2025年第二季度业绩超出预期；人工智能及核心业务势头强劲

2Q25 results beat; solid AI and corebusinesses momentum Target PriceHK$84.00(Previous TPHK$80.00)Up/Downside17.1%Current PriceHK$71.75 Kuaishoureported 2Q25 results:total revenue was up by 13%YoY toRMB35.0bn and adjusted net profit grew by 20% YoY to RMB5.6bn, 2% and11% ahead ofBloombergconsensusestimates, mainly thanks to the solid e-commercebusiness(GMV+18%YoY)and better-than-expected AImonetization (Kling AI revenue surpassing RMB250mn). For 3Q25E, we expecttotal revenue to grow by 13% YoY, driven by the strong momentum of e-commerce business and resilient growth of online marketing business. Weslightly raise our FY25-27E earnings forecastsby 0-1% to reflect the positivedevelopment onthe AI front. We raise our SOTP-derived TP to HK$84.0(previous:HK$80.0). We are upbeat on Kuaishou’s AI development andmonetization, given its SOTA visual generation model, strong product capability,and abundant use cases. Maintain BUY. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Acceleratinggrowth of core commercial businesses.By segmentin2Q25: 1)online marketing revenue grew by 13% YoY to RMB19.8bn.Revenue from external marketing services delivered solid growth driven bystrong demand form content-consumption, local services and automobilesectors. Closed-loop marketing service revenue was also up YoY, thanks tothe increasing demand foromni-platform marketing solutions;2) otherservices revenueincreased by 26% YoY to RMB5.2bn, 4% ahead ofconsensus estimate, mainly driven by both e-commerce and AI revenuecontribution. E-commerce GMV grew by 18% YoY to RMB359bn, fuelled bygrowth of paying users and increase in repeat purchasefrequency;3) livestreaming revenuegrewby 8%YoY to RMB10.0bn. Looking into 3Q25E,weforecast total revenue to grow by 13%YoY,with onlinemarketing/others/live streaming revenue+13/36/5% YoYrespectively. Ye TAO, CFAfranktao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Stock Data Source: FactSet Solid progress on the AI front.AI continued to drive business growth: 1)Kling AI revenue surpassed RMB250mn in 2Q25, and we expectthefull-year revenuefromKling AI to reachc.RMB950mn in FY25E (1% of totalrevenue); 2) the company launched OneRec, an AI recommendation modelwhich improved user time spent and retention rates throughrecommendingshort video content; 3) Kuaishou also leverages AI to better understandusers’behaviours andenables generation of marketing materials tailored tousers’interests, increasing conversion rates and driving low single-digitgrowth in online marketing revenue. Steadymargin despite step-up of AI investment.Adjusted NPMimproved by 1ppt YoY and 2pptsQoQ to 16% in 2Q25 despitethestep-upofAI investment (R&D expenses +21% YoY), mainly thanks to the strongoperating leverage.Given the strong monetization of Kling AI,managementexpectsFY25 Kling AI related capex to double from the previous budget atthebeginningof the year. That said,managementstillexpectsnon-GAAPNPM to be largely stable YoYinFY25. The company declared a specialdividendof HK$0.46 per share (c.1% dividend yield),and will continue togive back to shareholders through dividend and share repurchases. Source: FactSet Business forecasts updateand valuation Our SOTP-derived target price of HK$84.0comprises, per share: 1) HK$10.2for thelive streamingbusiness, based on1.0x 2025EEV/Sales, which isonpar with theaverageEV/Salesfor its peers. 2) HK$26.2for theonline marketingbusiness(excl. closed-loop marketing), based on16x2025EEV/EBIT, which ison par with theaverageEV/EBITfor its peers. 3) HK$41.0for thee-commercebusiness, based on0.10x 2025EEV/GMV. The targetmultipleisa discount to theaverageEV/GMVfor its peers(0.16x 2025E EV/GMV), giventhe relatively low monetization level of Kuaishou’s e-commerce business. 4) HK$6.7for net cash. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsiblefor the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/herassociates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.