Listing WPS Office As A Separate Entity Is Strong Reason To Go Long Kingsoft

Motek Moyen profile picture
Motek Moyen


  • I am writing this on Writer, the word processor software of the free WPS Office 2016 productivity suite from Kingsoft Software. It looks and acts like Word 2013 from Microsoft.
  • WPS Office, not Google’s G Suite, is now the biggest threat to Microsoft’s Office and Office 365 suite. A spin-off of WPS Office subsidiary is a brilliant move.
  • Kingsoft will probably give WPS Office the Cheetah Mobile treatment. King will likely sell some shares to raise funds, but it will hold on to a controlling stake.
  • Chinese investors will likely snap up WPS Office shares. WPS Office touts more than 1.25 billion installs worldwide.
  • After WPS Office is spun out, Kingsoft can concentrate on its core video games and cloud services.

I will do some profit taking on Apple (AAPL) this week to finance going long on Kingsoft Software (OTCPK:KSFTF) (HKG:3888). I argued before that Kingsoft’s freemium WPS Office 2016 is a threat to Microsoft’s (MSFT) Office productivity suite. I know Kingsoft generates most of its revenue/profit from its subsidiary, Cheetah Mobile (CMCM). However, the popularity of its WPS Office is why Kingsoft is famous around the world. The free and premium WPS Office desktop and mobile productivity suite versions tout 1.25 billion installs.

The business unit responsible for WPS Office is the smallest but second-fastest growing revenue contributor to Kingsoft software over the last four years, 742% growth in revenue from 2012 to 2016.

(Source: Kingsoft) Figures above are in Renminbi. 1 RMB = $0.15

The global success of WPS Office has inspired Kingsoft to apply a separate stock market listing for it at Chinext Shenzhen Stock Exchange. Once approved, the WPS Office subsidiary can concentrate more on improving the paid ($29.99/year Premium version, $79.99/year for a lifetime license) versions of WPS Office.

(Source: Kingsoft Software)

The Long-term Value Of A WPS Office Spin-Off

Going forward, I believe Kingsoft will treat this WPS Office spin-out listing at Chinext like it did when Cheetah Mobile got publicly listed in the U.S. Like Cheetah, Kingsoft can raise funds by selling shares of WPS Office division, but it will retain a controlling stake. The Cheetah Mobile IPO in 2014 raised $168 million, representing sales of 12 million American depositary shares at $14 each.

Before it did its IPO, Cheetah Mobile’s Q1 2014 revenue was $50.8 million. The WPS Office subsidiary of Kingsoft had Q1 2017 revenue of RMB 127.8 million or $19.17 million (up 58% Y/Y). WPS Office listing at Chinext could probably raise at least $70 million for Kingsoft. The $70 million relative guesstimate is based on Cheetah's

This article was written by

Motek Moyen profile picture
Motek Moyen is a financial analyst, technician, and Adobe multimedia content creator. He studied Mathematics, Commercial Advertising, and Computer Science in the 1990s. He does not trade stocks.

Disclosure: I am/we are long TCEHY, ATVI, AAPL, MSFT, NTES, BABA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (2)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.