研究报告全文：24Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateZhihuZHUSBUYMaintainVocationaltrainingAIGCasLTdriverTargetPriceUS23PreviousTPUS23UpDownside855DespitemacrochallengesandepidemicresurgenceZhihudeliveredbetter-than-CurrentPriceUS12feared4Q22resultswithstrongmembershipvocationaltrainingandnarrowinglossWeexpectZhihutoseerevreaccelerationfrom1Q23Eforecasting28ChinaInternetSectorYoYbackedby1resilientmembership2strongvocationaltrainingtocontinueforecasting140YoYand3mildadsrecoverywithChinasSophieHuangreopeningWeturnmorebullishonvocationaltrainingpotentialwithenriched85239000889productsmatrixandcourseofferingsWeseehighvisibilityforZhihutoimprovesophiehuangcmbicomhkitsmarginandachieveaquarterlybreakeveninFY24EevenwithAIGCinvestmentWelifteditsrevby5-8inFY23-24EwhileFY24EbottomlineEasonXubarelychangedwithTPatUS2385239000849easonxucmbicomhk4Q22all-aroundbeat4Q22rev9YoY46aboveconsensusourestimatesBysegmentCCSAds-19-27YoY34aboveourStockDataMktCapUSmn761estimatePaidmembership93YoY9aboveourestimateattributableAvg3mthstoUSmn792torisingpayingusersbackedbycommunityecosystemenhancementNon-52wHighLowUS333089GAAPnetlosssequentiallynarrowedtoRMB134mnaheadofconsensusandTotalIssuedSharesmn602ourestimatethankstosavingsinCOGSandlowerGAexpensesGPMSourceBloombergrecordedat5646pptsaboveconsensusShareholdingStructureReaccelerationinsightwithresilientmembershipandmildadsrecoveryCosmicBlueInvest165WithenrichedcontentandhigherengagementofbothcreatorsusersweGoldmanSachs126areconfidentonitsmembershipmomentumforecasting54inFY23EBankofAmerica105SourceBloombergZhihuwilllaunchitsappofYanyan盐言故事toenhanceitsuserexperienceForadsCCSmacroheadwindsmaylingerin1Q23ESharePerformanceforecastingrev-15YoYin1Q23EandweexpectrisingadsdemandfromAbsoluteRelative2Q23EespeciallyfromecommerceFMCGverticalsWeexpectadjNPM1-mth-237-261toimprove13pptsYoYinFY23EthankstohigherGPManddisciplinedSM3-mth-222-2986-mth53-04VocationaltrainingandAIGCinitiativestoboostLTmomentumSourceBloombergVocationaltrainingrevsurged281YoYin4Q22Byleveragingitsknowledge-inspiringcommunityweexpectvocationaltrainingbiz1408112-mthPricePerformancein1Q23EFY23EwithenrichedproductsmatrixanddiversifiedcourseUSZHUSCCMPrebasedofferingsAsaQA-orientedknowledgecommunityZhihuexceleditselfwith4uniquevaluepropositionandtrustworthyPUGCthusbuildingdatacontent33reserveforitsAIGCinitiativesWeexpectitsAIGCexplorationwouldbring2furtherupsideinecosystemenhancementandmonetization2MaintainBUYTofactorinstrongervocationaltrainingandmembershipwe1raiseditstoplineby5-8inFY23-24Ebutadjusteditsmarginby-50ppts1withTPunchangedatUS23implying21xFY23EPS0Mar-22Jun-22Sep-22Dec-22EarningsSummarySourceBloombergYE31DecFY21AFY22AFY23EFY24EFY25EAuditorErnstYoungRevenueRMBmn29273605460856746645YoYgrowth1165231278231171AdjnetincomeRMBmn7351196942129222AdjEPSRMB129195154021036YoYgrowthNANANANANAConsensusEPSRMBNANA140613PExNANANANA245PSx1715121008NetgearingNetCashNetCashNetCashNetCashNetCashSourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOANDhttpwwwcmbicomhk24Mar20234Q22all-aroundbeat4Q22rev93YoY46aboveconsensusourestimatesBysegmentCCSAds-19-27YoY34aboveourestimateduetoscalingbackofmarketingbudgetamidepidemicimpactandchallengingmacroOntheflipsidevocationaltrainingrevsurged281YoYwithmorediversifiedcourseofferingsPaidmembershipgrew96YoYdrivenbyrisingpayingusersattractedbynewcontentandbetteralgorithmNon-GAAPnetlosssequentiallynarrowedtoRMB134mnbetterthanconsensusofRMB243mnWeareimpressedbyitsbetter-than-fearedGPMat5646pptsaboveconsensusMAUreached1007mn4QoQ-25YoYasZhihuiscleaninguplow-qualitycontenttoenhanceuserexperienceFigure14Q22financialreviewRMBmnDec-YE1Q212Q213Q214Q211Q222Q223Q224Q22QoQYoYConsensusDiffCMBIDiffRevenue47863882410197438369121114222931076410496OperatingProfit342351322375648461279216NANA327NA341NANetprofit495321270383614487300180NANA305NA355NAAdjnetprofit194200112241367444251134NANA243NA262NAAdjEPSRMB135034019041061072041022NANA047NA043NAMarginGrossmargin570590516471451478487564506503Operatingmargin-716-549-392-368-872-551-306-194-304-325Adjnetmargin-405-314-136-236-494-531-275-120-226-250GrowthRevenueYoY154214421151961554310107935629RevenueQoQ-80335290238-27112591222181151OperatingProfitNANANANANANANANANANAAdjnetprofitNANANANANANANANANANASourceCompanydataBloombergCMBIGMestimatesFigure24Q22revenuebreakdownRMBmnDec-YE1Q212Q213Q214Q211Q222Q223Q224Q22QoQYoYTotalrevenue47863882410197438369121114229Content-commercesolutions12120727836722724026529812-19Advertising21424832137821723819727540-27Paidmembership1271551782092222713354032093VocationalTraining371422404678858281Others14214643384136545026SourceCompanydataPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE224Mar2023StrongvocationaltrainingmembershiptoboostFY23EreaccelerationVocationaltrainingwouldbeZhihusLTdriverByleveragingitsknowledge-inspiringcommunityZhihusvocationaltrainingbizclimbedupquicklyandweforecast1Q23Etrainingrev140YoY10oftotalrevMgmtguided20revcontributionfortrainingbizinthelongrunZhihuwillenhanceitscontentwithfocusoneducationemploymentimprovementWeexpectrichercontentofferingsandproductsmatrixtoboostitsstrongmomentumaheadWithenrichedcontentandhigherengagementofbothcreatorsusersweareconfidentinitsmembershipmomentumforecastingthissegment54inFY23EZhihuwilllaunchitsappofYanyan盐言故事toenhanceitsuserexperienceMildadsrecoveryahead1Q23Eadsrecoverypacemaylagbehindmacrorecoveryandecommercereboundbutona12-monthhorizonadsCCSshouldbenefitfromChinasreopeninginourviewByadsverticalsIT3CkeptresilientwhileecommercebeautiesandFMCGmightseerecoveryfrom2Q23Eespeciallyin618WeforecastadsCCSrevtodecline15YoYin1Q23EMarginimprovementtocontinuedespiteAIGCinvestmentWeexpectadjNPMtoimprove13pptsYoYinFY23EthankstohigherGPMmainlyonefficiencyimprovementinfixedcostsandhigherrevmixfromvocationaltraininganddisciplinedSMZhihuwillstrategicallyinvestinAIGCinitiativesbutRDexpenseswouldbemanageableWeforecastZhihutoachieveaquarterlybreakeveninFY24EFigure3QuarterlyrevestimatesFigure4Yearlyrevestimates70001401200RMBmn180RMBmn1606000120100014050001008001201004000806008030006040060200040402001000202000001Q212Q213Q214Q211Q222Q223Q224Q221Q23EFY21FY22FY23EFY24EFY25ERevYoYRevYoYSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE324Mar2023Figure5RevmixchangeFigure6Vocationaltrainingrevestimates1001400RMBmn60012005008010004006080030040600200400202001000FY20FY21FY22FY23EFY24E00FY21FY22FY23EFY24EFY25EOthersVocationalTrainingPaidmembershipAdvertisingCCSVocationaltrainingrevYoYSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure7QuarterlymarginestimatesFigure8Yearlymarginestimates807060605040403020201001Q212Q213Q214Q211Q222Q223Q224Q221Q23E0FY20FY21FY22FY23EFY24EFY25E-20-10-20-40-30-60-40GPMAdjNPMGPMAdjNPMSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE424Mar2023MaintainBUYwithTPatUS23Tofactorinstrongermembershipandvocationaltrainingweraiseditstoplineby5-8inFY23-24Ebutadjusteditsmarginby-4701pptsinFY2324EtoreflectitsAIGCinvestmentwithDCF-basedTPunchangedatUS23implying21xFY23EPSFigure9CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnDec-YEFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue460856746645473859636845-27-48-29Grossprofit234729993587242932093959-34-65-94Operatingprofit12674551101044453436NANANAAdjnetprofit94212922266017926NANANAEPSRMB154021036140062130NANANAGrossmargin509528540513538578-03ppts-10ppts-38pptsOperatingmargin-275-80-17-220-7664-55ppts-04ppts-80pptsNetmargin-204-2333-139-03135-65ppts-20ppts-102pptsSourceCompanydataBloombergCMBIGMestimatesFigure10EarningsrevisionNewOldDiffRMBmnDec-YEFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue46085674664543695276NA5576NAGrossprofit23472999358722062752NA6490NAOperatingprofit12674551101132695NANANANAAdjnetprofit942129222687124NANANANAEPSRMB154021036112020NANANANAGrossmargin509528540505522NA05ppts07pptsNAOperatingmargin-275-80-17-259-132NA-16ppts52pptsNANetmargin-204-2333-157-24NA-47ppts01pptsNASourceCompanydataCMBIGMestimatesFigure11DCFValuationDCFvaluationRMBmn2023E2024E2025E2026E2027E2028E2029E2030E2031E2032EEBIT1022207144328412535642758871963Tax00022348096114131144DA26303138453845515661Workingcapital5022244651133140147154162170CAPEX32404752576369768492FCF9785575342498570668773875957FCFGrowthNANA-4045141716139TerminalValue10562PVFCFTerminalValue97854562423133193323423454044AssumptionsWACC123Taxrate150Riskfreerate32Beta110Marketriskreturn115Costofequity123WACC123Terminalgrowthrate30Debtvalue0WACC232103113123133143EquityValue152624222019PV5419202724222119minusNetcash4348Growth252725232120minusMinorityInterest0302825232120EquityValue9767352926242220Sharesmn612403027242221TargetPriceUSbasedonDCF23453228252321SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE524Mar2023Asacrosscheckweselected2onlinecommunityplayers6VASpeersand2adspeersforcomparisonTheindustrymultipleis25xFY23EPS19aboveourDCF-basedmultipleZhihuisnowtradingat12xFY23EPSwithattractivevaluationlargelybelowindustryaverageWethinkourTPof21xisnotdemandingforZhihusince1itexceleditselfwithhigh-qualityknowledge-inspiringcontentand2itwoulddeliverhigherrevCAGR20inFY23-25Evs12forindustrialaverageItspotentialadsrecoveryrisingvocationaltrainingandAIGCinitiativeswouldfurtherhelpitre-rateFigure12ValuationcompsCompanyTickerMktcapCurrencyPriceCMBICMBIPEPSFY23-25EPSUSDmnRaitingTPFY23EFY24EFY25EFY23EFY24EFY25ECAGRZhihuZHUS793USD12BUY23NANA245121008NAOnlineCommunityBilibiliBILIUS9342USD23BUY30NANA522252119NAKuaishou1024HK31238HKD57BUY94NA209128211815750AverageNA209325232017NAVASChinaLiterature772HK5219HKD40NANA23620518243393612Tencent700HK457834HKD376BUY45522418815951464119JOYYYYUS2094USD30BUY461411098908080725HuyaHUYAUS794USD3BUY7NA585222060606NADouyuDOYUUS359USD1NANANANANA040404184TMETMEUS12321USD7BUY1115814412529272511Mango300413CH9658CNY36NANA33827223347413621iQIYIIQUS6618USD7BUY921514111214131238Average21917616025232144AdBaiduBIDUUS51971USD149BUY19616213812326242235WeiboWBUS4135USD17BUY2978696421191911Average1201039324222023Average19416417425222021SourceBBGCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE624Mar2023FinancialSummaryIncomestatementCashflowsummaryYE31DecRMBmnFY21AFY22AFY23EFY24EFY25EYE31DecRMBmnFY21AFY22AFY23EFY24EFY25ERevenues29273605460856746645Netincome12991564118737732CCS9741030110412541423DA2119263031Advertising11619269659851003ChangeinWC2914450222446Paidmembership6691231189424272813Others546374243246252VocationalTraining462484507911175OperatingCF4401128868121697Others78169194217230COGS14051797226026763057CAPEX725324047Grossprofit15221808234729993587Others3129344580000InvestingCF313734207684047SM16352026192918412013RD6207639859841031Issuanceofshares00000GA690622700629654IPOproceeds48530000Operatingprofit142316041267455110Others00000FinancingCF48530000Otherincome9740807878Pre-taxIncome13251564118737732Netchangeincash1276229210181651Cashbegofyr9582157444943484429IncomeTax20000Fxeffect1000000Netprofit13271564118737732Accretions1710000Netprofittoshareholder14981564118737732Adjnetprofit7351196942129222Cashendofyr21344449434844295080BalancesheetKeyratiosYE31DecRMBmnFY21AFY22AFY23EFY24EFY25EYE31DecFY21AFY22AFY23EFY24EFY25ENon-currentassets4713367887102SalesmixPPE107334353CCS333286240221214Intangibleassetsnet6880191823Advertising397257209174151Right-of-useassets127100262626Paidmembership228341411428423Others266149000VocationalTraining166998139177Others2747423835Currentassets83347320810883428900Total10001000100010001000Cashcashequivalents21574526434844295080Termdeposits2816948109310931093GrowthrateShort-terminvestments2240787104610461046Revenue1165231278231171Othercurrentasset11221058162117741681Grossprofit1009188298277196EBITNANANANANACurrentliabilities18981825238527593113AdjnetprofitNANANANANAAPandaccruals1027916108412721449Salarywelfarepayables314284435438468PLratiosContractliabilities2403566798701009Operatingmargin4864452758017Others318270187179187Pre-taxmargin4534342586705Adjnetmargin2513322042333Non-currentliabilities169137000Effectivetaxrate0200000000Leaseliabilities8243000ReturnsMezzanineequityand67385694468645554775ROE1092102012846shareholdersequityROA831561151525PershareEPSRMB1320150204DPSRMB0000000000BVPSRMB432479544623623SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE724Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMoritsaffiliateshaveinvestmentbankingrelationshipwiththeissuerscoveredinthisreportinpreceding12monthsCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE8