Investment Rating - The report maintains a "Buy" rating for Kuaishou, with a target price of HKD 75.96 per share, based on a 15x PE valuation for 2025 [4][5]. Core Viewpoints - Kuaishou's Keling technology is positioned to lead in the multi-modal video generation space, with significant competitive advantages and ongoing technological iterations [2][8]. - The report emphasizes the importance of continuous monitoring of video generation model advancements and AI empowerment in existing business operations [4][8]. - Kuaishou's revenue and profit forecasts for 2024-2026 are projected at CNY 127.19 billion, CNY 141.03 billion, and CNY 154.13 billion, respectively, with adjusted net profits of CNY 15.22 billion, CNY 19.05 billion, and CNY 23.42 billion [9]. Summary by Sections Section 1: Video Generation Model Development - The video generation model is entering a rapid development phase, with Kuaishou's Keling technology being a top player globally, particularly in core evaluation metrics such as consistency and precise control [22][31]. - The DiT architecture is identified as the mainstream framework for video generation, with Kuaishou quickly achieving technological breakthroughs [22][23]. Section 2: Kuaishou's Competitive Position - Keling's technological capabilities and data resource advantages position it favorably for future developments in the AI-driven content community [8][19]. - Kuaishou's strategic focus and unified organizational structure enhance its execution efficiency [8][19]. Section 3: Financial Performance and Market Position - Kuaishou's user engagement metrics remain strong, with MAU and DAU showing consistent growth, and daily average usage time maintained at high levels [8][9]. - The e-commerce GMV is expected to grow by 13.5% in 2025, outpacing the market, while online marketing services are projected to increase by 15.6% [8][9].

Investment Rating - The report maintains a "Buy" rating for Kuaishou, with a target price of HKD 75.96 per share, based on a 15x PE valuation for 2025 [4][5]. Core Viewpoints - Kuaishou's technology in multi-modal video generation is globally leading, particularly with its Keling model, which is positioned as a top competitor in the industry [2][8]. - The report emphasizes the importance of continuous technological iteration in video generation models and Kuaishou's competitive advantages in this space [4][8]. - The company is expected to see steady growth in its e-commerce GMV, projected to increase by 13.5% in 2025, outpacing the market [8]. Summary by Sections Financial Forecast and Investment Recommendations - Adjusted net profit forecasts for Kuaishou are CNY 176 billion, CNY 201 billion, and CNY 247 billion for 2024, 2025, and 2026 respectively [4]. - The report highlights a stable financial outlook with a low to mid-range valuation, providing a good safety margin for investors [8]. Video Generation Model Development - The report identifies the DiT architecture as the mainstream framework for video generation, with Kuaishou's Keling model being a leading player in this domain [22][23]. - Kuaishou's Keling model is noted for its superior performance in key evaluation metrics such as consistency and precise control, making it a top competitor globally [8][30]. User Engagement and Commercialization - Kuaishou's user engagement metrics remain strong, with MAU and DAU showing consistent growth, and average daily usage time maintained at 120-130 minutes [8][9]. - The report anticipates a transition in Kuaishou's business model from PUGC tools to multi-scenario empowerment, indicating a shift towards broader user engagement and monetization strategies [19][22].

Core Viewpoint - The 2024 China Mobile Internet Annual Report highlights the rapid growth of AI applications and the deep integration of digital economy with traditional industries, indicating a significant shift towards "smartization" and user engagement in various sectors. Group 1: Market Overview - The overall internet market is steadily increasing, with active users reaching 1.257 billion by December 2024, driven by technological innovation and policy support [5][6][10]. - User engagement is deepening, with average monthly usage time per person rising to 171.7 hours, reflecting a growing demand for content consumption, particularly in video, social media, and gaming [7][8][10]. - The user base in first-tier cities has increased by 1.2% year-on-year, indicating a shift in user demographics towards urban centers [6][10]. Group 2: AI Application Growth - AI applications are experiencing explosive growth, with over 70% of apps with over 100 million monthly active users integrating AI by December 2024 [2][11]. - The user base for AI-native apps reached 120 million, with an average usage time of 132.8 minutes per month, marking a year-on-year increase of 232% [2][11]. - Traditional apps are undergoing transformation, with 70% of major apps on the path to integrating AI functionalities [12][20]. Group 3: Advertising and Marketing Trends - The internet advertising market grew by 3.5% year-on-year in Q4 2024, reflecting advertisers' confidence in digital marketing strategies [21][22]. - Brands are increasingly leveraging event-driven marketing and IP collaborations to enhance consumer engagement and brand recognition [28][30][32]. - The marketing landscape is characterized by a matrix approach, with brands focusing on diverse content strategies to influence consumer preferences [25][26][27]. Group 4: Sector-Specific Insights - The entertainment sector, particularly short videos, is thriving, with active users exceeding 1 billion and a growth rate of 9% [47][50]. - The financial sector is witnessing significant user growth, with stock trading apps experiencing a surge in activity due to favorable market conditions [68][70]. - The e-commerce landscape is evolving, with major platforms integrating content and commerce strategies to enhance user experience and drive sales [76][78][80].