Written by Kaede

The revaluation narrative of China's tech assets continues.

Kingsoft Office (688111.SH), a leading domestic office software, soared by more than 13% intraday, reaching a maximum of 401.99 yuan per share.

More critically, the amount of energy can be amplified. The full-day turnover was 4.632 billion yuan, an increase of 3.51 billion yuan from yesterday.

With this, it has successfully stood firm at 180 billion yuan, with the latest market value of 184.2 billion yuan. That is, within 1 day, the market value of Jinshan soared by 19.7 billion yuan, with 22,800 shares in 24Q3, and an average income of 863,000 yuan per capita.

Logical refactoring

The detonation of today's AI-related sectors mainly comes from two pieces of news.

One is that Alibaba released and open-sourced a new inference model, Tongyi Qianwen QwQ-32B. According to reports, the overall performance of this large language model is comparable to DeepSeek-R1 in mathematics, code and general capabilities, and reduces the cost of deployment and use, and can also be deployed locally on consumer-level graphics cards.

One is Monica.im release of Manus AI, the world's first general-purpose AI agent product, which surpasses OpenAI DeepResearch.

Stimulated by this, the AI agent sector rose 6.29%, and the software development sector rose 5.41%.

What does this have to do with Kingsoft Office?

The logic behind this is that as the cost of computing power on the inference side decreases, the trend of "computing power equality" will promote the popularization of device-side AI (such as localized AI assistants and offline document processing) and agent (intelligent agent) applications.

As a leading office software company in China, Kingsoft Office is regarded as a direct beneficiary of this trend because its products are naturally adapted to end-to-end AI scenarios (such as intelligent collaboration in offline environments).

As early as the beginning of February, a number of media reported that Kingsoft Office was conducting docking tests with Deepseek, aiming to integrate DeepSeek's AI capabilities into WPS Office products.

DeepSeek's open technology breaks the traditional giant-dominated AI industry pattern, and its low-cost and high-adaptability characteristics provide Kingsoft Office with the possibility of "overtaking in corners".

The market expects that Deepseek may significantly improve WPS's document processing efficiency, personalized recommendation functions and AI assistant capabilities, such as automatic document generation and intelligent data analysis, so as to enhance product competitiveness. If the cooperation is implemented, Kingsoft Office is expected to attract more paying users through AI functions and improve user stickiness and payment rate.

Embrace AI in its entirety

Kingsoft Office is mainly engaged in the design, development, sales and promotion of WPS Office office software products and services.

Its distinctive symbol is WPS, and its corresponding global benchmark is Microsoft Windows. As of June 2024, the number of monthly active devices for Kingsoft Office's main products is 602 million.

More importantly, it is a company with R&D driving genes.

From entering office software when it was established 37 years ago, to deploying mobile office in 2011, strategic cloud office in 2018, and fully embracing AI in 2023, Kingsoft has followed market changes and has always been ahead of technological innovation.

This is inseparable from its continuous and increasing R&D investment, which has increased from 213 million yuan in 2016 to 1.472 billion yuan in 2023, with a compound annual growth rate of 31.73%.

In the first half of 2024, Kingsoft's R&D investment will be 808 million yuan, an increase of 12.61%, accounting for 33.47% of total revenue.

Prior to this, from 2020 to 2023, Kingsoft's R&D investment accounted for more than 30% of revenue.

In fact, in 2024, Kingsoft will continue to increase its R&D investment in the field of collaboration and AI around the core strategic direction of "multi-screen, cloud, content, collaboration, and AI".

Kingsoft believes that AI capabilities, as a core selling point of WPS 365, can quickly gain customer recognition and drive sales growth.

This is being verified by performance. In 2024, Jinshan will achieve revenue of 5.121 billion yuan, net profit attributable to the parent company of 1.645 billion yuan, and non-net profit of 1.556 billion yuan, a year-on-year increase of 12.4%, 24.84% and 23.3% respectively.

In a single quarter, in 24Q4, its revenue and net profit will hit a new high since financial records began.

Among them, the revenue increased by 16.21% year-on-year to 1.494 billion yuan, the net profit attributable to the parent company increased by 42.58% to 605 million yuan, and the non-net profit increased by 40.73% to 566 million yuan.

If we look at the month-on-month comparison, the performance growth rate of the three indicators is 23.08%, 90.05% and 86.55% respectively.

However, after this round of rise, its PE (TTM) has come to 125.78 times, which is at 70.8% of the quantile in the past three years.

That is, it is more expensive than 70% of the time in the past 3 years, and it is no longer cheap.

(Redirected from: Bubble Finance).