Guosen Securities Co.,Ltd. has issued a research report maintaining an "Outperform" rating for KUAISHOU-W (01024), with projected adjusted profits of 20.2/23.8/28.1 billion yuan for fiscal years 2025-2027, representing year-over-year growth of 11%/18%/18% and a CAGR of 15%, corresponding to PE ratios of 14x/12x/10x. The company distributed its first special dividend of HK$0.46 per share in Q2 2025, totaling HK$2 billion. Combined with share buybacks, the estimated current shareholder return rate stands at approximately 2%. As of June 2025, Kuaishou's total available funds reached 101.9 billion yuan, establishing a solid foundation for future AI business development and shareholder returns. Excluding borrowings, net cash amounts to 89.7 billion yuan. Kuaishou has joined the ranks of global first-tier AIGC manufacturers with promising prospects. Key areas to monitor include: 1) AI optimization, particularly algorithm improvements for core advertising businesses; 2) Kling revenue growth rate and global AIGC development trends.
**Kuaishou's Advertising Business Accounts for Over Half of Revenue, Early Focus on Inclusive Value Philosophy**
Kuaishou emphasizes content ecosystem development and user community operations with relatively light commercialization. The early "inclusive" value proposition enabled Kuaishou to support grassroots users, creating substantial private domain traffic. Analysis indicates significant growth potential for Kuaishou's advertising monetization per unit time, currently at 0.23 yuan per hour in 2024.
Kuaishou has strengthened operational capabilities through: ①Ending the dual-leadership structure of Su Hua and Cheng Yixiao in 2021; ②Cheng Yixiao assuming responsibility for the e-commerce division in 2022, with increased integration between commercialization and e-commerce divisions and gradual data consolidation; ③Current efforts in advertising technology and small merchant support.
**Core Business Development**
①OneRec recommendation algorithm upgrades drive user engagement growth, with current user numbers and per-user time maintaining single-digit growth; ②AI-powered advertising business efficiency improvements through more precise recommendations. AIGC reduces advertising material production costs, allowing merchants more budget flexibility for marketing solutions and increased advertising spending. According to Q2 2025 earnings call, AI-driven improvements in click-through and conversion rates contributed low single-digit growth to Kuaishou's advertising revenue.
**Kling's Market Position**
Kuaishou occupies a first-tier position in the AIGC field, with revenue experiencing rapid growth targeting a future market worth hundreds of billions of dollars. As of July 2025, Kling AI serves over 45 million creators globally. Since launch, the product has undergone more than 30 iterations, generating over 200 million videos and 400 million images, establishing itself as a comprehensive AI productivity engine. Kling leads in commercialization progress with annual revenue expected to exceed $125 million. Overseas revenue accounts for over 70%, making it a globally influential AI video product. According to Poe data, Kling AI achieved 30% market share in AI video usage in May 2025.
**Competitive Analysis of AI Video Products**
The competitive landscape divides into C-end and B-end focused products: 1) Typical C-end products leverage ecosystem and user advantages, such as overseas Veo3 integrating with Google's Gemini and YouTube platforms, ranking third globally in AI video usage market share; 2) Typical B-end products focus on vertical domains with comprehensive product matrices, such as overseas Runway's first-mover advantage in brand recognition, specializing in film and television with Gen series (text-to-video/image-to-video), Act series (motion capture), and Aleph (video editing) tools, currently holding second place globally in AI video usage.
As China's second-largest short video platform, Kuaishou possesses natural C-end ecosystem advantages with B-end business accumulation in short dramas and advertising. Kling AI demonstrates superior performance in realistic video styles, continuously iterating in generation quality and controllability.
**Market Commercialization Prospects**
AI video commercialization scenarios primarily include advertising production and film/TV special effects. Current global AI video creators exceed 100 million, with long-term market scale projected to reach hundreds of billions of dollars. Analysis suggests medium to short-term global market demand for Kling exceeds 20 billion yuan.