(Source: Zheshang Securities Research Institute).

Layout 2025

What to buy for long soil has been restored, continue to fight? Zheshang Research believes that at present, we should "look at the market with long thinking, select targets with strategic thinking", "first virtual and then reality", "first denominator and other numerators", and optimize the high-quality white horse catalyzed by the improvement of risk appetite of brokerage technology and risk evaluation, and launch a new [Layout 2025] series to help institutional investors dig gold.

Major recommendation

Computer——Kingsoft Office(688111. SH）

Recommended start date: February 22, 2025

Recommended Chief

Third place in the Golden Kirin in 2023. 2 years in the industry + 7 years in the seller + 2 years in the buyer's investment and research experience, deeply cultivated in the main fields of the computer industry.

Covers the fields of power grid informatization and Huawei's industrial chain.    

Zheshang Securities computer team

Team characteristics: deep combination of production and research, strange and mutually beneficial

Label recommendation: Suochen Technology, Kingsoft Office, Digital China, Radio and Television Express

Team members: Liu Wenshu, Tong Fei, Liu Jingyi, Zheng Yi, Tao Yunqi, Ye Guangliang, Zhang Zhiyuan

Reason for recommendation

As a leader in the domestic office software industry, Kingsoft Office is further optimizing the user experience by accessing the DeepSeek R1 model by virtue of WPS's entry position in office scenarios. The introduction of AI applications is expected to drive the growth of WPS monthly active users and paying users, while enhancing the intelligence and market competitiveness of the product.

Exceeding expectations

1. DeepSeek R1 access to promote WPS AI experience upgrade

Kingsoft Office has successfully connected to the DeepSeek R1 model to build WPS into a super entrance with rich AI functions. Users can ask questions directly in the input box and enjoy intelligent functions such as AI network search, AI writing, AI summary, and AI PPT production. DeepSeek's large model provides stronger logical reasoning and task dismantling capabilities, enabling WPS to better understand user needs and perform tasks autonomously, thereby improving users' office efficiency and willingness to pay.

2. AI technology reduces costs and promotes the popularization of AI large models

DeepSeek's open-source nature and multiple versions of the model with different parameters (including the full version of 660B and the smaller 1.5B-70B distilled version) have lowered the barrier to entry and cost for AI application vendors. Kingsoft Office can provide users with more AI experience at a lower price, which will accelerate the popularization of AI large model functions and bring a wider user base to the company.

3. Global market expansion potential:

The high popularity of DeepSeek in the global market provides Kingsoft Office with the opportunity to expand into the international market, so Kingsoft Office is expected to further enhance its competitiveness in the global office software market and promote the company's global growth with its strong AI application capabilities and DeepSeek's support.

Drivers

1. AI technology empowerment and DeepSeek access;

2. Localization trend and market demand growth;

3. Open source and cost advantages of AI large models;

4. Global market expansion opportunities.

Inspection indicators: the number of MAU, AI product users, overseas users, payment rate, ARPU value; The company's revenue growth, gross profit margin, net profit margin and other profitability indicators.

Catalysts: The progress of domestic basic large models, the introduction of new functions based on DeepSeek models in applications such as WPS, and the reduction of AI inference costs.

Earnings forecasts

It is estimated that the company's operating income from 2024 to 2026 will be 52.44, 64.51 and 7.925 billion yuan, a year-on-year increase of 15.11%, 23.01% and 22.84%; The net profit attributable to the parent company was 15.49, 18.55 and 2.369 billion yuan, a year-on-year increase of 17.58%, 19.74% and 27.71%.

Valuation analysis

The company's PE corresponds to 93 times in 2025 and maintains a "buy" rating.

Risk Warning

The commercialization of AI products is less than expected, the progress of AI technology is less than expected, the promotion of information innovation is less than expected, and the risk of intensified market competition.

About Zheshang major recommendation/key recommendation

Product Level: AAA (Maximum).

Product Highlights: The strongest confidence recommendation of researchers, the strictest control of the institute, and the highest standard recommendation of the whole institute.

Look for the [Zheshang Major Recommendation/Key Recommendation] logo.

Product Definition:

"Major Recommendation" (1) is particularly logically clear; (2) The stock price position is appropriate, and the bottom is generally recommended.

"Key Recommendation" (1) The logic is particularly clear; (2) The upward trend is clear, and it is generally recommended on the right side.