After JD.com and MEITUAN-W, is TENCENT going to "abandon" KUAISHOU-W?
According to the disclosure document from HKEX, on April 13th, TENCENT reduced its stake in KUAISHOU-W (01024.HK) from 20.46% to 19.02% (Class B shares), selling 51.15 million shares with a value of HKD 2.6 billion.
TENCENT has been continuously reducing its holdings in important companies it has invested in over the past two years, and has successively distributed JD.com and MEITUAN-W equity.
Does this mean that TENCENT is starting to "abandon" KUAISHOU-W?
TPP has promoted cooperation with external capital partners through its investment in TENCENT. PNI's shareholding has decreased by about 1.4%. TENCENT's total shareholding ratio of 17.96% (excluding TPP) remains unchanged.
Does KUAISHOU-W still have room to rise?
KUAISHOU-W's revenue in 2022 was 94.2 billion yuan, a year-on-year increase of 16.2%. The full-year domestic operating profit was 190 million yuan, achieving a turnaround. The adjusted net loss was significantly narrowed to 5.75 billion yuan, compared to a loss of 18.85 billion yuan in the previous year.
Guosheng Securities predicts that KUAISHOU-W's users are expected to steadily increase in 2023. The company's mid-term goal is to achieve a quarterly DAU average of over 400 million in the second half of 2024.
Guosheng Securities reiterated its "buy" rating. We expect KUAISHOU-W's revenue to be 108.9/124.9/141.8 billion yuan from 2023 to 2025, with a year-on-year increase of 16%/15%/13%, and adjusted net profit of 1.1/7/16.2 billion yuan.
Due to the downward adjustment of advertising growth, based on 1x 2023e P/S for live broadcast business, 15x 2023e P/E for advertising, and 3x 2023e P/S for e-commerce, we give KUAISHOU-W a target price of HKD 86 and reiterate our "buy" rating.
