STOCKS | Daiwa Cuts Kuaishou Target Price 7.5% To HK$37

Daiwa cut its target price on Kuaishou (01024) by 7.5% to HK$37 from HK$40 and kept a Hold rating, according to ETNet. The broker said Kuaishou management acknowledged at its investor day that the core business will face two difficult quarters, but reiterated confidence in the long-term potential of the short-video industry and Kling AI. Daiwa said Kling AI's next major model will focus on professional creators, and noted the unit recently completed about $3 billion in financing at a post-money valuation of $18 billion. Kuaishou still holds about 68% of Kling, while overseas markets account for about 75% of Kling's revenue. Daiwa said Kuaishou's three core businesses will remain under pressure over the next two quarters. It cited weak consumer demand and tighter tax enforcement on e-commerce as key drags, and expects the pressure to last until the fourth quarter of 2026 before conditions improve from 2027 as the base becomes lower and operations normalize. The broker also estimated the game business could generate more than RMB 200 million in revenue in 2026, with attractive margins, though its long-term performance still needs to be watched. Daiwa raised its 2026-2028 earnings per share forecasts for Kuaishou by 1% to 3% to reflect the game contribution, and lowered its valuation target to 6 times average 2026-2027 core business earnings from 7 times previously, while keeping Kling AI valued at 15 times price-to-sales.