Kingsoft Office Investment Quality Review (688111.SH)

Quality score: 82/100 Valuation position: current price/base FV 2.74 Final signal: WATCHLIST

Core Conclusion

Kingsoft Office is WATCHLIST. Current price is CNY240.80, far above conservative/base FV of CNY54.63/CNY87.89. The quality score is high, but the stock is too expensive under the report’s FCF framework.

Business And Quality

Five-year revenue CAGR is 15.9% and latest-year FCF is CNY2.40bn. The 82/100 score reflects software economics, growth, and net cash; valuation, evidence depth, and durability of growth keep the signal on watch.

Financial Audit

The review uses fiscal 2021-2025 in CNY. Five-year average FCF/Net Income is 1.36 and OCF/Net Income is 1.47. Latest net cash is CNY0.66bn. Market value is about CNY111.73bn on roughly 464mn shares.

Valuation

The valuation uses normalized FCF, a 1.7% CNY 10Y yield dated 2026-07-27, and separate balance-sheet adjustments. Price/base FV of 2.74 fails the BUY and 2x gates by a wide margin.

Buy And Monitor

Current action is watchlist. Upgrade requires price/base FV below 0.70, quality score at least 75, and stronger evidence that subscription and AI-related growth are durable. Track revenue trend, FCF/Net Income, ROIC, net cash/debt, dividends, buybacks, and governance disclosure.

Risks

Risks include growth deceleration, competition, AI monetization uncertainty, weaker cash conversion, and valuation compression. FCF/Net Income below 0.60 for two periods would require a lower FV.

Sources

Sources are public quote and financial data platforms, official filings or company IR, and ChinaBond for the CNY risk-free rate. Research only, not personalized investment advice.