J.P. Morgan: Maintains "overweight" rating on KUAISHOU-W (01024), 4Q25 performance stable and exceeding expectations, live streaming and advertising businesses are bright spots.

On March 26th, JPMorgan released a research report maintaining a "hold" rating on Kuaishou-W (01024) with a target price of 89 Hong Kong dollars. The bank believes that Kuaishou's performance in the fourth quarter of 2025 was overall strong, with revenue slightly exceeding market expectations, and advertising and the Kuaishou AI business continue to be the main highlights. The report shows that Kuaishou achieved revenue of 39.568 billion yuan in the fourth quarter of 2025, a year-on-year increase of 12%, which was about 2% higher than market expectations. Adjusted net profit was 5.463 billion yuan, a year-on-year increase of 16%. Online marketing service revenue was 23.618 billion yuan, up 15% year-on-year, and other service revenue was 6.295 billion yuan, up 28% year-on-year. JPMorgan believes that the better-than-expected other service revenue was mainly driven by the increase in Kuaishou AI revenue and the enhancement of non-advertising monetization in e-commerce. Advertising business remains one of the core highlights this quarter. JPMorgan points out that Kuaishou's advertising growth rate in the fourth quarter increased from 14% in the third quarter of 2025 to 15%, to a certain extent dispelling concerns in the market about slowing demand for e-commerce advertising. At the same time, the empowerment of AI in the core business has begun to more quantifiable revenue contributions, driving an additional 5% growth in Kuaishou's domestic online marketing service revenue in the fourth quarter. The commercial progress of Kuaishou AI has also attracted attention. The report states that in the fourth quarter of 2025, Kuaishou AI revenue increased by 13% quarter-on-quarter to 340 million yuan, with monthly revenue reaching 20 million USD in December. JPMorgan believes that this indicates that there is still ongoing demand for paid AI video generation products, and Kuaishou is expected to become an important increment in the company's valuation system in the future. The bank also points out that in the medium to long term, Kuaishou still has room to further improve monetization efficiency in the advertising and e-commerce fields, and the prospects for profit growth in the core business remain healthy. With the revenue structure continuing to tilt towards high-margin businesses such as advertising and e-commerce, the company's profit margin is expected to continue to improve. In terms of shareholder returns, Kuaishou announced a final dividend of 3 billion Hong Kong dollars, equivalent to 0.69 Hong Kong dollars per share; combined with the special dividend announced earlier, the total corresponds to a dividend yield of about 2.2%. JPMorgan believes that while continuing to increase AI investment, the company is still maintaining cash return arrangements, which helps strengthen market recognition of its financial stability. On the valuation front, JPMorgan points out that Kuaishou's current price-to-earnings ratio for 2026 is around 9 times, still in a relatively attractive range, and has not fully reflected the potential value of the Kuaishou AI business, therefore maintaining a "hold" rating and a target price of 89 Hong Kong dollars.