![]() ![]() Only then, assuming KC will have grown at projected rates (CAGR of 28%), will economies of scale allow for an operational break-even. Moreover, for the next few years, probably until 2025, I expect Kingsoft Cloud will not achieve business profitability. In fact, ever since the IPO in 2020, KC recorded losses. ![]() With negative EBITDA the company isn't profitable. Moreover, KC did not lose much steam in 2021 growing 47% year-over-year.Īs mentioned, the business profitability doesn't convince. In the period 2017 until 2020, revenues grew from $183 million to $953 million, implying a compounded annual growth rate of 73.59%. While KC does not convince with operating cash flow (business profitability), the company has very attractive revenue growth and a healthy balance sheet.įirst, let us start with the income statement. When evaluating an investment, I hope for three key features: revenue growth, strong operating cash flow (business profitability), and a healthy balance sheet. The reason for the sell-off was entirely due to a change in confidence connected to negative sentiment around Chinese stocks and ADR delisting fears. It is worth noting, as we will see in the following section that the sell-off in KC shares wasn't connected to a change in business fundamentals. From its all-time high in February 2021, the stock has sold off more than 88.8% and is now trading far below IPO price. If you believe in the company and the growth story of the Chinese cloud market, an investment in KC would now be possible at relatively depressed prices. (Yes, the cloud-industry is actually an industry that enjoys tailwinds from the Chinese government.) The opportunity There are multiple reasons why the cloud market is expected to grow at highly elevated growth levels: increased penetration of cloud services into traditional enterprises and public service organizations, application of 5G, applications of AI and IoT, and support by favorable government policies. Being among the existing market leaders who have built significant competitive advantages in a market that has high entry barriers, I argue Kingsoft Cloud is well positioned to capture a slice of the large and growing market opportunities. Again in numbers, the market is expected to grow at a CAGR of 28.3% until 2025, arguably x10 the growth rate of the broad economy. This is indicated by the lower market penetration as compared to that in the United States. Moreover, China's cloud market is at an early stage with tremendous growth potential. In numbers, the market size of China's cloud services grew at a CAGR of 37.7% from 2015 to 2020. In 2018, China has become the second largest cloud market globally in terms of revenue, following the United States. The cloud market globally, and especially in China, is fast-growing. Overall, Kingsoft Cloud is the third largest internet cloud service provider in China with a market share of 5.4% in terms of revenue from Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Public Cloud Services (PCS). As of December 2020, Kingsoft's research and development team consisted of 1,286 engineers, researchers, programmers, and data scientists, accounting for 59% of the company's total employees. Xiaomi Corporation ( OTCPK:XIACF ) is the second largest shareholder owning 12% of shares outstanding.īut regardless of the question if KC is independent or not, Kingsoft Cloud is at the forefront of cloud technology development and has built extensive research and development capabilities in the context of cloud native technologies. I doubt, however, the word "independent" as ownership data shows that the majority of KC shares is held by two corporations: Kingsoft Corporation Limited is the largest shareholder with 39% of shares outstanding. If that is actually a benefit, I don't know. It frames itself as independent because it is not one of the cloud service providers that belong to certain large-scale conglomerates such as Alibaba Cloud ( BABA), Baidu Cloud ( BIDU) and JD Cloud ( JD). The company describes itself as the largest "independent" cloud provider in China, which - according to my understanding - means that Kingsoft is fully focused on the cloud business. The company has built a comprehensive cloud platform consisting of cloud infrastructure and industry-specific solutions across public cloud, enterprise cloud and IoT cloud services. Kingsoft Cloud ( NASDAQ: KC) is an internet cloud service provider in China. Olemedia/E+ via Getty Images About Kingsoft Cloud ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |