Citi: Raises Kingsoft Cloud's target price to $5.50, driven by strong performance in public cloud and recovery in enterprise cloud in the third quarter

Citi published a report stating that Kingsoft Cloud's third-quarter performance was generally in line with expectations, with total revenue increasing by 16% year-on-year, mainly driven by strong public cloud performance and a rebound in enterprise cloud; adjusted EBITDA margin further increased to 9.8%. The company renewed its framework agreements with Xiaomi and Kingsoft Software, strengthening their partnership, with highlights including increased transaction revenue and financing limits. Attention is also focused on the revenue growth potential brought by Xiaomi's autonomous driving. Citi expects Kingsoft Cloud's revenue growth in the fourth quarter to accelerate to 18% year-on-year, while the adjusted EBITDA margin is expected to further improve to 13%. The firm raised its revenue forecasts for the fiscal years 2024 and 2025 by 1% and 6%, respectively, and increased its adjusted net profit forecasts by 64 million and 100 million yuan to reflect strong AI business growth. The firm raised its target price from $3 to $5.5, maintaining an "outperform" rating