Bank of America Securities has issued a research report reaffirming its "Buy" rating on Kuaishou-W (01024), setting a target price of HK$63 and highlighting its attractive valuation.
The report notes that the company's net cash position is close to half of its share price, implying a cash-adjusted price-to-earnings ratio of approximately 5 times for the fiscal year ending 2026.
Within the firm's sum-of-the-parts valuation, it assigns a value of HK$31 to Kuaishou's AI model, Kling AI, equating to US$18 billion, based on a projected price-to-sales multiple of 35 times for fiscal year 2026.
The report indicates that following Kuaishou's investor conference, the firm holds an optimistic view on Kling AI, citing its world-leading position in AI video generation and accelerating commercialization efforts.
Revenue forecasts for Kling AI are seen to have potential upside, and future model upgrades and value-unlocking events will be closely monitored.
The report mentions that Kuaishou announced in May it is evaluating options to restructure Kling AI, which may involve external financing.
The primary purpose of such financing would be to retain and attract talent.
Regarding a potential initial public offering for Kling AI, the report suggests it typically requires a certain period to obtain the necessary regulatory approvals.
For Kuaishou's core business, growth is anticipated to resume as comparisons normalize in the coming period.
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