Citigroup: maintains a "buy" rating on Kuaishou, spin-off can unlock its potential value.

Citi released a research report stating that there are media reports that Kuaishou plans to spin off its artificial intelligence video generation unit Ke Ling and plans to go public next year. According to the report, Kuaishou has been in talks with potential investors regarding pre-listing financing for Ke Ling, seeking a valuation of $20 billion based on an expected annual recurring revenue target of approximately $1.3 billion for the first quarter of 2027. The bank was not surprised by this unconfirmed report, believing that as an industry leader, Kuaishou's spin-off could unlock the value of Ke Ling, explaining the sharp rise in the stock price last week. According to SensorTower data, Ke Ling's mobile app revenue momentum has recently rebounded, mainly driven by the U.S. market. The bank believes that the next major update could be released on or before June 6th, the one-year anniversary of Ke Ling. Citi has a target price of HK$72 for Kuaishou and maintains a "buy" rating.