S&P: KUAISHOU's free cash flow may be cut by more than half this year, with capital expenditures increasing by 70%

Rating agency S&P issued a report warning that KUAISHOU-W (01024.HK) is expected to see its free cash flow shrink by more than half this year, primarily due to intense competition in China's internet industry and a surge in demand for AI-related investments. It is anticipated that while the company increases its spending on artificial intelligence, revenue growth will slow down, and EBITDA profit margins will also be under pressure.

S&P expects KUAISHOU's capital expenditures to increase by approximately 70% this year, mainly for strengthening AI model training, regular server procurement, and the construction of its own data centers. The group's free operating cash flow is projected to decline to less than RMB 5 billion annually in 2026 and 2027, lower than the bank's previous estimate of around RMB 10 billion, with KUAISHOU's free cash flow for 2025 estimated at approximately RMB 12 billion