Citibank: Raises KUAISHOU-W (01024) target price to HKD 95, optimistic about the growth potential of Ke Ling AI.

Citi released a research report stating that Kuaishou-W (01024) is likely to announce its performance around the end of March, with its revenue and adjusted profit expected to roughly meet market expectations. Due to current policy developments and the high base effect, the bank maintains its forecast that the total gross merchandise volume (GMV) growth of the company will slow down to 13% in the fourth quarter of 2025. The efficiency improvement brought by artificial intelligence, as well as the excellent performance in vertical fields such as short videos, comics, and mini-games, are expected to drive the mainland advertising business. Citi expects that the annual revenue of Keling AI will record strong year-on-year growth. The bank will incorporate the good growth momentum of Keling AI into the valuation model and raise the target price from HK$88 to HK$95, with a "buy" rating. The bank predicts that Kuaishou's total revenue in the fourth quarter will increase by 9.6% year-on-year to 38.8 billion RMB (same below), in line with market consensus. The revenue growth will be driven by advertising and other services, which are expected to increase by 12% and 22.5% year-on-year respectively, assuming a 13% year-on-year increase in GMV. Due to the revenue structure tilting towards advertising and e-commerce during peak season, the gross profit margin is expected to increase from 54.7% in the third quarter to 55.5%; while adjusted operating profit margin is estimated at 16.1% due to increased artificial intelligence research and development costs, and adjusted profit is expected to be 5.4 billion RMB, in line with market consensus. In terms of the outlook for core business, Citi expects that the growth of live e-commerce on Kuaishou will still be faster than traditional e-commerce platforms in 2026. The bank believes that Kuaishou will continue to strengthen its traffic support for Key Opinion Leaders (KOLs) and shelf e-commerce to drive GMV growth, while continuing to improve artificial intelligence tools to enhance advertising efficiency.