Kuaishou: Start to unlock value; solid Kling revenue trend

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Kuaishou: Start to unlock value; solid Kling revenue trend

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Kuaishou

Start to unlock value; solid Kling revenue

trend

Reiterate Rating: BUY | PO: 63.00 HKD | Price: 46.00 HKD

Kling: US$15bn pre-money valuation, raise up to US$3bn 07 July 2026

Kuaishou announced the restructuring and fundraising for Kling AI: 1) USD2bn Equity

fundraising from initial investors, up to USD3bn under capital increase agreement; 2)

USD15bn pre-money and USD18bn post-money valuation (if USD3bn is raised); 3) Miranda Zhuang, CFA >>

Kuaishou’s stake in Kling will be lowered to 68.33%, if 3bn is raised from external Research Analyst

Merrill Lynch (Hong Kong)

investors (17% dilution) and the employee incentive schemes are fully utilized (15% +852 3508 2879

dilution); 4) those initial investors incl. internet companies - Tencent, AliCloud, Baidu, miranda.zhuang@bofa.com

financial institutions, and state/government-affiliated funds. Joanna Du >>

Research Analyst

joanna.du@bofa.comBenefits: Retain talent, ease cash pressure, unlock value

The USD15bn pre-money valuation implies 30x Kling’s USD500mn ARR (Mar 2026), and Alex Liu >> Research Analyst

14x 2027 P/S (BofAe) by our estimates, vs. 15x/70x+ 2027 P/S for AI model company Merrill Lynch (Hong Kong)

Minimax/Zhipu. Kling’s USD18bn post-money valuation suggests USD12bn attributable alex.liu3@bofa.com

to Kuaishou. Hence, if successful, Kling value + Kuaishou’s net cash could amount to Joyce Ju >> Research Analyst

USD26bn, which would be above Kuaishou’s current market cap. We see clear potential Merrill Lynch (Hong Kong)

benefits: 1) for Kling: better talent retention and recruitment; 2) for Kuaishou: significant joyce.ju@bofa.com

ease of cash flow pressure; 3) for Kuaishou shareholders: value unlocking. We expect