Orient Securities has issued a research report forecasting KUAISHOU-W's (01024) adjusted net profit attributable to shareholders for 2026-2028 to be 17.0/18.5/20.4 billion yuan. Based on comparable companies, the firm is valued at 17x P/E for 2026, corresponding to a fair value of 281.6 billion CNY, or 322.0 billion HKD (assuming an exchange rate of 0.875 HKD/CNY). This translates to a target price of HK$74.06 per share, leading to a maintained "Buy" rating. Orient Securities' key views are as follows:

The Kling model combines leading capability with cost-effectiveness, with its 4K direct output feature targeting the film and television sector for differentiation. In terms of model capability, according to the Artificial Analysis text-to-video ranking, domestic models Alibaba's Happyhorse-1.0, ByteDance's Seedance2.0, and KUAISHOU's Kling 3.0 occupy the top three positions. Since the release of Kling 1.0 in June 2024, despite changes in the competitive landscape due to new model launches, the Kling series has consistently remained in the top tier, demonstrating leading technical prowess. Regarding pricing, the API cost to generate a one-minute video for Happyhorse-1.0, Seedance2.0, and Kling 3.0 is $14.4, $22.4, and $13.4, respectively, indicating Kling offers more prominent overall value. In terms of feature iteration, Kling recently launched a 4K direct output function. Feedback from creators suggests it offers stronger deliverability, particularly in fields with stricter requirements like advertising and film/TV.

Strong downstream demand, such as for AI-generated series, is expected to drive high growth in Kling's Annual Recurring Revenue (ARR). Sensor Tower data shows Kling's mobile revenue grew 24% and 10% month-over-month in March and April 2026, respectively, with Monthly Active Users (MAU) maintaining a relatively high level above 7 million. The bank attributes this growth primarily to increased usage penetration. From a downstream content scenario perspective, the number of AI-generated series airing in March increased by 138% compared to January. The bank believes technology providers are well-positioned to benefit from the high growth in downstream vertical AI content. As a model with leading capabilities and cost-effectiveness, Kling's scenario expansion is expected to drive sustained high growth in its commercial performance.

Increased CapEX investment, with core main business profit showing steady growth after adjusting for depreciation. Capital Expenditure (CapEX) for 2026 is projected to increase by 11.0 billion yuan compared to 2025, reaching 26.0 billion yuan. Assuming a straight-line depreciation period of 4-5 years, the negative impact on 2026 profit increment is estimated at 2.2-2.75 billion yuan. However, after adjusting for depreciation add-back, the core main business profit is still expected to maintain steady growth.

Risk factors include a slower-than-expected recovery in macro consumption, lower-than-expected domestic commercialization efficiency, increased losses in overseas operations, and slower-than-expected technological iteration for Kling.