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Going low-tier is a consensus of all in China today We expect Kuaishou's to post C3Q23 GMV growth of 32% YoY, a respective number given today’s retail environment. We expect its revenue to grow 41% YoY. Kuaishou started its 11.11 promotion on October 18th, a week before e-commerce peers. Kuaishou secured iPhone 15 launch rights and has gained recognition as a valuable lower-tier platform for brands. Blue Lotus analyst found widening gap between online social retail sales and parcel volume (Exhibit 4), suggesting that basket size of e-commerce parcel has declined, benefiting low basket size platforms like PDD. We believe Kuaishou should also benefit. It is also a good time to start serving local services Local services like catering are also entering low tier cities en masse, which we believe supports Kuaishou’s advertising business targeting this segment. Company found only 20% of merchants overlap with Meituan and Douyin. We believe this reflects Kuaishou’s current stage of development and will elevate to more national chains down the road. Health user matrices resulting from experience optimization We anticipate limited impact from the expansion of Tencent Video and expect Kuaishou to grow DAU on a sequential basis with healthy growth in daily time spent. We notice that management optimized user experience during the quarter, likely resulting in better retention and traffic growth. Amid macroeconomic challenges, overall performance growth has shifted from external advertising to internal advertising. We expect Kuaishou’s content ecosystem to complement its e-commerce business through traffic optimization and utilization. |