BofA Securities slightly raised Kuaishou’s target price, hiked EPS forecasts
STOCKS VIEWS & ANALYSIS
BofA Securities slightly raised Kuaishou’s target price, hiked EPS forecasts
STOCKS VIEWS & ANALYSIS

BofA Securities slightly raised Kuaishou’s target price, hiked EPS forecasts

 

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Kuaishou’s Q2 results once again beat expectations, especially in terms of profit performance, and the forecast of the company’s EPS for FY 2023 – 25 by 5% – 15%, target price raised from HK$85 to HK$86, said BofA Securities in a note.

The broker reiterated its Buy rating on the company, citing bullishness about the development of its e-commerce business and gradual improvement of its profit margins.

BofA Securities expects Kuaishou’s adjusted net profit margin to expand to 14% and 19% in 2024 and 2025 respectively, compared to 12% and 18% in its previous forecast, mainly due to improved gross margins in the e-commerce and advertising business portfolios. Additional growth is also expected from new initiatives such as the e-commerce mall, which will help achieve long-term merchandise volume targets, it said.

The broker expected Kuaishou’s gross margin to grow by 2% – 3% per annum to reach 55% by 2025, which, coupled with cost controls on key expense items, will reduce user acquisition costs.