,

Size: px

Start display at page:

Download ","

贡褚
5 years ago
Views:

1 Company Research Results Review Kingsoft Corp (3888 HK) Healthy 2018 Outlook On 21 Mar, Kingsoft Corp (Kingsoft) announced FY17 net profit at RMB3.2bn, while core profit of RMB1,036m (+48% yoy) exceeded our estimate by 9%. Post analyst briefing, we are upbeat on 2018 outlook and tweak F-19F core earnings growth to 35%/41% yoy (from 32%/40%) on (1) New self-developed titles to be released by 2H18 and (2) Cloud business and office software continuing to shine with wider margin. Keep BUY with higher SOTP-TP of HKD34.00 on cloud business higher valuation (+36.0% Upside) core earnings beat our forecast by 9%. Albeit the slower online game sales due to the natural life cycle of Kingsoft s older titles, the FY17 core earnings at RMB1,036m, up 48% yoy, beat our forecast by 9%. Thanks to (1) robust customer usage in cloud segment and (2) government agencies boosted sales growth in office software business. As such, we tweak our core profit growth in -FY19 to +35%/41% yoy (from +32%/40%) with 3-year revenue CAGR (FY17-FY20F) at 34%. Cloud business growth with wider margin. Its management would likely focus on the optimization of business instead of pursuing absolute growth, we expect Cloud business will continue to have good growth momentum, becoming profitable in the next few years. According to IDC, Kingsoft is the third largest IaaS public cloud service provider in China by 1H17, driven by video cloud and gaming cloud business. From IDC and China Public Cloud Service Tracker, PRC public Cloud Service jumped 55.5% yoy in 1H17. In particular, IaaS market had a remarkable +62.2% yoy growth over the same period, on higher online entertainment service demand like live streaming, short video and gaming. WPS and Gaming business stays positive. During conference call, the management is optimistic on the monetization of WPS including value-added service as well as advertisement. Its subsidiary, Beijing Kingsoft Office Software has filed an IPO application for a listing on Shenzhen s ChiNext likely by 3Q18. On the gaming side, three new mobile titles, namely Yunshangyuyi (YSYY), JX Online II & III, are expected to be released and start sales by end-2018, with the JX online III revamped version already launched in Dec So, we keep this sales in 2018 at 25% yoy growth, projecting a 22% CAGR FY17-20F. SOTP-TP rises to HKD34.00 (from HKD30.96); Keep BUY. Our SOTP derived TP lifts to HKD34.0, implying 26.9x F P/E consistent with mobile global mobile internet sector mean. It comprises of (1) online games valuation of HKD11.7/s with 11.6x F P/E, in-line with sector s past 3-year average; (2) larger cloud computing at HKD4.9/s, 17.5% of TP (previous: HKD3.2/s, 12%), due to post-money valuation reaching USD2.37bn after the USD720m series D financing. Key risks: intense cloud business competition, longer-than-expected game testing period. Figure 1: Financial Summary Year to Dec 31 (RMBm) FY16A FY17A F FY19F FY20F Revenue 3,834 5,181 7,095 9,472 12,565 Operating Profit ,178 1,610 2,136 Reported Profit (271) 3,202 1,136 1,561 2,055 Underlying Profit 700 1,036 1,478 2,025 2,677 Underlying EPS (RMB) Underlying EPS growth (%) P/E P/B ROE (%) ROA (%) China TMT Technology 13 April 2018 BUY Target price HKD34.00 Previous Rec/Target Last price (12 Apr 18) Buy HKD30.96 HKD25.00 Upside/downside (%) 36.0 HSI Mkt cap (HKDb/USDb) 34.3/ week range (HKD) Avg trading volume daily (USDm) Free float (%) 55 Performance HKD Apr-17 Price(LHS) Performance 1M 3M 12M Absolute (%) (11.2) (7.6) 23.8 Absolute (USD, %) (11.3) (7.9) 22.5 Relative to HSI (%) (8.8) (5.7) (3.0) Company background Kingsoft Corporation Ltd. develops and markets computer software. The Company develops role-playing computer games and security, word processing, and spreadsheet software. Raymond Lam SFC CE No.: BGL raymond.lam@guosen.com.hk Dec-17 Rel. to HSI(RHS) 120% 110% 100% 90% 80% 70% See the last page of this report for important disclosures 1

2 Figure 2 SOPT Valuation (as closed price on 12 April 2018) 2018F Non-GAAP NP Revenue P/E Ownership Discount Value Value per Share (RMBm) (RMBm) (%) (%) (RMBm) (RMB) Online Game 1,755 3,900 12x 90% 10% 16, Cloud computing 50% 10% 6, Office software and others x 50% 10% 2, Cheetah Mobile 47% 5, Net Cash 8, TP (HKD) 34.0 Implied P/E 26.9 Current price 25.0 Upside 36.0% Figure 3 P/L details and forecast RMBm FY16 FY17 F FY19F FY20F Online game 2,546 3,120 3,900 4,680 5,616 Cloud 737 1,333 2,236 3,450 5,072 WPS and others ,342 1,876 Total Revenue 3,834 5,181 7,095 9,472 12,565 YoY growth (%) -32% 35% 37% 34% 33% Cost of revenue (1,292) (2,169) (2,944) (3,931) (5,214) Gross profit 2,541 3,012 4,151 5,541 7,350 Gross margin (%) 66% 58% 59% 59% 59% R&D costs, net of gov grants (1,085) (1,446) (1,916) (2,558) (3,393) Selling and distribution expenses (323) (545) (780) (1,042) (1,382) Administrative expenses (197) (257) (326) (398) (528) Share-based compensation costs (55) (235) (390) (521) (691) Other operating income Other expenses (8) (9) (21) (28) (38) Opex/ sales excl. SBC (%) 42% 43% 43% 42% 42% Operating profit ,178 1,610 2,136 OP margin (%) 24% 16% 17% 17% 17% Operating profit excluding SBC 980 1,049 1,568 2,131 2,827 OP margin excl. SBC (%) 26% 20% 22% 23% 23% Non-operating gains/(losses), net (1,152) (156) Share of gain (losses) of JV Share of gain (losses) of associates (7) 51 (20) (26) (33) Finance income Finance costs (107) (112) (165) (174) (174) Profit before tax (82) 912 1,403 1,951 2,596 Taxation (177) (134) (233) (321) (427) Less: Non-controlling interests (22) Profit attributable to Owners of the parent (271) 3,202 1,053 1,499 1,995 Non-GAAP net profit 700 1,036 1,396 1,963 2,617 YoY growth (%) 19% 48% 35% 41% 33% Non-GAAP net margin (%) 18% 20% 20% 21% 21% Guosen Securities (HK) 2

3 Figure 4 Earnings forecasts adjustment Before After +/- RMBm FY17F F FY19F FY17A F FY19F FY17F F FY19F Cheetah Mobile 5,338 6,406 7,687 5,338 6,406 7,687 --% --% --% Online game 3,182 3,962 4,754 3,120 3,900 4,680 (2%) (2%) (2%) Cloud, WPS and others 1,996 2,795 3,913 2,061 3,195 4,792 3% 14% 22% Net Revenue 5,178 6,756 8,667 5,181 7,095 9,472 0% 5% 9% Gross profit 3,029 3,952 5,070 3,012 4,151 5,541 (1%) 5% 9% Operating profit 802 1,122 1, ,178 1,610 2% 5% 9% EBITDA 1,587 2,151 2,879 1,610 2,232 2,996 1% 4% 4% Profit before tax 880 1,421 1, ,403 1,951 4% (1%) 6% Profit after tax 717 1,188 1, ,170 1,630 9% (1%) 6% Reported net profit attributable to Owners of the parent 2,975 1,069 1,413 3,202 1,053 1,499 8% (1%) 6% Non-GAAP net profit 954 1,338 1,767 1,036 1,396 1,963 9% 4% 11% Key metrics and assumptions - - GPM 59% 60% 60% 58% 59% 59% ppt ppt ppt Opex/ revenue ratio 44% 42% 41% 43% 43% 42% ppt 1.00 ppt 1.00 ppt Operating margin 15% 20% 21% 16% 17% 17% 0.23 ppt ppt ppt Operating margin excluding SBC 21% 25% 25% 20% 22% 23% ppt ppt ppt Non-GAAP net margin 18% 23% 23% 20% 20% 21% 1.58 ppt ppt ppt Figure 5 Peers comparison table (as closed price on 12 April 2018) 3-mth avg t/o (US$m) PER FY17 PER PER FY19 EPS YoY% EPS FY19 YoY% Div yld FY17 (%) Div yld (%) Company Ticker Price Mkt cap (US$m) 3-Yr EPS Cagr (%) PEG Online Game TENCENT 700 HK , IGG INC 799 HK , BOYAA INTERACTIV 434 HK N/A N/A FEIYU 1022 HK N/A N/A N/A N/A N/A N/A N/A LINEKONG INTERAC 8267 HK N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A NETEASE INC-ADR NTES US , CHANGYOU.COM-ADR CYOU US , Mobile Internet BAIDU INC-SP ADR BIDU US , WEIBO CORP-ADR WB US , FACEBOOK INC-A FB US , Cloud Computing VIANET-ADR VNET US N/A N/A N/A N/A N/A N/A N/A N/A N/A SALESFORCE.COM CRM US , IBM IBM US , ORACLE CORP ORCL US , AMAZON.COM INC AMZN US 1, , Application Software YONYOU NETWORK-A CH , NEUSOFT CORP-A CH , N/A P/B P/B FY19 ROE FY17 (%) Guosen Securities (HK) 3

4 Figure 6 3-yr online games forward PE band chart Forward PE 24.0 Figure 7 3-yr cloud computing forward PS band chart Forward PE Jan Jul Jan Jul Jan Jul Jan Apr-15 4-Oct-15 4-Apr-16 4-Oct-16 4-Apr-17 4-Oct-17 4-Apr-18 Figure 8 12 months forward PE band chart Figure 9 12 months forward PB band chart Guosen Securities (HK) 4

5 Summary financial statements(year to Dec 31) Profit & Loss (RMBm) FY16A FY17A F FY19F FY20F Financial Ratios FY16A FY17A F FY19F FY20F Revenue 3,834 5,181 7,095 9,472 12,565 Gross profit margin (%) Revenue growth (%) (32.5) Operating profit margin (%) Cost of sales (1,292) (2,169) (2,944) (3,931) (5,214) Underlying profit margin (%) Gross profit 2,541 3,012 4,151 5,541 7,350 Net debt/equity (%) (117) (65.7) (61.6) (62.3) (63.8) Other income/(expense) (11) Net debt/total assets (%) (52.2) (44.7) (43.7) (44.2) (45.1) Operating expenses (1,605) (2,248) (3,022) (3,997) (5,302) Current ratio (%) Operating profit ,178 1,610 2,136 Dividend payout (%) Operating profit growth (%) 70.7 (12.0) Interest cover Other non-operating inc/(exp) (1,152) (156) Dividend cover Finance income Acct. receivable turnover days Finance expenses (107) (112) (59) (63) (63) Acct. payable turnover days Associates & JCE Inventory turnover days Profit before taxation (82) 912 1,509 2,028 2,670 Cash cycle days Taxation (177) (134) (247) (331) (437) Dupont Analysis FY16A FY17A F FY19F FY20F Non-controlling interests 22 (95) (126) (136) (179) Tax burden (%) Net profit (271) 3,202 1,136 1,561 2,055 Interest burden (%) (8.8) Other Adjustments on UP 970 (2,166) Operating profit margin (%) Underlying Profit 700 1,036 1,478 2,025 2,677 Asset turnover Underlying profit growth (%) Leverage ratio EPS (RMB) (0.210) ROA (%) Underlying EPS (RMB) ROE (%) Underlying EPS growth (%) DPS (RMB) DPS growth (%) 6.9 (0.1) Balance Sheet (RMBm) FY16A FY17A F FY19F FY20F Cashflow (RMBm) FY16A FY17A F FY19F FY20F Fixed assets 1,098 1,329 1,573 1,874 2,248 EBIT ,178 1,610 2,136 Associates & JCE 572 4,056 4,248 4,507 4,851 Depreciation & amortization Others 2,804 1,833 1,978 2,210 2,444 Interest expense 9 (17) Non-current assets 4,474 7,217 7,798 8,591 9,543 Change in working capital (321) 154 (515) Inventories Tax paid (197) (194) (208) (298) (395) Debtors & prepayments 2,896 1,847 2,037 2,589 3,288 Other operating cashflow Bank deposits & cash 9,993 8,599 8,901 10,112 11,827 Operating activities 1,393 1,890 1,528 2,780 3,704 Others Capex (683) (692) (945) (1,201) (1,525) Current assets 13,105 10,545 11,044 12,813 15,233 Free cash flow 710 1, ,579 2,179 Bank & other borrowings Disposal of non-current assets 153 (1,408) Trade & payables Associates & JCE (net) (209) (163) Taxation Interest received Others 2,671 3,175 2,802 3,328 4,023 Dividends received Current liabilities 3,731 3,854 3,527 4,147 4,962 Other investing cashflow (2,474) (1,976) Bank & other borrowings Investing activities (3,128) (4,108) (945) (1,201) (1,525) Others 3,408 1,068 1,083 1,108 1,141 New loans raised Non-current liabilities 3,846 1,355 1,370 1,396 1,428 Repayment of loans Net assets 10,002 12,553 13,946 15,861 18,385 Dividends paid (110) (271) (222) (304) (402) Share capital Other financing cashflow 106 (320) (59) (63) (63) Premium & reserves 7,810 12,076 13,380 15,158 17,502 Financing activities 601 (266) (281) (367) (465) Shareholders' funds 7,815 12,081 13,385 15,164 17,508 Inc/(dec) in cash (1,134) (2,484) 301 1,212 1,715 Non-controlling interests 2, Cash at beginning of year 6,629 5,776 3,036 3,338 4,550 Total equity 10,002 12,553 13,946 15,861 18,385 Foreign exchange effect 281 (256) BVPS (RMB) Cash at end of year 5,776 3,036 3,338 4,550 6,264 Guosen Securities (HK) 5

6 Information Disclosures Stock ratings, sector ratings and related definitions Stock Ratings: Buy: A return potential of 10 % or more relative to overall market within 6 12 months. Neutral: A return potential ranging from -10% to 10% relative to overall market within 6 12 months. Sell: A negative return of 10% or more relative to overall market within 6 12 months. Sector Ratings: Overweight: The sector will outperform the overall market by 10% or higher within 6 12 months. Neutral: The sector performance will range from -10% to 10% relative to overall market within 6 12 months. Underweight: The sector will underperform the overall market by 10% or lower within 6 12 months. Interest disclosure statement The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates serves as an officer of the listed companies covered in this report and has no financial interests in the companies. Guosen Securities (HK) Brokerage Co., Ltd. and its associated companies (collectively Guosen Securities (HK) ) has no disclo sable financial interests (including securities holding) or make a market in the securities in respect of the listed companies. Guosen Securities (HK) has no investment banking relationship within the past 12 months, to the listed companies. Guosen Securities (HK) has no individual employed by the listed companies. Disclaimers The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred rath er than profit made as a result of buying and selling securities. The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any buying/selling or dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or will se ek investment banking or other business (such as placing agent, lead manager, sponsor, underwriter or proprietary trading in such securities) with the listed companies. Individuals of Guosen Securities (HK) may have personal investment interests in the li sted companies. This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy or completeness of such information is not guaranteed by Guosen Securities (HK). This report does not take into account the part icular investment objectives, financial situation or needs of individual clients and does not constitute a personal investment recommendation to anyone. Clients are wholly responsible for any investment decision based on this report. Clients are advise d to consider whether any advice or recommendation contained in this report is suitable for their particular circumstances. This report is not intended to be an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK) s written authorization, any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to legal action. Such infor mation and opinions contained therein are subject to change and may be amended without any notification. This report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdictio n where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guosen Securities (HK) and its group companies to any registration or licensing requirement within such jurisdiction. Guosen Securities (HK) 6

7 信息披露公司评级行业评级及相关定义公司评级买入 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅在 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅介于 -10% 与 10% 之间 ; 减持 : 我们预计未来 6-12 个月内, 个股相对大盘跌幅大于 10% 行业评级超配 : 我们预计未来 6-12 个月内, 行业整体回报高于市场整体水平 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 行业整体回报介于市场整体水平 -10% 与 10% 之间 ; 低配 : 我们预计未来 6-12 个月内, 行业整体回报低于市场整体水平 10% 以上利益披露声明报告作者为香港证监会持牌人士, 分析员本人或其有联系者并未担任本研究报告所评论的上市法团高级管理人员, 也未持有其任何财务权益本报告中, 国信证券 ( 香港 ) 经纪有限公司及其所属关联机构 ( 合称国信证券 ( 香港 )) 并无持有该公司须作出披露的财务权益 ( 包括持股 ), 在过去 12 个月内与该公司并无投资银行关系, 亦无进行该公司有关股份的庄家活动本公司员工均非该上市公司的雇员免责条款证券价格有时可能非常波动证券价格可升可跌, 甚至变成毫无价值买卖证券未必一定能够赚取利润, 反而可能会招致损失本研究报告内容既不代表国信证券 ( 香港 ) 的推荐意见, 也并不构成所涉及的个别股票的买卖或交易要约国信证券 ( 香港 ) 或其集团公司有可能会与本报告涉及的公司洽谈投资银行业务或其它业务 ( 例如配售代理牵头经办人保荐人包销商或从事自营投资于该股票 ) 国信证券 ( 香港 ) 不排除其员工有个人投资于本报告内所提及的上市法团报告中的资料均来自公开信息, 我们力求准确可靠, 但对这些信息的正确性公正性及完整性不做任何保证本报告没有考虑到个别客户特殊的投资目标财务状况或需要, 并不构成个人投资建议, 客户据此投资, 责任自负客户在阅读本研究报告时应考虑报告中的任何意见或建议是否符合其个人特定状况本报告并不存在招揽或邀约购买或出售任何证券的企图本报告仅向特定客户传送, 未经国信证券香港书面授权许可, 任何人不得引用转载以及向第三方传播, 否则可能将承担法律责任研究报告所载的资料及意见, 如有任何更改, 本司将不作另行通知在一些管辖区域内, 针对或意图向该等区域内的市民居民个人或实体发布公布供其使用或提供获取渠道的行为会违反该区域内所适用的法律或规例或令国信证券 ( 香港 ) 受制于任何注册或领牌规定, 则本研究报告不适用于该等管辖区域内的市民居民或身处该范围内的任何人或实体 Guosen Securities (HK) 7

,

公司报告业绩分析国药控股 (1099 HK) 持续改革以稳定增长国药控股于 8 月 22 日公布总体盈利和核心净利润分别为人民币 25.29 亿 ( 同比升 32%) 及 25 亿 ( 同比升 35%), 较我们预期高 17% 及 8%, 原因是融资成本和税率下降 16 第 2