KUAISHOU TECHNOLOGY
Kuaishou Technology 1024.HK / kuaishou.com
Primary listing in the Hong Kong Stock Exchange – HKSE with ticker symbol 1024.HK
Secondary listing in the Deutsche Börse with ticker DB:5Y0 and in the US OTC Pink Sheet Market under KUAS.F symbol.
"Kuaishou is a leading content community and social platform with its mission to be the most customer-obsessed company in the world. Kuaishou has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. At Kuaishou, any user can chronicle and share their life experiences through short videos and live streams and showcase their talents. Working closely with content creators and businesses together, Kuaishou provides product and service offerings that address various user needs that arise naturally, including entertainment, online marketing services, e-commerce, online games, online knowledge-sharing, and more. "
Kuaishou is founded in 2011 and is a publicly listed company since February. Kuaishou is a very similar company in its main profile to Huya, Douyu, TikTok etc.
PRE-ANALYSIS
Based on
ANNOUNCEMENT OF THE RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2021
So, it’s not referring to a year but 3 months.
Based on the numbers Kuaishou is a big loss maker (Loss for the period – 57,751,051,000 RMB) but looking at the whole image and study the financial reports a bit we can see that situation isn’t bad at all indeed Kuaishou is making gross profit (Gross profit 6,987,795,000 RMB).
Then why is there such a huge loss in the books?
The answer is Fair value changes of convertible redeemable preferred shares -51,275,797,000 RMB.
What is that exactly?
Kuaishou went IPO not that long ago and early investors/adopters anyone with priviliges had the right to cash out their investment at market price realizing a large profit...and they did and they usually do just as it happened with Xiaomi and JD Health to mention some of the big names.These write-offsusually happen in the first 1 year after IPO which negatively impacts the book as the company has to pay out this amount but once it happened it’s done, it's not a recurring loss and the company can have profitable operation. From now on much better numbers are expected.
Without this amount Kuaishou the loss would be about -5,000,000,000 RMB which is still a large number but not even close to the 57.7 billion.
Based on
FOUR-YEAR FINANCIAL SUMMARY
This report shows a much longer-term financial information about Kuaishou.
Based on
FINANCIAL SUMMARY / Year Ended December 31, 2020
So far, revenue keeps going nicely higher but their expenses are very high so it's definitely a point to work on. Overall it's promising.
The numbers speak to itself. Kuaishou is getting more popular.
There is a lot to digest first but once it's done let's see the next part.
RESEARCH & ANALYSIS
| COMPANY | KUAISHOU TECHNOLOGY |
|||||||||
| STOCK CODE | 1024 | |||||||||
| DATE OF ANALYSIS | AUG 9-12, 2021 | |||||||||
| STOCK EXCHANGE | HONG KONG | |||||||||
| LOT SIZE | 100 | |||||||||
| INDUSTRY | Interactive Media & Services |
COLOR CODES - GROWTH VALUATION MODEL
| ALERT | The current situation is very bad so be very careful. Stay away! |
| HIGH RISK | Far from optimal and major problems to solve first. Definitely a wait! |
| MODERATE RISK |
Still a lot to do but no major risk can be detected altough profit can’t be seen just yet. Still wait! |
| ALRIGHT | On the right track. Still things to do and profit is in near proximity. Start accumulating slowly! |
| GOOD | Profitable and still lots of growth potential. |
| GREAT | Great is even greater for a growth company. Looks like a opportunity not to miss. |
| >1 | 1-2 | 2-4 | 5-6 | 7-8 | 9-10 |
| ALERT | HIGH RISK | MODERATE RISK |
ALRIGHT | GOOD | GREAT |
ANALYSIS
| FACTOR | COMPANY DATA | FACTOR VALUE 1-10 | WEIGHTED FACTOR VALUES 1-10 |
| Price / Earnings – P/E | -0.7 | 1 | 5 |
| Price / Book – P/B | 3.3 | 1 | 3 |
| Price Earnings Growth – PEG | can’t be evaluated yet |
1 | 3 |
| Price / Share – P/S | 5.5 | 1 | 3 |
| Enterprise Value / Earnigs Before Interest Tax Depereciation Amortization – EV/EBITDA |
-19.52 | 1 | 5 |
| Return On Equity – ROE | -238.7 | 1 | 5 |
| Return On Assets – ROA | -148.9 | 1 | 5 |
| Return On Capital Employed – ROC |
-19.3 | 1 | 5 |
| Earnings Per Share – EPS | -149.285 | 1 | 5 |
| Operating Profit Margin | LOSS | 1 | 5 |
| Net Profit Margin | LOSS | 1 | 5 |
| Cashflow Positive in the last 5 years |
can’t be evaluated yet |
1 | 5 |
| Expected Growth % | 66.7 | 10 | 10 |
| Debt to Equity Ratio | NO DEBT | 10 | 10 |
| Debt to EBITDA | NO DEBT | 10 | 10 |
| Last Dividend % / year | NO DIVIDEND | 9 | 1 |
| Dividend % / year Average of the last 5 years |
NO DIVIDEND | 9 | 1 |
| Dividend Payout Ratio % | NO DIVIDEND | 9 | 1 |
| Insider Ownership more Than 5% |
42.9 | 10 | 9 |
| Share Dilution in the last 1 year | NO | 10 | 10 |
| Insider Trading Activity In the last 1 year |
NO | 5 | 10 |
| CEO Tenure Year | 5 | 10 | 10 |
| Management Team Tenure Year | 5 | 10 | 7 |
| Factors that can slow down growth | YES | 3 | 10 |
| Market Cap HKD / USD | 353B / 45.3B | 10 | 5 |
| NON-WEIGHTED SCORE | 4.96 | ||
| WEIGHTED SCORE | 6.91 | ||
| THE MOAT FACTOR | |
| Long-Term Prospects | 7.5 |
| Business Model | 7 |
| Product Sustainabilty | 8 |
| Competition | 2 |
| Management | 10 |
| Customer Base | 7 |
| MOAT SCORE | 6.92 |
| FINAL VALUE SCORE | 6.92 |
INTRINSIC VALUE
Financial metric based calculation isn't really possible because Kuaishou isn't profitable yet but based on the discounted cashflow model the current intrinsic value would like this.
There is 60 Billion yuan cash available for Kuaishou to grow which is a lot and they have no debt either which is a huge-huge plus for a growth company.
TECHNICAL POINT OF VIEW
The stock 1024.HK is on a strong downtrend right now and onyl in the last couple of seems to be a point to stop the fall. Can it go lower? Of course, it can but this might be a good point to start accumulating with a smaller amount.
REALISTIC EXPECTATIONS
High growth stock but still a lot to work to reduce their expenses. They have a good business model but the competition is strong. All depends on how they can be getting more popular. Financially
Kuaishou seems to be a very-very well establsihed and strong company
and there is lots of cash available to reach their goals.
A bit of a worry in the equation that it's a company that deals with a lot of users' data that might bring up privacy issues on the road, mostly if the Chinese regulations are getting stricter, and currently it looks like that they're getting stricter on this ground.
Overall, the final conclusion from long-term investment perspective to me is to keep an eye on Kuaishou 1024.HK and wait and see how things turn out in the near future.
Comments
Post a Comment