Kingsoft market cap is currently: 5.95bil usd
Lets relook at its sum of parts.
Kingsoft Office(53% stake): 12.93bil usd (3.49bil usd at 40x pe)
WPS is the crown jewel of Kingsoft. WPS has a full product suite that mirrors Microsoft Office (Word, Excel, PowerPoint, PDF, document cloud, and collaboration tools).
WPS and Microsoft are interchangeable in terms of functionality. There are some areas where WPS is better and others where Microsoft is better, but those are along the fringes. Lastly, WPS has been added to some national student examinations as of November 2020 and by March 2021 was in all national student exams. This point is crucial as it will train the younger generation to learn how to use WPS over Microsoft.
The market is pricing in some assurance due to US-China geopolitics. China would want to be self sufficient so they would want to use more of their own home grown software going forward, hence there should be growth consistency for wps going forward every quarter. Chinese government offices have also swapped Microsoft office to wps. Long term tail wind is likely. Hence valuation for Kingsoft Office is high, pe of 148x.
Being listed means Kingsoft can theoretically sell their 53% stake and get back exactly 12.93bil usd which is 2.2x its current market cap. But to be conservative, I value WPS at 40x pe, which give Kingsoft's 53% stake a valuation of 3.49bil usd
Net cash: 1.57bil usd
Extra conservative. I use their unrestricted cash minus off their total liabilities(company has no debt)
Seasun(73% stake): 682mil usd
Give this company a 10x earnings multiple. This gaming company is subscriptive based just like world of warcraft. More stability for its earnings but it needs to come up with expansion or reiterations for user growth and retention. Its not a run of the mill company, it has a strong user base and Tencent owns a 10% stake.
Kingsoft Cloud(39.12%): 595mil usd
Quite straightforward, basing on the listed value on nasdaq. Even if I put a 1x sales to it it comes out quite similar in valuation.
Zeroizing their other small stake in Cheetah Mobile etc,
Total sum of parts: 6.337bil usd (basing wps at 40x pe)
Total sum of parts: 15.78bil usd (basing wps on listed valuation)
Current market cap: 5.97bil usd
So its up to us to decide which valuation of WPS we want to use.
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