[ET Net News Agency, 16 January 2020] Macquarie Research initiated coverage on Kingsoft
Corporation (03888) with an "outperform" rating and a target price of HK$32.
The research house said Kingsoft is comprised of three major businesses: (1) online
games; (2) Cloud; and (3) office software (WPS). Even assuming zero value for online
games, the Hong Kong-based stock is trading at 47% discount to the Net Asset Value (NAV)
of HK$55.2bn against its holdings in subsidiaries both listed and evaluated in recent
fundraising.
Macquarie believes Kingsoft Cloud should be the next driver with a 53% revenue CAGR in
2019-22 for Kingsoft. As a niche player, Kingsoft Cloud's growth will be driven by (1) its
technological edge in video and game cloud, (2) government and large corporates' demand,
and (3) back-up plan for internet players. (KL)