Kuaishou Earnings: Raising Fair Value by 7% on Solid Guidance For E-Commerce and Advertising In 2024

We raise our fair value estimate for Kuaishou to HKD 75 per share from HKD 70 after the company provided strong guidance for 2024 and fourth-quarter 2023 revenue of CNY 32.6 billion—an increase of 15% year on year, which was in line with our forecast. Kuaishou guided 2024 revenue to grow 14%, which was slightly higher than our forecast of 12%, driven by year-on-year revenue increases of over 20% in advertising and 30% in e-commerce. This highlights the continued momentum for both businesses, which remain the main long-term growth drivers for Kuaishou. While there is a slight deceleration for e-commerce—which was expected, given robust growth in the last two to three years—we are encouraged that advertising shows fewer signs of slowing down as it maintains approximately the same growth rate as last year. Advertising would be driven by strength in internal ads, or ads that lead to other pages on the platform—which is important, as it keeps the user within the Kuaishou ecosystem. External ads, which lead the user to third-party pages, would also see demand recovery. E-commerce revenue would be driven by a 25% year-on-year increase in gross merchandise volume, or GMV, rather than an increase in commission, which is positive, given that low monetization remains a lever that Kuaishou can use to further catalyze growth. E-commerce is driven by content-based commerce and highlights the consumer shift from traditional e-commerce. We expect the trend to continue and for Kuaishou to outpace peers in both revenue and GMV growth.