Beijing Kingsoft Office Software, Inc. - A (688111.SS): AI extends the productivity growth runway; assume coverage at Overweight

We assume coverage of Kingsoft Office with an Overweight rating and a Rmb325 Dec-27 price target, based on 45x 2028E P/E. We expect a longer growth runway as AI expands WPS from document software into broader knowledge work, while personal monetization and WPS365 provide two visible growth engines. Personal revenue growth accelerated to 15.2% YoY in 1H26, WPS365 sustained 60%+ growth for the sixth consecutive quarter and adjusted attributable net profit increased 28.3%, ahead of revenue. As model intelligence becomes cheaper and more widely available, we expect differentiation in productivity software to shift towards distribution, persistent document and enterprise context, and native execution, where Kingsoft Office has meaningful existing assets. We forecast 2026-28E revenue and core profit at 5%/11%/8% and 10%/2%/2% above consensus, respectively. The shares remain expensive against China software and global SaaS peers, but valuation is less demanding against the company's own histo