On January 28, Kuaishou-W (01024) opened higher and fluctuated upwards in morning trading. As of the time of writing, the stock was trading at HK$81.25, up 3.11%, with a turnover of approximately HK$1.24 billion. The catalyst for the move was a recent research report from UBS, which highlighted the strong initial commercialization progress of Kuaishou's video-generative AI product, Kling AI, in early 2026, prompting the bank to raise its sum-of-the-parts valuation and target price for Kuaishou.
UBS pointed out that following the company's disclosure that Kling AI's Annual Recurring Revenue (ARR) reached $240 million in December 2025, reports from LatePost indicated that Kling's daily revenue in January 2026 increased by approximately 30% compared to the December 2025 level, suggesting further upside potential for monetization. Concurrently, Kling's Monthly Active Users (MAU) surpassed 12 million in January, with its paying user base growing by 350% month-over-month.
UBS believes these advancements are primarily attributable to a series of product iterations since late 2025, including the world's first unified multimodal video model, Kling O1, the Kling 2.6 model featuring "audio-visual synchronization," and a novel motion control function. The motion control feature, in particular, allows users to generate character videos with precisely controlled actions and expressions by uploading a local video or selecting a motion from a library to imitate, and then uploading a reference image of the character. The simplicity of operation and engaging玩法 have lowered the barrier to entry, fueling organic discussions about the product.
The viral spread of "pet dancing" AI videos, which originated in South Korea and gained global traction, has also contributed to a wave of "viral marketing" for Kling AI. Regarding user demographics, UBS noted that Kling is gradually expanding beyond professional user circles and penetrating a broader base of general consumers.
The bank views this trend as beneficial for further expanding the user base and enhancing the scalability of its commercialization efforts. UBS estimates the global potential user base for video-generative AI to be between 90 million and 140 million people, corresponding to an annual revenue potential of approximately $11 billion to $23 billion, with overall industry penetration still at a relatively low level.
Based on this assessment, UBS has raised its 2026 revenue forecast for Kling to RMB 2.3 billion, representing a year-on-year increase of 128%. Simultaneously, UBS maintained its "Buy" rating on Kuaishou and increased its target price from HK$95 to HK$108. UBS stated that the target price hike primarily reflects an increased valuation assigned to Kling.
For Kuaishou's core business, UBS anticipates that excluding Kling, the core operations—encompassing e-commerce, advertising, and live streaming—are still expected to achieve steady growth in both revenue and operating profit for 2026, and the current valuation level remains attractive compared to peers.
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