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<Research>G Sachs Drops KUAISHOU-W (01024.HK) TP to $67; Risk Reflected After Shr Price Decline
Recommend 46 Positive 77 Negative 46 |
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Goldman Sachs noted in a report that the 2Q24 revenue of KUAISHOU-W (01024.HK) was in line with expectations, while non-IFRS net profit has surpassed broker and market forecasts by 10% and 8% respectively. Goldman maintained its Buy rating on KUAISHOU, with a target price cut from $70 to $67. According to the broker, the main focus of KUAISHOU's 2Q results included a slowdown in e-commerce due to the macro environment and competition, offset by strong external advertising business. The slowdown was attributed to the disruption of some leading key opinion leaders (KOLs) and weakness in 618 festival promotions. However, user penetration improved and purchase frequency remained stable, external advertising re-accelerated on the back of rising demand from emerging verticals including micro dramas and games, with continuity set to continue in 2H24. Goldman believed KUAISHOU's valuation multiple contractions have been completed and the risks have been reflected in the nearly 30% drop in its share price from its May high, which has underperformed all other major e-commerce firms such as BABA-SW (09988.HK), PDD (PDD.US), and JD-SW (09618.HK). At the same time, the continued improvement in profitability of KUAISHOU, for which the market has lowered its GMV forecast, coupled with management's reaffirmation of its 20% long-term net profit margin target and continued buybacks should provide downside support to the stock price. In addition, with external advertising growth re-accelerating to 30% YoY, the broker believed the market may revisit the valuation methodology of KUAISHOU, ceasing to directly reference the valuation multiples of other e-commerce firms. AAStocks Financial News |
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