Tianfeng Securities: Maintaining the Kuaishou-W (01024) “Buy” rating, a high increase in external circulation advertising and superposition can contribute to revenue growth

Zhitong Finance App learned that Tianfeng Securities released a research report saying that considering the high growth rate of Kuaishou-W (01024) external circulation advertising combined with the increase in revenue contributed by Colin, the bank expects the company's revenue to be 141.3/152.2 billion yuan in 2026 (140.7 billion yuan 25 years ago), respectively; considering the company's increased investment in AI, the bank expects the company's adjusted net profit for 2025-2026 to be 196/23.4 billion yuan (21.6 billion yuan 25 years ago), maintaining a “buy” rating.

The main views of Tianfeng Securities are as follows:

24Q4 performance highlights: revenue and profit are in line with expectations

The company announced 24Q4 results. In 2024Q4, the company achieved operating income of 35.4 billion yuan, an increase of 8.7% year on year; adjusted net profit was 4.7 billion yuan, up 7.8% year on year, and gross profit was 19.1 billion yuan, up 10.6% year on year. Sales and marketing expenses increased 11% year over year to $11.3 billion, accounting for 32% of total revenue. The increase was mainly due to increased spending on promotional activities. R&D expenses increased 4.7% year over year to 3.5 billion yuan, accounting for 9.8% of total revenue. The increase was mainly due to an increase in employee benefit expenses. Administrative expenses increased 15.2% year over year. The bank believes that the company's core business revenue is growing steadily, and suggests continuing to pay attention to the increase in users and revenue brought by Keling.

Traffic side: User traffic reached a record high, and DAU and time length both increased slightly year-on-year

The average DAU/MAU for Kuaishou applications in 2024Q4 was 401/736 million, up 4.8%/5.0% year on year; the average daily usage time of each DAU was 125.6 minutes, and the total user usage time increased 5.8% year on year. Looking forward to the future, the bank believes that the company's single user acquisition and retention costs or continuous optimization will further increase user acquisition ROI.

AI: Expected to drive revenue growth

Keling: 2024Q4, the company's biggest video model, launched the 1.6 version. The image quality in terms of style maintenance, image color, lighting effects, and detailed performance was improved, maintaining the world's leading technical advantage. At the same time, in 2024Q4, the company launched the Keling AI independent app. From the beginning of monetization until February 2025, the cumulative revenue exceeded RMB 100 million.

AI internal empowerment: The company continues to deepen the application of AI models in the content ecosystem and commercial ecosystem. The average daily consumption of 24Q4 AIGC marketing materials exceeds RMB 30 million.

Online marketing business: Strong growth in external circulation advertising, steady growth in internal circulation advertising

2024Q4, online marketing service revenue reached 20.6 billion yuan, up 13.3% year on year. The growth was mainly driven by external circulation marketing services, where customer marketing service bids (eCPM) achieved a high year-on-year increase in the number of units; judging from external circulation, the content consumption industry, including skits, games, and novels grew significantly, and the proportion of UAX consumption in the external circulation further increased to over 55%; looking forward to the future, the company expects the total consumption of 24Q4 merchants to account for 55% of the total internal circulation consumption. External circulation advertising has maintained a strong growth trend, and internal circulation advertising is still expected to synchronize with GMV's growth rate.

Revenue from other services (including e-commerce): Pan-shelf GMV is expected to increase steadily

2024Q4, the company's revenue from other services increased 14.1% year on year to 4.9 billion yuan, and Kuaishou e-commerce GMV increased 14.4% year on year to reach RMB 462.1 billion. On the supply side, the average monthly number of Kuaishou e-commerce merchants increased by more than 25% year-on-year, mainly due to the company's continued promotion of new merchant strategies such as the “Doujin Plan” and “Launch Plan”; on the demand side, the number of monthly active buyers of Kuaishou e-commerce increased 10% year-on-year to 143 million, and the monthly active user penetration rate reached 19.5%; looking forward to the future, the GMV share of the GMV in the general shelf will continue to increase significantly in 2024Q4 (2024Q4 GMV accounts for 30%). Expected to arrive soon 13%

Live streaming rewards business: the number of signed associations and anchors is growing steadily

The 2024Q4 live streaming business revenue was RMB 9.8 billion. By the end of the third quarter, the number of guild organizations signed up to the platform had increased 30% year over year, and the number of signed anchors had increased 60% year over year.

Overseas business: ROI drives growth and pursues commercialization in core regions

Overseas revenue increased 52.9% year-on-year in 2024Q4, with online marketing services increasing 83.5% year-on-year. Among them, the number of daily active users (DAU) in Brazil increased 9.3% year over year, and the average daily DAU usage time in a single day exceeded 75 minutes, which was a steady increase over the same period last year. The bank believes that the company will invest key resources in key countries where users are concentrated, the ecology is more mature, and commercial monetization can be initiated.

Risk warning: The growth in the number and length of Kuaishou users fell short of expectations; the review of live streaming content became stricter; the increase in the number and repurchase rate of e-commerce paying users fell short of expectations; overseas business expansion and commercialization fell short of expectations.