Bank of China International: Upgrades KINGOSFT (03888) rating to "Buy", target price lowered to HK$40.

Bank of China International released a research report stating that KINGSOFT (03888) performed below expectations in the third quarter of this year, with revenue lower by 8% to 11% than expected and net profit lower by 26% to 55% than expected. This was mainly due to weak performance in the gaming business; however, revenue in the office software business increased by 26%, partially offsetting the impact. The bank upgraded its rating on KINGSOFT from "hold" to "buy" and lowered the target price from HK$41.7 to HK$40, as after a nine-month adjustment period, the risk-return ratio of the stock price became more attractive. The bank believes that although KINGSOFT's gaming business is gradually normalizing, the gaming product line remains weak. The bank believes that the stock price of KINGSOFT has already dropped by 27% since mid-2025, which essentially reflects this downward risk. The market may overlook the potential growth momentum of the office software and cloud business.