Core Viewpoint - Kuaishou-W (01024) maintains a "buy" rating due to significant updates in its Keling AI, which are expected to enhance video generation efficiency and drive user and revenue growth [1] Group 1: Keling AI Updates - Keling AI has launched several updates in December, including the world's first full-modal video model Keling O1 and the first audio-visual model Keling 2.6, which are anticipated to increase user numbers and payment rates [1] - The Keling O1 model supports full-modal editing, improving workflow efficiency, while Keling 2.6's audio-visual capabilities are expected to integrate well with gaming, advertising, short dramas, and live streaming [1] - Keling AI's website traffic has significantly increased, surpassing competitors like Minimax, Runway, and Midjourney by the end of December 2025 [1] Group 2: Pricing Advantage - Keling 2.6 offers a clear pricing advantage over Google Veo 3.1 and Sora 2, with video generation costs for premium memberships ranging from 0.44 to 0.88 yuan per second [2] - In comparison, Google Veo 3.1's standard version is priced at $0.4 per second, while Sora 2-pro is priced at $0.3 per second, making Keling 2.6 competitively priced [2] - Keling AI's revenue exceeded 300 million yuan in Q3 2025, with an annual revenue forecast of $140 million [2] Group 3: Impact on Core Business - The One series of generative models has positively impacted Kuaishou's marketing and e-commerce sectors, with the OneRec model boosting domestic marketing revenue by approximately 4%-5% in Q3 2025 [3] - The introduction of the OneSearch architecture has improved product matching and user experience, leading to a 5% increase in search order volume in the e-commerce segment [3] Group 4: Outlook for 2026 - The company is expected to maintain steady growth in its core business through 2026, despite previous network attacks that have been addressed without significant impact on other operations [4] - The company’s live streaming revenue has been stabilized through strict ecosystem governance, and the growth in core advertising and e-commerce businesses is expected to mitigate the lower-margin impact of live streaming [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance in the next six months [3][6][18]. Core Insights - The company is expected to see user growth and increased payment rates due to the recent updates in its AI models, particularly the launch of the One series and the Keling 2.6 version, which enhances user engagement and monetization opportunities [2][6][7]. - The financial forecasts have been adjusted, with revenue projections for 2025-2027 slightly lowered, but the adjusted net profit estimates remain stable, reflecting confidence in the company's core business despite macroeconomic pressures [5][6][18]. Financial Data and Profit Forecast - Revenue projections for the years 2023 to 2027 are as follows: - 2023: 113.47 billion RMB - 2024: 126.90 billion RMB - 2025: 142.19 billion RMB - 2026: 155.15 billion RMB - 2027: 169.33 billion RMB - The adjusted net profit estimates are: - 2023: 10.27 billion RMB - 2024: 17.72 billion RMB - 2025: 20.23 billion RMB - 2026: 22.28 billion RMB - 2027: 25.47 billion RMB - The company’s earnings per share (EPS) are projected to grow from 2.38 RMB in 2023 to 5.96 RMB in 2027, with a return on equity (ROE) forecasted to remain strong at around 21% to 29% over the same period [5][18]. Product Development and Market Position - The Keling AI has launched several significant updates, including the Keling O1 model, which supports multi-modal video generation, and the Keling 2.6 version, which features audio-visual synchronization, enhancing user experience and engagement [6][7][12]. - The pricing strategy for Keling's services shows a competitive advantage over rivals like Google Veo3.1 and Sora2, with lower per-second video generation costs, which is expected to attract more users and increase revenue [9][10]. Marketing and E-commerce Impact - The One series models have positively impacted the company's marketing and e-commerce sectors, with the OneRec model improving domestic marketing revenue by approximately 4%-5% and the OneSearch model enhancing product matching and user experience, leading to a 5% increase in search order volume [12][17].

Investment Rating - The investment rating for Kuaishou-W (01024) is maintained as "Buy" [2] Core Insights - Kuaishou's AI model, Keling, has seen significant updates, including the launch of the world's first unified multimodal video model, Keling O1, and the audio-visual synchronization model, Keling 2.6, which are expected to drive user growth and payment rates [7][8] - The One series of end-to-end generative models continues to boost the core business, with improvements in marketing and e-commerce driving revenue growth [19] - The company has adjusted its revenue and profit forecasts for 2025-2027, maintaining a "Buy" rating despite macroeconomic pressures [7] Financial Data and Earnings Forecast - Revenue projections for Kuaishou are as follows: - 2023A: 113,470 million RMB - 2024A: 126,898 million RMB - 2025E: 142,185 million RMB - 2026E: 155,153 million RMB - 2027E: 169,326 million RMB - Adjusted net profit forecasts are: - 2023A: 10,271 million RMB - 2024A: 17,716 million RMB - 2025E: 20,228 million RMB - 2026E: 22,284 million RMB - 2027E: 25,470 million RMB - The projected earnings per share (EPS) are: - 2023A: 2.38 RMB - 2024A: 4.12 RMB - 2025E: 4.74 RMB - 2026E: 5.22 RMB - 2027E: 5.96 RMB - The return on equity (ROE) is expected to be 21% in 2027 [6][21] User Growth and Product Development - Keling AI's website traffic has significantly increased, surpassing competitors like Minimax and Midjourney by the end of December 2025 [7] - The Keling 2.6 model offers a pricing advantage over competitors such as Google Veo3.1 and Sora2, with video generation costs being lower [10] - The OneRec model has improved marketing revenue by approximately 4%-5% and enhanced e-commerce order volume by 5% through better product matching [19][13]

Investment Rating - The report suggests a "barbell" investment strategy focusing on companies with stable cash flows supporting AI-related investments and those with strong operational capabilities for overseas expansion [1][3]. Core Insights - 2026 is viewed as a pivotal year for capturing user attention in the AI era, emphasizing the importance of lowering usage barriers, enhancing decision-making efficiency, and creating real value [1]. - Companies like Tencent, Alibaba, and Kuaishou are highlighted for their potential to benefit from AI-driven growth in advertising and cloud services, while firms like NetEase and Trip.com are noted for their stable earnings growth and reasonable valuations [1][3]. Summary by Sections AI Theme - Companies to watch include Tencent, which is expected to benefit from AI-driven advertising and cloud growth, Alibaba, which has a lower valuation compared to peers, and Kuaishou, which is making progress in monetizing AI applications [1][3]. Profit Growth Certainty - Focus on companies with reasonable valuations and strong performance, such as NetEase and Trip.com, which are expected to maintain stable profit growth [1][3]. E-commerce and Online Retail - The online retail sector is anticipated to see growth in experiential consumption, while competition in physical goods retail may normalize due to reduced government subsidies [3][15]. - Instant retail is expected to maintain high GMV growth, but the overall e-commerce sector may face challenges in revenue and profit growth due to competitive pressures [3][15]. Online Gaming and Music - The online gaming industry is projected to grow by around 10% in revenue, with profit growth expected to be between 10-15% [15]. - The online music sector is expected to see revenue and profit growth of 10-15%, although competition from ByteDance's music platform poses challenges [15][18]. Cloud and Advertising - Cloud and advertising are expected to remain the main growth drivers for companies leveraging AI, with a focus on investment returns [3][39]. Overseas Expansion - The report highlights the potential for overseas expansion in cloud services and OTA, with companies that have strong cash flow and profit margins likely to perform better in the long term [3][15]. Investment Recommendations - Specific companies recommended for investment include Tencent, Alibaba, Kuaishou, Trip.com, and NetEase, each with unique strengths and growth prospects in the AI and digital landscape [37][38].

Core Viewpoint - Kuaishou reported Q3 2025 earnings with revenue of 35.5 billion yuan, a year-on-year increase of 14%, slightly exceeding expectations. IFRS net profit was 4.5 billion yuan, up 7.19% compared to consensus, with a net profit margin of 12.6%. Non-IFRS net profit reached 4.99 billion yuan, up 3.2% against consensus, indicating better-than-expected performance [1] Group 1: Financial Performance - Q3 revenue reached 35.5 billion yuan, with a year-on-year growth of 14% and a slight increase of 0.69% compared to consensus [1] - IFRS net profit was 4.5 billion yuan, reflecting a year-on-year increase of 7.19% against consensus [1] - Non-IFRS net profit was 4.99 billion yuan, exceeding market expectations by 3.2% [1] Group 2: Business Highlights - Advertising revenue grew by 14% year-on-year, surpassing previous market expectations, with AI model applications contributing an increase of 3-4% to ad revenue [2] - Kuaishou's Keling product generated over 300 million yuan in revenue for Q3, with a quarter-on-quarter growth of 20% [2] - E-commerce GMV increased by 15% year-on-year, aligning with expectations [1] Group 3: AI and Commercialization - Keling's revenue growth and performance improvements are expected to accelerate B-end commercialization, especially with the rise of new video content formats [2] - AI tools have enhanced core business performance, with the introduction of a bidding model and expanded recommendation models leading to a 4%-5% increase in online marketing revenue [2] - E-commerce GMV growth was driven by improved user repurchase frequency and the introduction of new search and recommendation tools [2] Group 4: Operational Metrics - Q3 live streaming revenue was 9.6 billion yuan, showing a year-on-year increase of 3% [3] - Q3 gross profit was 19.4 billion yuan, with a gross profit margin of 54.7% [3] - Daily active users (DAU) reached 416 million, with a year-on-year growth of 2% [3]

Core Insights - Kuaishou Technology is transforming AI from a cost center into a profit center, demonstrating how AI can drive efficiency in traffic, advertising, and e-commerce operations [1][6] - The company’s AI tool, Keling AI, is transitioning from a user acquisition phase to a monetization phase, with projected quarterly revenue exceeding $45 million by Q4 2025 and annual revenue reaching $343 million by 2027 [1][4] Keling AI Development - Keling AI is positioned as a "professional content creation tool," with a significant shift in user demographics from 70% consumer to 60% business users, indicating a move towards B2B applications [4] - The tool has onboarded approximately 10,000 B2B clients, including platforms like Freepik and various advertising agencies, which are expected to provide higher retention and payment capabilities compared to C-end users [4] Cost Efficiency and Model Performance - The latest Keling 2.5 Turbo model has significantly reduced video generation costs while maintaining high performance, with costs per video dropping to as low as $0.201 [5] - AI algorithms have contributed to a 4-5% growth in Kuaishou's core advertising business, showcasing the effectiveness of AI in enhancing revenue streams [6] User Engagement and Revenue Metrics - Despite recent price reductions aimed at expanding the user base, increased user engagement has mitigated the impact on revenue, with average revenue per user (ARPU) stabilizing between $20 and $30 per month [7] - The global market for professional video creators is vast, with a low penetration rate indicating significant growth potential for Keling AI [7] AI's Impact on Core Business - AI-driven systems like OneRec are applied to 25%-30% of traffic distribution, resulting in at least a 1% increase in video views and user engagement, translating to substantial commercial value [8] - The application of AI in advertising has led to a 4-5% incremental growth in ad revenue for Q3 2025, highlighting the technology's effectiveness in improving return on investment (ROI) [8] Traditional Metrics and Growth Opportunities - Kuaishou's current ad load rate is approximately 9%, significantly lower than competitors like Douyin, which stands at 14%-15%, indicating room for improvement [9] - The company aims to increase its shelf-based e-commerce GMV from 30% to over 40% by enhancing product offerings and integrating more live-streaming links [9]

Kuaishou Technology (1024.HK) Conference Call Summary Company Overview - **Company**: Kuaishou Technology - **Ticker**: 1024.HK - **Market Cap**: HK$292.7 billion / $37.6 billion - **Current Price**: HK$68.65 - **12-Month Target Price**: HK$83.00, indicating an upside of 20.9% [2][22] Key Industry Insights - **AI Integration**: Kuaishou is leveraging AI to enhance user experience and advertising monetization, with a focus on the Kling AI platform [1][5] - **User Ecosystem**: The user base is divided into professional (P-end) and business (B-end) users, with a notable shift in user mix from 70:30 to 60:40 in favor of B-end users [7][8] Core Business Highlights - **User Growth**: - Approximately 200 million professional users globally, with a low single-digit percentage of paying users out of 20-30 million monthly active users (MAU) [7] - Average Revenue Per User (ARPU) is currently between $20-$30 per month, with expectations for stability in the short term [7] - **Advertising and E-commerce**: - Advertising revenue growth of 4-5% in Q3 2025 attributed to AI technology [12] - E-commerce now accounts for approximately 30% of total Gross Merchandise Value (GMV), with a target to increase this to over 40% [11] - The aggregate take rate is around 4%, with 1% from e-commerce commissions and 3% from e-commerce ads [11] Financial Projections - **Kling AI Revenue**: Expected to reach $343 million by 2027, with a forecast of $45 million+ in Q4 2025 [14][16] - **Revenue Growth**: - Revenue projections for Kuaishou are as follows: - 2025E: RMB 142.0 billion - 2026E: RMB 157.0 billion - 2027E: RMB 172.4 billion [19][22] Risks and Challenges - **Key Risks**: - Slower-than-expected recovery in advertising budgets - Weaker monetization of the Kling platform - Slower growth in user engagement metrics - Lower-than-expected profitability and AI progress [20] Additional Insights - **User Engagement**: Kuaishou is focusing on attracting younger users through diverse content categories to drive daily active users (DAU) and traffic [12] - **Advertising Strategy**: The current ad load is approximately 9%, with plans to increase this to over 9% through improved native advertising and algorithm enhancements [12] - **Financial Health**: The company is maintaining a strong gross margin, projected to reach 57.3% by 2027 [19] This summary encapsulates the key points from the conference call, highlighting Kuaishou's strategic focus on AI, user growth, and financial projections while also addressing potential risks that could impact its performance.

Core Insights - Kuaishou reported Q3 2025 revenue of 35.554 billion yuan, a year-on-year increase of 14.21% and a quarter-on-quarter increase of 1.45% [1] - Adjusted EBITDA for Q3 2025 reached 7.653 billion yuan, up 37.2% year-on-year, while adjusted net profit was 4.986 billion yuan, reflecting a 26.3% year-on-year growth [1] Revenue Growth - The online marketing revenue for Kuaishou in Q3 2025 was 20.102 billion yuan, marking a 14.0% year-on-year increase, with growth accelerating from 12.8% in Q2 2025 [1] - The DAU and MAU reached 416 million and 731 million respectively, both hitting record highs for three consecutive quarters, with daily usage time averaging 134.1 minutes [1] AI Empowerment - The OneRec model has enhanced the platform's ecosystem, leading to accelerated growth in online marketing revenue [1] - AI technology has significantly improved advertising content creation and distribution, with AIGC marketing materials driving over 3 billion yuan in online marketing service consumption in Q3 2025 [1] E-commerce Performance - Kuaishou's e-commerce GMV reached 385 billion yuan in Q3 2025, a year-on-year increase of 15.2% [2] - The OneSearch model has improved product matching and user experience, increasing search order volume by nearly 5.0% [2] Future Outlook - The company aims to continue enhancing its e-commerce business through AIGC content production and improving merchant efficiency [2] - Kuaishou's Keling AI generated over 300 million yuan in revenue in Q3 2025, with the new Keling AI 2.5 Turbo model achieving significant improvements in content generation [3] Financial Projections - Revenue projections for Kuaishou are estimated at 142.062 billion yuan, 154.990 billion yuan, and 167.064 billion yuan for 2025, 2026, and 2027 respectively, with adjusted net profits of 20.498 billion yuan, 22.915 billion yuan, and 25.308 billion yuan [3]

Core Insights - Kuaishou Technology reported Q3 2025 earnings with revenue of 35.6 billion yuan, a year-on-year increase of 14.2% [1] - The company achieved a total operating profit of 5.3 billion yuan, with an operating profit margin of approximately 14.9% [1] - Non-GAAP net profit attributable to shareholders was 5 billion yuan, up 26.3% year-on-year, with a non-GAAP net profit margin of about 14.0% [1] Revenue Breakdown - Online marketing services, live streaming, and other services generated revenues of 20.1 billion, 9.6 billion, and 5.9 billion yuan respectively, with year-on-year growth rates of 14.0%, 2.5%, and 41.3% [1] E-commerce Performance - E-commerce GMV grew by 15.2% year-on-year to 385 billion yuan, with a healthy development in the average buyer structure and active user repurchase frequency [2] - The share of general merchandise e-commerce GMV exceeded 32%, indicating strong growth [2] AI Integration - AI models like OneSearch and OneRec contributed to a significant increase in e-commerce order volume and advertising revenue, with OneRec driving domestic online advertising revenue growth of approximately 4%-5% [2] - The introduction of the Keling 2.5 Turbo model improved performance while reducing video generation costs by about 30%, enhancing its commercial viability [3] Future Projections - The company expects revenues of 141.5 billion, 155 billion, and 167 billion yuan for 2025-2027, with growth rates of 11%, 10%, and 8% respectively [3] - Adjusted net profits are projected to be 20.5 billion, 24.8 billion, and 27.8 billion yuan for the same period, with growth rates of 16%, 21%, and 12% respectively [3] Investment Rating - The company maintains a "Buy" rating with a target price of 94 HKD based on a 15x P/E ratio for 2026 [3]

Core Viewpoint - The company reported a solid performance in Q3 2025, with revenue growth driven by user engagement and AI enhancements, indicating a positive outlook for future growth [1][5]. Group 1: Operational Performance - The company implemented a refined user growth strategy and upgraded AI algorithms, resulting in a steady user performance with Q3 2025 MAU and DAU reaching 731 million and 416 million, respectively, representing year-over-year growth of 2.4% and 2.1% [1]. - Daily active users spent an average of 134.1 minutes, with total user engagement time increasing by 3.6% year-over-year, reflecting high user activity and stickiness [1]. Group 2: Financial Metrics - In Q3 2025, the company achieved revenue of 35.554 billion yuan, a year-over-year increase of 14.2% and a quarter-over-quarter increase of 1.4% [1]. - The gross margin was reported at 54.7%, with a year-over-year increase of 0.3 percentage points and a quarter-over-quarter decrease of 1.0 percentage points [1]. - Adjusted net profit reached 4.986 billion yuan, marking a year-over-year increase of 20.1% but a quarter-over-quarter decrease of 11.2% [1]. Group 3: Online Marketing and Lifestyle Services - Online marketing service revenue grew by 14.0% year-over-year to 20.1 billion yuan, with AI being a significant growth driver [1]. - The introduction of AI models optimized advertising bidding and content matching, contributing to a 4.0%–5.0% increase in domestic online marketing service revenue [1]. - The lifestyle services sector improved conversion efficiency through AI customer service enhancements [1]. Group 4: E-commerce and Other Businesses - E-commerce and other business revenue increased by 41.3% year-over-year to 5.9 billion yuan, with GMV growing by 15.2% to 385 billion yuan [2]. - The growth was supported by various initiatives, including multi-faceted promotional policies and AI tools enhancing user experience [2]. - AIGC capabilities improved merchant efficiency and product matching, leading to higher conversion rates [2]. Group 5: Live Streaming Business - Live streaming revenue grew by 2.5% year-over-year to 9.6 billion yuan, driven by content supply optimization and AI technology [3]. - The number of signed guilds and streamers increased significantly, enhancing the content ecosystem [3]. - The "live streaming +" model positively impacted traditional industries, with notable growth in user engagement metrics [3]. Group 6: International Business - The company focused on high-quality growth in overseas markets, particularly in Brazil, where user engagement metrics remained stable [4]. - E-commerce operations in Brazil improved subsidy and operational efficiency, achieving healthy growth in transaction volume and order numbers [4]. Group 7: AI Model Development - The company launched the Keling AI 2.5 Turbo model, achieving significant improvements in text response and dynamic effects [4]. - The model's commercial applications spanned various sectors, generating over 300 million yuan in revenue in Q3 2025 [4]. Group 8: Profit Forecast and Investment Rating - The company adjusted its profit forecast, expecting revenues of 142.8 billion yuan, 157.4 billion yuan, and 171.9 billion yuan for 2025-2027, with adjusted net profits of 20.8 billion yuan, 23.4 billion yuan, and 26.1 billion yuan, respectively [5]. - The target market capitalization for 2026 is set at 346.2 billion yuan, with a target price of 80 yuan and 88 HKD, maintaining a "buy" rating [5].