Kuaishou Technology 3Q25 Earnings Call Summary Company Overview - **Company**: Kuaishou Technology (1024.HK) - **Industry**: China Internet and Other Services - **Market Cap**: Rmb252,753 million - **Current Stock Price**: HK$63.50 - **Price Target**: HK$76.00 (20% upside) Key Financial Results - **3Q25 Results**: In line with estimates - Total Revenue: Rmb35,554 million, a 14% YoY increase - Online Marketing Services Revenue: Rmb20,102 million, a 14% YoY increase - Other Services Revenue: Rmb5,878 million, a 41% YoY increase - Gross Profit: Rmb19,434 million, a 15% YoY increase - Net Income: Rmb4,986 million, a 26% YoY increase - Diluted EPS: Rmb1.02, a 37% YoY increase [3][10][11] 4Q25 Outlook - **Revenue Guidance**: Slightly below market expectations - Domestic online marketing growth expected to slow to 14% - GMV growth projected to fall to 12.5-13% - Other revenue growth expected to slow from 41% in 3Q to 22-23% in 4Q due to commission rebates to e-commerce partners [2][3] 2026 Projections - **Revenue Estimates**: - 2026 Revenue: Rmb158 billion - 2027 Revenue: Rmb171 billion - **EPS Estimates**: - 2026 EPS: Rmb5.18 - 2027 EPS: Rmb5.76 [7] Strategic Insights - **Cost Control**: Management emphasizes cost control as a key factor for maintaining profitability in 4Q [4] - **Kling Product Performance**: Kling's revenue reached Rmb300 million, driven by B2B expansion, with a 40% contribution from B2B sales in 3Q25 [9][10] - **Advertising Growth**: External ads growth is expected to slow, but Internet content (short dramas, novels, and games) remains a growth driver [9] Risks and Considerations - **Upside Risks**: - Better-than-expected MAU growth - Improving ad revenue per DAU - Lower-than-expected sales and marketing expenses [16] - **Downside Risks**: - Lower-than-expected advertising revenue growth - Increased competition affecting MAU growth [16] Valuation Methodology - **Valuation Model**: Discounted cash flow model with a 12% WACC and 2% perpetual growth rate - **Kling Valuation**: Valued at 25x EV/S, aligning with top software companies globally [14] Conclusion Kuaishou Technology's 3Q25 results reflect solid growth, although the outlook for 4Q25 and 2026 shows signs of slowing growth. Cost control measures and strategic product developments, particularly with Kling, are critical for maintaining profitability and navigating competitive pressures in the market.