BofA Securities: KUAISHOU-W (01024) Can Ling AI Begins to Release Value, Maintains "Buy" Rating.

Bank of America Securities released a research report stating that it maintains a "buy" rating on KUAISHOU-W (01024) with a target price of HK$63 unchanged. The restructuring and financing of Lingxi AI by Kuaishou marks the beginning of releasing shareholder value for Lingxi AI, which will bring multiple potential benefits, including better retention and recruitment of talent, easing the company's cash flow pressure, realizing the hidden value of Lingxi AI's independent valuation, and providing further upside option for a potential future IPO. Lingxi AI's post-investment valuation is $18 billion, meaning Kuaishou's stake should be valued at approximately $12 billion, and with the company's net cash on hand totaling $26 billion, which is higher than the company's current market value. According to the financing arrangement, the initial investment amount for investors is $2 billion, and it can reach up to $3 billion according to the subscription agreement, with a pre-investment valuation of $15 billion and a post-investment valuation of up to $18 billion. After completing the financing and employee incentive plan, Kuaishou's stake will be 68.33%. The pre-investment valuation of Lingxi AI corresponds to a multiple of approximately 30 times the annual recurring revenue (ARR) of $500 million in March 2026, and the bank predicts an expected market sales ratio of approximately 14 times by 2027.