Core Viewpoint - Kuaishou's Q2 performance shows a revenue increase of 13% to 35 billion, exceeding consensus expectations by 2% [1] - The company maintains a "buy" rating, anticipating continued growth in AI application penetration [1] Group 1: Financial Performance - Q2 revenue reached 35 billion, with a year-on-year growth of 13%, surpassing consensus expectations [1] - Gross margin improved by 0.3 percentage points to 55.7% [1] - Adjusted net profit increased by 20% to 5.6 billion, exceeding expectations by 11% [1] Group 2: Business Segments - Revenue from live streaming, advertising, and e-commerce grew by 8%, 13%, and 26% respectively [1] - Advertising revenue is expected to grow by 13% in Q3, below the consensus of 16%, primarily due to regulatory impacts on overseas advertising [1] - E-commerce revenue accelerated to a 26% year-on-year growth, with GMV increasing by 18% [3] Group 3: Product and Market Development - The company is launching a 2B subscription plan in Q3 to enhance B-end commercialization [1] - Kuaishou's "Keling" product generated 250 million in revenue in Q2, with a positive gross margin [2] - The number of C-end creators reached 45 million, and over 20,000 enterprises and developers are covered on the B-end [2] Group 4: Advertising and Monetization - Q2 advertising revenue slightly exceeded expectations, with a year-on-year growth of 13% [3] - The internal advertising monetization rate is expected to improve significantly, with a 40% share of all-site promotion and smart management [3] - The company upgraded its AI marketing products, enhancing conversion rates by over 10% [3] Group 5: Future Outlook and Valuation - The company announced a special dividend of 0.46 HKD per share, equating to a 0.6% dividend yield [4] - Revenue forecasts for 2025-2027 have been adjusted upward by 0.2%, 0.3%, and 0.9% respectively [4] - Target price raised to 85.28 HKD based on SOTP valuation, reflecting expected contributions from Keling [4]

Investment Rating - The report maintains a "Buy" rating for the company [7][5]. Core Views - The company reported a 13% year-on-year revenue growth in Q2, reaching 35 billion RMB, which exceeded consensus expectations by 2% [1]. - Gross margin improved by 0.3 percentage points to 55.7%, and adjusted net profit increased by 20% to 5.6 billion RMB, surpassing expectations by 11% [1]. - The company is expected to accelerate its B-end commercialization with the launch of a subscription plan in Q3, potentially driving significant revenue growth [2]. - The advertising revenue grew by 13% year-on-year, slightly above expectations, with a notable increase in the monetization rate of internal advertising [3]. - E-commerce revenue saw a 26% year-on-year increase, with a growing proportion of general merchandise e-commerce [4]. Summary by Sections Financial Performance - Q2 revenue reached 35 billion RMB, a 13% increase year-on-year, exceeding expectations by 2% [1]. - Adjusted net profit for Q2 was 5.6 billion RMB, a 20% increase year-on-year, surpassing expectations by 11% [1]. - The company announced a special dividend of 0.46 HKD per share, translating to a yield of approximately 0.6% [5]. Business Segments - Live streaming revenue grew by 8% year-on-year, while advertising and e-commerce revenues increased by 13% and 26%, respectively [1]. - The advertising segment is expected to see a 13% year-on-year growth in Q3, although it may fall short of the consensus expectation of 16% due to regulatory impacts on overseas advertising [1][3]. - The e-commerce segment's revenue structure is diversifying, with a 26% year-on-year growth in Q2, and the GMV increased by 18% [4]. Future Outlook - Revenue forecasts for 2025-2027 have been adjusted upwards by 0.2%, 0.3%, and 0.9%, primarily driven by accelerated growth in advertising and AI-related services [20]. - The target price for the company has been raised to 85.28 HKD, reflecting an increase in expected contributions from the AI segment [5][24]. - The company is expected to launch a new subscription service targeting professional and enterprise users in Q3, which is anticipated to enhance B-end revenue generation [2].