Guotai Haitong: Maintains "buy" rating for KUAISHOU-W (01024), firm in AI investment strategy, online marketing recovery.

Guotai Haitong released a research report stating that it maintains a "buy" rating for KUAISHOU-W(01024) with a target price of HK$77.9. The significant improvement in Kuaishou's profitability in Q3 of 2025 is mainly attributed to the continuous recovery of online marketing service revenue and a steady growth of 15.2% in e-commerce GMV, with AI technology making a significant contribution in optimizing content creation, improving advertising effectiveness, and enhancing e-commerce conversion. Guotai Haitong's main points are as follows: - Acceleration in revenue growth, year-on-year improvement in profitability - In Q3 of 2025, Kuaishou achieved revenue of 35.55 billion yuan, a year-on-year increase of 14.1%. Gross profit margin was 54.7%, up 0.3 percentage points year-on-year. Operating profit was 5.3 billion yuan, a year-on-year increase of 69.9%; operating profit margin was 14.9%, up 4.9 percentage points year-on-year. Adjusted net profit was 4.99 billion yuan, a year-on-year increase of 26.3%; adjusted net profit margin was 14.0%, up 1.3 percentage points year-on-year. - Continuous improvement in baseline model quality, AI empowering internal and external application scenarios - In Q3 of 2025, Kuaishou's DAU and MAU were 416 million and 731 million respectively, up 2.1% and 2.4% year-on-year, with DAU/MAU at 56.9%. Average daily usage time per user was 134.1 minutes, with total user usage time up 3.6% year-on-year. E-commerce GMV reached 385 billion yuan, up 15.2% year-on-year, with short video e-commerce GMV maintaining healthy growth; general shelf e-commerce GMV accounting for over 32%. In September 2025, the Ke Ling AI launched the 2.5Turbo model, significantly improving in dimensions such as text response, dynamic effects, style preservation, and aesthetic effects, reducing the production cost of creators' single videos by nearly 30%. Ke Ling AI's revenue exceeded 3 billion yuan in Q3 of 2025. In addition, the application of AI large model technology, especially OneRec, has led to an approximately 4-5% increase in domestic online marketing service revenue in Q3 of 2025. - Continuous recovery in online marketing services, aided by AI technology to continuously upgrade online marketing placement products - Online marketing service revenue in Q3 of 2025 was 201 billion yuan, up 14.0% year-on-year. External and internal circulation marketing service revenue both achieved fast year-on-year growth; UAX consumption accounted for 70% of total consumption in external circulation. Live broadcast business revenue was 9.57 billion yuan, up 2.5% year-on-year. Other service revenue was 5.88 billion yuan, up 41.3% year-on-year. In Q3 of 2025, Kuaishou's e-commerce monthly average buyer structure tended towards healthy development, with the frequency of active users repurchasing increasing year-on-year. The end-to-end generative retrieval architecture OneSearch drove a nearly 5% increase in mall search orders, while OneRec brought about a high single-digit increase in GMV for e-commerce mall information flow. Risk warning - Increasing industry competition, weak macro environment, AI monetization falling short of expectations, etc.