[ET Net News Agency, 25 May 2018] Citi Research lowered its target price for Kingsoft
Corporation (03888) to HK$30 from HK$33, and retained its "buy" rating.
The research house said Kingsoft's 1Q revenues of RMB1.26bn (+4% yoy) was in-line with
Citi's forecast, with strong cloud and WPS growth offsetting the weakness in game
revenues. Non-GAAP EPADS of Rmb0.12 missed Citi's Rmb0.14 estimate. Gross margins declined
further from 55.7% in 4Q 2017 to 48.7% due to lower revenue contribution from the
high-margin gaming business, thereby operating margins also fell to 2.1% from 10% in 4Q
2017.
While Citi was disappointed with JX Online 3 suffering a significant decline and are
still unclear on the launch schedule of JX Mobile II, the research house remains positive
on Kingsoft's game outlook given the increasing visibility on YSYY and JX Mobile III's
launch time and game quality.
Citi lowered its game revenues estimate for 2018/19 by -6%/-3% due to JX Online 3
headwind and later than expected launch of new games. (KL)
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03888 KINGSOFT
Nominal 
25.150 -0.600 (-2.330%) Others
25/05/2018 14:32
[I-bank focus]Citi lowers Kingsoft Corp (03888) to HK$30
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