Citigroup Boosts Kuaishou Target Price 33% on Strong Q2 Outlook

Citigroup has raised its target price for Kuaishou, a leading short-video platform, from 66 Hong Kong dollars to 88 Hong Kong dollars. This adjustment is based on the expectation that Kuaishou's second-quarter performance will meet market forecasts, reflecting a potential 21% upside from the latest closing price of 72.4 Hong Kong dollars. The upgrade comes as Kuaishou is set to release its second-quarter financial results in late August, a period when multiple institutions have issued bullish reports on the company.

Citigroup's analysts highlighted two key factors driving their optimism. Firstly, the commercialization of Kuaishou's video generation model, known as Kuaishou AI, has exceeded expectations. The company reported monthly revenue surpassing 100 million yuan in April and May, building on the first quarter's performance of over 150 million yuan. This suggests that Kuaishou's annual revenue could significantly surpass the management's guidance of 1 billion yuan. Secondly, the platform's e-commerce advertising capabilities have improved, with second-quarter advertising revenue growth expected to accelerate to 12.3%. This is primarily due to increased advertising spending by e-commerce merchants and a rebound in non-e-commerce advertising demand.

For the upcoming second-quarter results, Citigroup forecasts that Kuaishou's revenue will grow by 11% year-over-year to 34.5 billion yuan, with adjusted net profit estimated at 5.1 billion yuan. These projections align with market expectations. The report emphasizes that with the continued optimization of the e-commerce advertising system and the sustained revenue generation from Kuaishou AI, the company is poised for robust growth in the second half of the year. This positions Kuaishou to achieve its annual target of a 13% increase in Gross Merchandise Value (GMV).

On the valuation front, Citigroup has switched its evaluation benchmark to 2026 financial performance, increasing the price-to-earnings ratio from 13 times to 15 times. This adjustment reflects the bank's confidence in Kuaishou's long-term growth prospects and its ability to deliver on its financial targets. The upgrade in target price and valuation multiple underscores Citigroup's bullish stance on Kuaishou, positioning the company for continued success in the competitive short-video and e-commerce landscape.