JP Morgan: if the AI valuation of Kuaishou-W (01024) reaches 52 billion US dollars, the valuation could reach 73 Hong Kong dollars per share.

JP Morgan released a research report stating that Kuaishou-W (01024) plans to spin off its film-generated large-scale AI business, with a target valuation of $20 billion. The Annual Recurring Revenue (ARR) of the AI business has reached $500 million. It is projected that by the first quarter of 2027, the ARR will reach $1.3 billion. The bank believes that the potential spin-off of Kling AI will be a significant value unlocking event for Kuaishou. According to a Sum of the Parts (SOTP) analysis, if Kling AI achieves a valuation of $52 billion, assuming an ARR of $1.3 billion in the first quarter of 2027, the target price per share of Kuaishou could reach HK$73. Therefore, the bank believes that the stock price of Kuaishou currently has upward potential, mainly driven by the unlocking of Kling AI value. JP Morgan believes that the potential spin-off listing or independent financing of Kling AI could become a catalyst for the revaluation of Kuaishou's valuation, providing upside potential for the stock price. The bank downgraded its rating on Kuaishou in March, primarily due to a slowdown in revenue growth in its core short video business (excluding Kling AI). However, it also pointed out at the time that as one of the few AI applications globally to reach $300 million in ARR, the unlocking of its value could bring potential upside to the stock price.