KC - Kingsoft Cloud: Betting On China's Cloud Market

• Kingsoft Cloud is a leading cloud service provider in China, and the country’s biggest cloud-only player.
• China’s market for cloud infrastructure is expected to reach approximately $85 billion by 2026—implying a 5-year CAGR of 25%.
• Kingsoft is poised to benefit from the structural growth trend in China’s Cloud market and the large addressable market.
• Kingsoft Cloud (KC) is down approximately 85% from ATH. While the company has certainly traded at rich valuations in the past, the company now appears very cheap at x0.71 P/B and x0.8 P/S.
• I value Kingsoft Cloud based on a residual earnings framework and calculate a fair base-case target price equal to $6.37/share, implying 50% upside potential.

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