Zhi Tong Cai Jing·2025-08-22 02:21Core Viewpoint - The company maintains its Non-IFRS net profit forecast for Kuaishou-W (01024) and has raised its target price by 11% to HKD 89, reflecting a valuation premium due to the continuous upgrade of its AI ecosystem, with an upside potential of 24% [1] Group 1: Financial Performance - The company's Q2 2025 revenue increased by 13% to RMB 35 billion, exceeding the forecast of RMB 34.5 billion, while Non-IFRS net profit rose by 20% to RMB 5.62 billion, surpassing the expected RMB 5.1 billion [2] - The company announced its first special dividend of HKD 0.46 per share, totaling HKD 2 billion, indicating strong cash flow and commitment to shareholder returns [2][5] Group 2: Revenue Growth Drivers - Advertising revenue growth in Q2 was driven by key industry advertisers and smart placement products, with a 13% increase in overall revenue. The growth was particularly supported by content consumption, local life services, and the automotive sector [3] - Other service revenue grew by 26%, with e-commerce GMV increasing by 18% to RMB 358.9 billion, reflecting improvements in monthly average buyers and repurchase frequency [3] Group 3: AI Ecosystem Development - The company launched version 2.1 of its AI platform, enhancing productivity and generating revenue of RMB 250 million in Q2, a 67% quarter-on-quarter increase, with expectations to double revenue by the end of 2025 [4] - The introduction of the OneRec end-to-end generative recommendation model has improved user engagement and advertising effectiveness, contributing to low single-digit growth in advertising revenue [4] Group 4: Long-term Strategy and Shareholder Returns - The company has repurchased approximately HKD 1.9 billion worth of shares in the first half of 2025 and plans to continue considering share buybacks and dividends as part of its long-term strategy [5] - The company aims to further leverage AI to enhance value for creators, marketing clients, and merchants, indicating a focus on long-term growth through technological advancements [5]