Kingsoft Office(688111) Ping An Securities·2024-10-28 11:45Investment Rating - The report maintains a "Recommendation" rating for Kingsoft Office (688111.SH) [1][7] Core Views - The company has shown steady growth in its performance for the first three quarters of 2024, with revenue reaching 3.627 billion yuan, a year-on-year increase of 10.90%, and a net profit attributable to shareholders of 1.04 billion yuan, up 16.41% year-on-year [2][3][4] - The report highlights the significant potential of WPS AI, which is expected to enhance user engagement and subscription conversion rates, contributing to future growth [6][7] Financial Performance Summary - For the first three quarters of 2024, the company achieved: - Revenue: 3.627 billion yuan, up 10.90% year-on-year - Net profit attributable to shareholders: 1.04 billion yuan, up 16.41% year-on-year - Non-recurring net profit: 999 million yuan, up 15.16% year-on-year [2][3] - In Q3 2024 alone, the company reported: - Revenue: 1.214 billion yuan, up 10.53% year-on-year - Net profit attributable to shareholders: 318 million yuan, up 8.33% year-on-year - Non-recurring net profit: 303 million yuan, up 6.66% year-on-year - Operating cash flow: 451 million yuan, up 31.20% year-on-year [3][4] Business Segment Performance - In Q3 2024, the domestic personal office service subscription business generated revenue of 762 million yuan, a growth of 17.24% year-on-year [6] - The domestic institutional subscription and service business saw revenue of 248 million yuan, a slight increase of 0.02% year-on-year [6] - The domestic institutional authorization business achieved revenue of 143 million yuan, up 8.97% year-on-year [6] - International and other businesses reported revenue of 61 million yuan, down 10.43% year-on-year [3][6] Cost and Investment Analysis - The gross margin for the first three quarters of 2024 was 85.10%, slightly down by 0.55 percentage points year-on-year [4] - The operating expense ratio decreased to 61.89%, down 0.77 percentage points year-on-year, with R&D expenses increasing to 1.262 billion yuan, up 17.26% year-on-year [4] - The company’s R&D investment in Q3 2024 was 454 million yuan, a year-on-year increase of 26.54% [4] Future Earnings Forecast - The report adjusts the earnings forecast for the company, estimating net profits for 2024-2026 to be 1.536 billion yuan, 1.969 billion yuan, and 2.505 billion yuan respectively, with corresponding EPS of 3.32 yuan, 4.26 yuan, and 5.42 yuan [7][10]