Kingsoft Office(688111) Dongxing Securities·2024-11-01 00:32Investment Rating - The report maintains a "Strong Buy" rating for Kingsoft Office (688111.SH) [2][5] Core Views - The company's performance in Q3 2024 met expectations, with a revenue of 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] - The report highlights the steady growth of various business segments, particularly the subscription business, which saw a revenue increase of 17.24% year-on-year in the domestic personal office service segment [3][4] - The company is leveraging AI capabilities to enhance user experience and is expanding its B-end business by targeting large private enterprises and local state-owned enterprises, contributing to stable growth in subscription services [3][4] Summary by Sections Financial Performance - For the first three quarters, the gross profit margin was 85.10%, a slight decrease of 0.55 percentage points year-on-year, indicating strong cost control capabilities [4] - The company achieved a net profit of 1.314 billion yuan in 2023, with projections for net profits of 1.561 billion yuan, 2.145 billion yuan, and 2.781 billion yuan for 2024, 2025, and 2026 respectively [5][10] Business Segments - The subscription business for personal office services generated 762 million yuan, reflecting a growth of 17.24% year-on-year, while institutional subscription and service revenue remained stable with a slight increase [3][4] - The company is capitalizing on the trend of "Xinchuang" (信创) to stabilize and recover its institutional licensing business, particularly in local state-owned enterprises [3][4] User Growth - As of September 30, the company's main products had 618 million monthly active users, a year-on-year increase of 4.92%, with WPS Office's PC and mobile monthly active devices growing by 6.95% and 3.36% respectively [4] Profitability Forecast - The report forecasts earnings per share (EPS) of 3.38 yuan, 4.65 yuan, and 6.02 yuan for 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (PE) ratios of 76.49, 55.65, and 42.93 [5][9]