CITIC Securities: KUAISHOU's main business shows steady growth, target price 100 yuan

CITIC Securities published a research report, optimistic about KUAISHOU-W (01024.HK) and its steady growth in core business, initiating a "Buy" rating with a target price of HKD 100. The firm pointed out that Kuaishou has significant advantages in AI technology and commercialization potential, with strong valuation attractiveness. Compared to AI leaders like Zhizhu (02513.HK), MiniMax (00100.HK), OpenAI, and Perplexity, Kuaishou's core business forms a differentiated competitive edge with AI applications, especially since its major upgrade last December, showing a significant growth trend.

The report mentioned that Kuaishou enhances its commercialization potential through robust core business growth and a unique community ecosystem. AI technology upgrades (such as OneRec and OneResearch) further drive efficiency improvements in advertising and e-commerce. As a leader in AI-native applications, Kuaishou's Keling AI technology is advanced, possessing competitive advantages in Chinese semantic understanding, generation efficiency, and platform synergy. The firm is optimistic about the commercialization potential growth brought by recent upgrades in Keling AI.

Kuaishou users spend over 130 minutes on the platform, significantly ahead of the 70 minutes on video accounts, laying a solid foundation for commercialization. The company has successfully turned its core business profitable in 2023, with adjusted net profit margins expected to rise to 14% in 2024. CITIC Securities predicts that Kuaishou's advertising and e-commerce core business revenue growth rates will reach 12% and 9% respectively in 2026 and 2027, with continuous improvements in AI technology upgrades and operational efficiency further supporting margin enhancement.

CITIC Securities expects Kuaishou's adjusted net profit to reach RMB 23.1 billion and RMB 26.5 billion in 2026 and 2027, growing by 12% and 15% year-on-year. The firm believes that if the commercialization of AI technology is further validated, Kuaishou's core business is likely to undergo a revaluation. Additionally, Keling AI's market valuation generally ranges from 20 to 30 times sales ratio, which is significantly attractive compared to its Hong Kong peers and leading AI companies in the U.S., coupled with Keling's revenue scale and growth potential, forming important support for Kuaishou's long-term development