On 5 August 2021, Kuaishou Technology (1024.HK) downed by more than 15% as the IPO lockup period was ended on 4 August 2021. Cornerstone investors are now can exit their investment and put further pressure on the share price of Kuaishou Technology. Is it the right time to add Kuaishou Technology in portfolio?

First Quarter Result of 2021

Revenues for first quarter was RMB 17,019,450,000 which increased by 36.6% yoy. Gross profit was RMB 6,987,795,000 which increased by 64.1% yoy. However, there was loss for the period RMB -57,751,051,000 which increased 89.4% yoy. The loss is the result of fair value changes of convertible preferred shares which total RMB 51,275,797,000.

Average DAUs was 295.3 million which increased by 16.6% yoy. Average MAUs was 519.8 million which increased by 5% yoy. Average online marketing services revenue per DAU was RMB 29.00 which increased by 124.8% yoy. Total e-commerce GMV was RMB 118,559.4 million which increased by 219.7% yoy.

Kuaishou Technology also expanded in the overseas markets such as South America and Southeast Asia. Overseas markets with average monthly active users exceeding 100 million in the first quarter of 2021, and further increased to more than 150 million in April 2021.

Valuation

Since Kuaishou Technology isn’t profitable yet, it will be fair to compare with other technology company by P/S ratio (Company’s market capitalization divided by the company’s sales for the previous 12 months) as following:

Conclusion

After the slump of the share price, Kuaishou Technology’s P/S ratio decrease but only in line with the main technology company. For long term investor, there may be a better candidates which have proved record of operation and profitability, such as JD.com, Inc. (9618.HK), Alibaba Group Holding Limited (9988.HK) and Tencent Holdings Limited (0700.HK).

Investment Disclaimers