Goldman Sachs reiterates "buy" on Kuaishou: undervalued with a target price of HKD 87.

On February 12, Goldman Sachs released a research report, reaffirming its "buy" rating on Kuaishou (01024) and giving a 12-month target price of 87 Hong Kong dollars, representing a 25% upside from the current stock price. Goldman Sachs focused on the competition between Kuaishou's video generation model "Keylings" and ByteDance's Seedance 2.0 in the report. The report stated that with the release of Keylings 3.0, its capabilities in multimodal generation, image consistency, storyboard control, and multi-language audio generation have significantly improved, placing its overall technical level among the global top tier. Although some market feedback suggests that Seedance 2.0 has better performance in physical movement and complex action handling, Goldman Sachs pointed out that Keylings AI still remains competitive in image consistency, commercial scene adaptation, and professional creative capabilities, especially possessing differentiation advantages in the enterprise and professional user markets. Goldman Sachs believes that the AI video generation industry is still in a rapid expansion phase and will not form a monopoly by a single platform. With continuous upgrades in model capabilities and expansion of application scenarios, Goldman Sachs predicts that the global AI video generation market will expand by about 10 times in the next five years, reaching approximately $29 billion by 2030. In the context of industry expansion, multiple leading models will benefit together. In terms of commercialization pace, Goldman Sachs cited third-party data indicating that Keylings AI has seen significant acceleration in overseas users and revenue since December last year, and this trend is expected to continue this year. Goldman Sachs expects Keylings AI revenue to reach approximately $280 million by 2026, with a year-on-year growth of over 90%. In terms of valuation, Goldman Sachs estimated that the implied valuation of Keylings in the current stock price is approximately $5 billion. The report suggests that this valuation does not fully reflect its growth potential. The report indicates that after the recent stock price decline, the valuation level of Kuaishou is now in a relatively reasonable range, and the long-term growth space of its AI business is still not fully reflected in the current stock price, hence the "buy" rating is maintained.