Open-source Securities: Maintaining a "buy" rating on KUAISHOU-W (01024) AI can empower the main business to accelerate commercialization and monetization.

Open Source Securities released a research report stating that it maintains a "buy" rating for KUAISHOU-W (01024), with Q3 revenue increasing by 14% year-on-year to 35.6 billion yuan, and profitability continues to improve. The growth is mainly driven by online marketing and e-commerce, with AI technology deeply empowering the main business, such as optimizing ad delivery and product matching. The commercialization of AI products is starting to show results, with revenue exceeding 3 billion yuan. The platform's user base and stickiness are steadily increasing, with e-commerce GMV increasing by 15% year-on-year to 385 billion yuan. The prospects for AI applications and e-commerce growth are still promising. The main points of Open Source Securities are as follows: Performance In Q3 2025, the company achieved revenue of 35.6 billion yuan (up 14% year-on-year), a profit of 4.49 billion yuan (up 37% year-on-year), and an adjusted net profit of 4.99 billion yuan (up 26% year-on-year). In terms of business segments, online marketing service revenue was 20.1 billion yuan, up 14% year-on-year, mainly due to the continuous upgrading of online marketing products through AI technology. Live streaming revenue was 9.6 billion yuan, up 3% year-on-year. Other service revenue was 5.9 billion yuan, up 41% year-on-year, mainly benefiting from the increase in e-commerce GMV and the enhancement of AI product capabilities. The gross profit margin for Q3 2025 was 54.7% (up 0.4 percentage points year-on-year), with sales/management/research and development expenses of 29.3%/1.9%/10.3% respectively (down 4.0/-0.6/+0.3 percentage points year-on-year). Cost reduction measures drove the net profit margin up by 2.1 percentage points year-on-year to 12.6%, with an adjusted net profit margin of 14.0% (up 1.3 percentage points year-on-year). It is expected that the company's net profit attributable to equity holders for the years 2025-2027 will be 180.53/192.89/219.94 billion yuan (previously 188.18/226.85/254.52 billion yuan), and the corresponding PE ratios for the current stock price are 14.2/13.3/11.7 times. We are optimistic about the deepening of AI applications driving core business growth and the gradual realization of the broad prospects of AI, maintain a "buy" rating. AI technology iteration empowers business growth, and innovative functions of Keliang may accelerate commercialization In terms of online marketing, the company iterates its online marketing product delivery, upgrades the end-to-end generative recommendation model OneRec, and introduces the generative reinforcement learning bid model G4RL. In Q3 2025, AI drove a 4-5% increase in domestic online marketing service revenue, with AIGC marketing materials bringing in over 3 billion yuan in consumption, and UAX (fully automatic delivery) penetrating over 70% in external circulation. In e-commerce, the end-to-end generative retrieval architecture OneSearch achieves more precise product matching and enhances the user experience, driving a nearly 5% increase in shopping mall search orders; OneRec also brings about a high single-digit increase in GMV for e-commerce mall information flow. In terms of live streaming, Keliang AI supports the launch of the AI Wanxiang gift customization function, with over 100,000 gifts made and sent out by users on the first day of launch. The company continues to enhance the basic model capabilities, with the Keliang AI 2.5 Turbo model reaching the top of the Artificial Analysis video list 10 days after its release; in Q3, it also launched the Agile Canvas, upgraded the first and last frame functions, and launched the DIGIHUMAN solution. In Q3 2025, Keliang AI revenue exceeded 3 billion yuan, and innovative functions may accelerate commercialization. The content ecosystem continues to prosper, with abundant supply of goods and enhanced user conversion driving high e-commerce growth In Q3, the user base and depth experienced double growth, with average DAU/MAU reaching new highs at 416/731 million (up 2.1%/2.4% year-on-year), and daily active user usage reaching 134.1 minutes (up 3.6% year-on-year). The e-commerce GMV reached 385 billion yuan in Q3 2025 (up 15% year-on-year). The company continues to attract merchants to join the platform, encourages the expansion of product categories, assists high-quality merchants and influencers in attracting followers and converting sales, and the high growth in e-commerce GMV and revenue may continue. Risk Factors Risks may include advertising performance efficiency lower than expected, slowdown in user growth, and AI iteration of Keliang not meeting expectations.