from 45% in 19 years to more than 70% in 21 years. According to the National Gold Index, Kuaishou Technology's repurchase rate in the next month and quarter was 1.9 and 1.6 times that of Douyin, respectively. 2) the monetization rate is at a low level in the industry: under the strategy of rebates to support merchants to expand market share, there is still a gap between the company's current commission monetization rate of about 1% and the industry average, and it is expected to increase after entering the steady-state development stage. The revenue of other businesses (live e-commerce) is expected to be 9.5 billion yuan in 22 years, + 15.8% compared with the same period last year.
Live reward: the impact of the new rules is limited, and the follow-up business is expected to develop smoothly. In 21 years, the proportion of live broadcast reward in revenue has dropped to 38%. The company's live broadcast reward business is promoted by inclusive mode and does not pursue high reward for a single user. According to the company announcement, the compound rate of 1Q22 live broadcast reward is 9.5%, and the number of people paying is 46.3yuan compared with the same period last year, which is located at the lowest level in nearly 8 quarters. The reward business is mainly driven by the growth of paying users rather than ARPPU growth. We believe that the main impact of the new rules lies in ARPPU, minor users and content compliance, and is expected to have a limited impact on the company's cash realization. Live broadcast reward revenue is expected to be 32.7 billion yuan in 22 years, + 5.5% year-on-year.
Investment suggestion
It is estimated that the revenue from 2022 to 2024 will be 939 Universe 1160,135.8 billion yuan, and the net profit of return to the mother will be-206Company167Universe 6.2 billion yuan, corresponding to the corresponding EPS of-4.8Compay 3.9Universe 1.5 yuan. The SOTP method is used to give the 22-year target market value HK $492.3 billion, corresponding to the target price of HK $115.20. Cover for the first time, giving a "buy" rating.
Risk hint
Policy risks in the live and short video industry; user growth is not as expected; commercialization is not as expected; anchors and content creators are lost; content compliance and copyright risk; data statistics error risk.