Understanding the Market | Kingsoft Cloud rises over 5%, with revenue contributions from Kingsoft and Xiaomi expected to increase; UBS states the market underestimates potential development

Kingsoft Cloud is currently up over 5%, as of the time of writing, up 6.11%, priced at HKD 4.86, with a transaction volume of HKD 284 million. UBS released a research report stating that benefiting from AI development and the support of the Kingsoft ecosystem, Kingsoft Cloud's performance in the third quarter was robust, exceeding market expectations, which helps enhance investors' expectations for its revenue and profit recovery. The current stock price level is still below the valuation of independent cloud companies in China, and it is believed that the market has underestimated the potential development opportunities of Kingsoft and AI businesses. Kingsoft Cloud's target price has been raised from USD 4.2 to USD 12.5. UBS pointed out that as cloud usage increases, especially with AI demand related to WPS Office and Xiaomi's Internet of Things, smartphones, and electric vehicles, the revenue contribution from Kingsoft Software and Xiaomi is expected to rise from about 20% in 2024 to over 40% in 2027, driving the company's annual compound growth rate in revenue from 2025 to 2027 to reach 13%