The article "After the Performance" summarizes the latest ratings, target prices, and views of brokerages after KUAISHOU-W announced its quarterly results

KUAISHOU-W (01024.HK) announced its third-quarter results after the market closed yesterday (19th), and this morning (20th) the stock price performed well, rising 1.8% to HKD 64.65 in half a day. Citi released a report stating that Kuaishou's quarterly performance exceeded expectations, with revenue and adjusted net profit higher than forecasts by 1% and 3%, respectively. The revenue from Kuaishou's marketing and Keling AI brought positive surprises. China's marketing revenue accelerated year-on-year growth to 16%, driven by improvements in traffic, advertising load, and matching efficiency. Keling AI revenue exceeded RMB 300 million, and the annual target was raised to RMB 1 billion. The Keling AI 2.5 Turbo text/image-to-video function has shown stable performance since its launch, attracting more business customers. The firm predicts that the company's fourth-quarter revenue and adjusted net profit will grow year-on-year by 10% and 16%, respectively, with marketing revenue expected to rise by 12% to 13% year-on-year, and Keling AI revenue expected to be between RMB 350 million and RMB 400 million. The firm maintains a "Outperform" rating on Kuaishou with a target price of HKD 83.

Kuaishou reported a 37% year-on-year increase in net profit for the third quarter of this year to RMB 4.488 billion; basic earnings per share were RMB 1.05. The adjusted net profit under non-International Financial Reporting Standards increased by 26% year-on-year to RMB 4.986 billion, with an adjusted net profit margin of 14%; adjusted EBITDA grew by 37% to RMB 7.653 billion. The company's quarterly revenue increased by 14% year-on-year to RMB 35.554 billion, with online marketing service revenue rising by 14% year-on-year to RMB 20.102 billion, live streaming revenue increasing by 2.5% year-on-year to RMB 9.574 billion, and other service revenue growing by 41% to RMB 5.878 billion. Overall core business revenue grew by 19% year-on-year, and the gross merchandise volume of the e-commerce business in the third quarter increased by 15% year-on-year to over RMB 385 billion. In the third quarter, Kuaishou's average daily active users increased by 2% year-on-year to over 416 million; average monthly active users rose by 2% year-on-year to over 731 million.

Kuaishou stated that during the period, it continued to advance its AI strategy, expanding scenario-based AI applications across various businesses, driving the continuous release of value in content and commercial ecosystems. With the extensive exploration of Keling AI in various application scenarios, its revenue growth achieved further breakthroughs, with quarterly revenue exceeding RMB 300 million, believing that AI large model technology brought about a 4% to 5% increase in quarterly domestic online marketing service revenue.

【Other revenue growth expected to slow due to commission rebates】

Citi predicts that Kuaishou's platform gross merchandise volume in the fourth quarter will grow by 13% year-on-year, slightly slowing compared to the third quarter due to a higher base. Advertising growth is expected to be roughly in line with gross merchandise volume performance; other revenue growth may slow to more normal levels, as strong performance in the third quarter will lead to commission rebates for KOLs. The firm expects profit margins to continue to expand year-on-year, benefiting from a shift in revenue mix towards advertising and other income, as well as optimized marketing expenses, although partially offset by higher tax rates. The company raised its guidance for Keling revenue, which is generally in line with market expectations The bank maintains a target price of HKD 88 for KUAISHOU-W. Based on attractive valuation, it continues to give a "Buy" rating.

UBS stated that KUAISHOU-W's quarterly advertising and e-commerce commission revenue exceeded expectations, and operating expenses were lower than forecast, with the quarterly outlook generally in line with market consensus. The bank largely maintains its performance forecasts and noted that initial investor feedback indicated that the company's quarterly results did not bring significant positive surprises, but it observed that market expectations for KUAISHOU-W's core business and KuaLing AI had been adjusted downward prior to the results. The bank believes that reasonable valuation growth and the remaining HKD 10 billion repurchase quota can provide subsequent support for KUAISHOU-W's stock price. The bank maintains a "Buy" rating for KUAISHOU-W, adjusting the target price to HKD 95.

Morgan Stanley believes that KUAISHOU-W's fourth-quarter revenue outlook and preliminary guidance for next year are slightly below market expectations, but cost control will help profits. The bank believes that KUAISHOU-W's quarterly performance meets its forecasts, but the fourth-quarter revenue outlook is slightly negative, as evidenced by the slowdown in online marketing growth in mainland China to 14% from a low base, and gross merchandise volume growth falling to 12.5% to 13% after accelerating for two consecutive quarters. KUAISHOU-W plans to offer commission rebates to e-commerce partners, and other revenue growth is expected to slow significantly from 41% in the third quarter to 22% to 23% in the current quarter. The bank also noted that the company has again raised its full-year revenue guidance for KuaLing, but the guidance remains conservative and below market expectations. Cost control will play a role in fourth-quarter profits, and the profit guidance is in line with the bank's forecasts. The bank gives KUAISHOU-W a "Market Perform" rating with a target price of HKD 76.

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The latest comprehensive ratings and target prices for KUAISHOU-W from 8 brokerages:

Brokerage│Investment Rating│Target Price

UBS│Buy│95.37 HKD->95 HKD

Daiwa│Buy│95 HKD

JP Morgan│Overweight│89 HKD

Citi│Buy│88 HKD

UOB Kay Hian│Buy│90 HKD->88 HKD

Goldman Sachs│Buy│83 HKD

Citi│Outperform│83 HKD

Morgan Stanley│Market Perform│76 HKD

Brokerage│Viewpoint

UBS│Third-quarter performance is good, fourth-quarter outlook generally meets market expectations

Daiwa│AI applications are showing initial results

JP Morgan│Advertising revenue and profits are stable

Citi│Advertising and other revenue growth has slightly slowed, KuaLing business is on track

UOB Kay Hian│Revenue and profit growth are stable

Goldman Sachs│Artificial intelligence drives the value of the entire ecosystem

Citi│KuaLing AI revenue has positive surprises

Morgan Stanley│Quarterly results meet expectations, but outlook is below expectations