Is Kuaishou Technology (SEHK:1024) Now A Buy After A Sharp Price Surge?

The recent volatility in Kuaishou Technology's (SEHK:1024) stock price has sparked debate among investors about whether the company's sharp price surge has corrected its valuation dislocation or created new risks. To assess this, we must dissect its valuation metrics, intrinsic value estimates, and financial health, while evaluating the margin of safety for potential buyers.

Valuation Dislocation: A Discounted Peer

Kuaishou's current Price-to-Earnings (P/E) ratio of 16.7x is significantly below both its industry peers' average of 25.1x and the broader Asian Interactive Media and Services sector's average of 20.5x according to Simply Wall St. This suggests the stock is trading at a discount relative to its peers, a dislocation that could stem from market skepticism about its growth trajectory or temporary macroeconomic pressures. However, intrinsic value estimates complicate this narrative. Alpha Spread calculates Kuaishou's intrinsic value at HK$109.87, implying a 27% undervaluation against its current price of HK$80.25 according to Alpha Spread. Analysts further back this with a 12-month average price target of HK$90.58, signaling a potential 20% upside according to Simply Wall St.

The company's Price-to-Book (P/B) ratio of 3.91 and an Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 2.7 (as of early 2026) according to TradingView. While the P/B ratio aligns with its historical average of 4.28, the EV/EBITDA ratio has plummeted from 9.51 in 2024 to 2.7, reflecting either a sharp improvement in profitability or a market-driven repricing of its future cash flows. This divergence from historical norms (11.63 for EV/EBITDA) raises questions about sustainability but also hints at a potential overcorrection in valuation.

Margin of Safety: Strong Fundamentals as a Buffer

Kuaishou's financial health bolsters its margin of safety. Its debt-to-equity ratio of 31.04% indicates prudent leverage management, avoiding the pitfalls that have plagued more indebted tech firms according to Yahoo Finance. Operational efficiency is evident in its levered free cash flow of CN¥21.41 billion over the trailing twelve months, a critical buffer against economic headwinds according to Morningstar.

Earnings growth in Q4 2025 further strengthens the case for optimism. Revenue reached CN¥35.046 billion, with net income of CN¥4.922 billion and EPS of 1.13, reflecting year-over-year improvements according to Investing.com. These figures suggest Kuaishou is not only stabilizing but also scaling profitably, a rare trait in the volatile social media sector.

Risks and Considerations

While the valuation appears attractive, investors must remain cautious. The EV/EBITDA ratio's sharp decline-though potentially reflecting improved margins-requires scrutiny to ensure it is not a function of one-time accounting adjustments. Additionally, Kuaishou's reliance on advertising revenue exposes it to macroeconomic cycles and regulatory shifts in China's tech sector.

Conclusion: A Buy with Caution

Kuaishou Technology's valuation dislocation, combined with its strong intrinsic value estimates and robust financials, presents a compelling case for a cautious buy. The stock's current discount to both peers and intrinsic value offers a margin of safety, while its earnings growth and free cash flow provide resilience. However, investors should monitor the sustainability of its EV/EBITDA contraction and broader macroeconomic risks. For those with a medium-term horizon and a tolerance for volatility, Kuaishou appears undervalued and warrants a closer look.