UOB Kay Hian
Report Date: Friday, 22 August 2025
Kuaishou Technology Delivers Margin Expansion and AI-Led Growth in 2Q25: In-Depth Analysis & Investor Outlook
Overview: Kuaishou Technology’s Strong 2Q25 Performance and Strategic AI Investments
Kuaishou Technology, a leading content community and short video platform, reported robust second quarter 2025 (2Q25) results, highlighting double-digit revenue growth, margin expansion, and intensified investments in artificial intelligence through its Kling AI initiative. UOB Kay Hian reiterates its BUY rating on Kuaishou, raising the target price to HK$89.00, reflecting confidence in ongoing monetization momentum, operational efficiency, and the company’s AI-driven future.
Key Stock Data and Shareholder Information
Share Price: HK$71.75
Target Price: HK$89.00 (previously HK$80.00)
Upside Potential: +24.0%
Market Cap: HK$309,675.3 million (US$39,631.3 million)
52-Week Range: HK$81.65 – HK$37.55
Major Shareholders:
Tencent Holdings Ltd: 18.9%
Morningside Venture Capital Ltd: 15.7%
China Asset Management Co Ltd: 8.4%
FY25 NAV/Share: RMB 20.91
FY25 Net Cash/Share: RMB 8.56
2Q25 Financial Highlights: Revenue and Profit Beat, Kling AI Accelerates
Kuaishou’s 2Q25 results were in line with expectations, driven by strong growth in online marketing, live streaming, and e-commerce. Notably, Kling AI’s revenue contribution is ramping up faster than previously anticipated.
| Metric |
2Q25 |
1Q25 |
2Q24 |
YoY Change |
QoQ Change |
| Total Net Revenue (RMB m) |
35,046 |
32,608 |
30,975 |
+13% |
+7% |
| Live Streaming Revenue |
10,044 |
9,814 |
9,302 |
+8% |
+2% |
| Online Marketing Revenue |
19,765 |
17,977 |
17,515 |
+13% |
+10% |
| Other Services Revenue |
5,237 |
4,817 |
4,158 |
+26% |
+9% |
| Gross Profit (RMB m) |
19,504 |
17,792 |
17,135 |
+14% |
+10% |
| Non-IFRS Net Income (RMB m) |
5,618 |
4,580 |
4,679 |
+20% |
+23% |
| Non-IFRS Operating Profit Margin |
17% |
15% |
15% |
+2ppts |
+2ppts |
Key Observations:
Online marketing revenue surged 13% YoY, led by external ads, especially in content-consumption and local services sectors.
Live streaming reversed previous declines, up 8% YoY, driven by a 20% increase in partnering talent agencies and a 30% rise in agency-managed streamers.
E-commerce GMV climbed 18% YoY with e-commerce revenue up 26% YoY to RMB 5.2b.
Kling AI contributed RMB 250m in revenue in 2Q25, prompting management to raise the full-year revenue target for Kling AI to RMB 900m (US$125m).
Solid User Growth and Engagement Metrics
Kuaishou reported healthy user expansion and engagement, critical for sustaining future monetization:
Average Daily Active Users (DAU): 409 million (+1m QoQ, +14m YoY)
Monthly Active Users (MAU): 715 million (+3m QoQ, +23m YoY)
DAU/MAU Ratio: 57.2% (a strong indicator of engagement)
Average Daily Time Spent per DAU: 127 minutes (stable YoY)
Profitability and Margin Trends
Gross profit grew 14% YoY to RMB 19.5b in 2Q25.
Gross margin remained steady at 55.7%.
Non-IFRS operating profit rose 30% YoY to RMB 6b, with the non-IFRS operating margin at 17%.
Domestic business grew 20% YoY to RMB 5.4b.
Overseas segment turned profitable with RMB 19m operating profit in 2Q25, compared to a loss of RMB 277m in 2Q24.
Guidance for 3Q25 and Full Year 2025
3Q25 revenue expected to grow 13.5% YoY, supported by e-commerce monetization and Kling AI contributions.
Adjusted net profit guidance for 3Q25: RMB 4.9b (+24% YoY), implying a net margin of 13.8%.
3Q25 revenue growth by segment:
Online marketing: +13% YoY
Other services: +37% YoY
Live streaming: +5% YoY
E-commerce GMV expected to rise 15% YoY in 3Q25.
S&M, R&D, and G&A ratios are projected to remain stable at 31%, 10%, and 2.3% respectively, factoring in AI-Generated Content (AIGC) investment.
DAU projected to grow 2% YoY to 414m in 3Q25, with DAU/MAU ratio stable at 57%.
Full-year 2025 revenue growth guidance: 11-12% YoY.
Segmental 2025 revenue growth guidance:
Online marketing: +14.5% YoY
Live streaming: +3% YoY
Other services: +19.5% YoY
Kling AI full-year revenue guidance: RMB 900m (was RMB 440-450m).
Capex expected to rise from RMB 10b to RMB 11-12b, mainly for AI computing investments.
Adjusted net profit expected to grow 11-12% YoY to RMB 20b in 2025, with a stable net margin of 14%.
Special Dividend Announcement
For the first time since its listing, Kuaishou declared a special dividend of HK$0.46 per share, totaling HK$2b.
Earnings Revisions and Risks
UOB Kay Hian raised 3Q25 and 2025 revenue forecasts by 2% and 1%, respectively, reflecting robust e-commerce and Kling AI contributions.
3Q25/2025 net profit estimates were also lifted by 1%.
Key risks include:
Weaker advertisement demand due to macroeconomic headwinds.
Intensifying competition from Douyin.
Regulatory restrictions on minor’s video consumption.
Potential losses from new business initiatives.
Valuation and Investment Recommendation
BUY rating maintained, with target price lifted to HK$89.00, implying 14x 2026F PE, in line with sector peers.
Kuaishou trades at 11x 2026F PE, with an estimated 23% EPS CAGR over the next three years.
Share price catalysts:
Higher monetization rates across segments.
Easing competition.
Supportive government policies.
Loosening of internet platform regulations.
Key Financials and Forecasts
| Year (RMBm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
113,470 |
126,898 |
142,769 |
156,900 |
170,767 |
| EBITDA |
13,798 |
22,688 |
25,660 |
30,558 |
36,485 |
| Operating Profit |
6,740 |
15,697 |
18,051 |
22,358 |
27,648 |
| Net Profit (Adj.) |
10,580 |
18,126 |
20,357 |
25,123 |
29,765 |
| EPS (Fen) |
238.2 |
411.4 |
472.9 |
583.6 |
684.6 |
| PE (x) |
27.7 |
16.0 |
13.9 |
11.3 |
9.6 |
| Net Margin (%) |
5.9 |
12.4 |
12.3 |
14.0 |
15.4 |
| Net Debt/(Cash) to Equity (%) |
(26.3) |
(17.3) |
(40.9) |
(54.6) |
(65.1) |
SOTP Valuation Breakdown (2026F)
| Segment |
2026F Revenue (RMBm) |
2026F GMV (RMBm) |
Net Profit (RMBm) |
PS(x) |
PE(x) |
To Kuaishou (HK\$m) |
HK\$/share |
| Live Streaming |
41,174 |
6,176 |
5 |
33,042 |
7 |
– |
– |
| Online Marketing |
90,068 |
16,663 |
3 |
16 |
285,263 |
64 |
– |
| E-commerce |
21,657 |
1,748,616 |
4,331 |
15 |
65,486 |
15 |
– |
| Kling AI |
1,723 |
– |
10 |
– |
18,433 |
4 |
– |
| Others |
4,002 |
– |
3 |
12,845 |
3 |
– |
– |
| SOTP Value |
383,791 |
89 |
Conclusion: Investment Thesis and Outlook
Kuaishou Technology stands out as a growth leader in China’s digital content and e-commerce ecosystem. With strong user engagement, accelerating AI monetization, and a demonstrated ability to deliver margin expansion, the company is well-positioned for continued growth. Strategic investments in AI, robust e-commerce, and resilient domestic business fundamentals underpin a compelling investment case, further supported by the inaugural special dividend.
For investors seeking exposure to the next phase of China’s digital transformation, Kuaishou Technology offers an attractive opportunity, combining operational excellence, strong financials, and innovative growth drivers.
