Shenwan Hongyuan has released a research report reiterating a "Buy" rating on Kuaishou-W (01024). The report highlights that Kuaishou's Kling AI underwent intensive updates in December, launching the world's first full-modal video model, Kling O1, and its first audio-visual simultaneous output model, Kling 2.6. These advancements significantly enhance video generation efficiency and expand application scenarios, which are expected to drive user and revenue growth. The Kling series holds a price advantage over competitors like Google Veo and Sora, and its AI technology has effectively driven growth in core businesses such as advertising and e-commerce. The company's main businesses are projected to maintain steady development through 2026. Shenwan Hongyuan's key viewpoints are as follows: Kuaishou's Kling AI received密集 updates in December. The Kling 2.6 version achieves audio-visual simultaneous output for the first time, while the Kling O1 version enables full-modal instruction, which is expected to boost user numbers and payment conversion rates. Key launches include: 1) the world's first unified multi-modal video model, Kling O1; 2) the first audio-visual simultaneous output model, Kling 2.6; 3) Kling Digital Human 2.0; and 4) the Kling O1 Subject Library and Comparison Templates. The report posits that the Kling O1 model is the world's first video generation model supporting full-modal editing, allowing for better workflow integration and efficiency gains. The Kling 2.6 version's support for simultaneous audio and video output enables better integration with sectors like gaming, advertising, short dramas, and live streaming. Both significant updates are anticipated to drive increases in user count and payment rates. According to Similar Web data, by the end of December 2025, global traffic to the Kling AI website showed marked growth, with single-day visits surpassing competitors such as Minimax's HaiLuo, Runway, and Midjourney by the end of the month. Kling 2.6 and Kling O1 possess a clear price advantage over Google Veo 3.1 and Sora 2. For the high-quality audio-visual simultaneous output version of Kling 2.6, the cost per second for generating video is RMB 0.88, 0.78, 0.73, and 0.44 for Gold, Platinum, Diamond, and Black Gold members, respectively. This represents a significant price advantage compared to Google Veo 3.1 (Standard API priced at $0.4/sec, Fast version at $0.15/sec) and Sora 2-pro (priced at $0.3/sec). The highest quality Kling 2.6 version is essentially in the same price range as Sora 2, priced at $0.1 per second. According to Kuaishou's financial reports, Kling AI revenue exceeded RMB 300 million in Q3 2025, and the company expects full-year revenue to potentially reach $140 million. The "One" series of end-to-end generative models continues to boost core businesses. The "One" series models have contributed to growth in both marketing and e-commerce: 1) In marketing, large AI models, particularly OneRec, contributed approximately a 4%-5% increase to Kuaishou's domestic marketing revenue in Q3 2025; 2) In e-commerce, the launch of the end-to-end generative search architecture, OneSearch, has enabled more accurate product matching and optimized user experience, driving a 5% increase in mall search orders. Looking ahead to 2026, the institution expects the company's core businesses to maintain steady growth. According to a company voluntary announcement, the recent cyberattack was addressed immediately with contingency plans, and live streaming functionality has been gradually restored to normal service, with other operations unaffected. The report suggests that live streaming revenue has undergone strict ecosystem governance in recent years, and with the growth of core advertising and e-commerce businesses, the impact of the relatively lower-margin live streaming segment on the main business is limited. Risk warnings include potential revenue shortfalls due to live streaming ecosystem governance; slower-than-expected macroeconomic recovery impacting advertising and e-commerce revenue; slower-than-anticipated AI progress; and risks associated with overseas regulatory impacts hindering the progress of international operations.
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