Long-term foreign institutional investors with strong research and investment experience have a significant influence on the long-term capital and smart money flow of the market due to their powerful research and investment capabilities.

Zhongtong Finance APP noticed that Citigroup, the world's top financial service group, released the first coverage report of Kuaishou (01024) on July 5th after the trading holiday, giving it a 'buy' rating with a target price of HKD 69, which is 54% higher than the closing price of HKD 44.8 on that day.

Influenced by Citigroup's firm bullishness, Kuaishou bucked the trend and rose against the trend on July 8th, when the Hong Kong stock market contracted and fell sharply, rising more than 3% at one point during the trading session. As of the close on the same day, Kuaishou closed at HKD 45.75, up 2.23%.

The influx of hot money into Kuaishou not only proves the high reference value and wide influence of Citigroup's report on the Hong Kong stock market, but also more importantly, it indicates that the mainstream capital in the market highly recognizes Kuaishou's current investment value.

Looking through Citigroup's report, the bank believes that Kuaishou's value is severely underestimated by the market. In summary, Citigroup's six main reasons for being bullish on Kuaishou can be summarized as follows:

First of all, from an industry perspective, after several years of development, short video has reached a high penetration rate and occupies a large amount of users' time. As a leader in the short video field, Kuaishou is in a prominent leading position in indicators such as daily user usage. This solid foundation provides important support for Kuaishou's long-term stable development.

Secondly, in terms of market flow, although there is some overlap between Kuaishou and other similar products such as Douyin, Kuaishou's distinctive style and features give it a significant advantage in market share in lower-tier cities. Although users in these regions currently have lower average purchasing power, with Kuaishou continuously optimizing its ecosystem, the platform's monetization rate is expected to have significant room for improvement in the future.

Thirdly, from the analysis of the potential for diversified businesses, Kuaishou, which has a high user stickiness moat, also has the possibility of further expanding its ability boundary and enhancing its profit potential. Currently, Kuaishou has entered a fast lane of releasing profits on a quarterly basis, and this good trend is expected to continue.

Then, if we focus our attention on Kuaishou's 'two carriages' - e-commerce and advertising businesses, the growth signals are still strong at present, which may indicate that the company has high growth certainty in the future.

For e-commerce, Citigroup believes that the e-commerce business may contribute key growth drivers for Kuaishou in the coming years. From the perspective of business scope, the pan-shelf field has become a new growth point for Kuaishou's e-commerce business. Users' consumption consciousness in the pan-shelf field has gradually developed, driving the significant growth of the pan-shelf transaction scale.

In terms of advertising business, under the joint driving force of internal circulation advertising and external circulation advertising, Kuaishou's advertising business is better than the market's growth level. It is precisely due to the continued growth in the scale of the advertising business with higher profit margins that Kuaishou's overall profitability has been optimized.

If we turn our attention to Kuaishou's overseas business, its differentiated competitive strategy and strategic choice to focus more on growth make its overseas development more rational, as seen in the continuous reduction of the losses of the company's overseas business. According to Citigroup's estimation, Kuaishou is expected to achieve a balance between profits and losses in its overseas business in 2025.

As a smart money barometer, Citigroup is bullish on Kuaishou, and it's no wonder that the stock was snapped up as soon as the report was released.

In addition, it is worth mentioning that there are many positive factors about Kuaishou on the news front that are continuing to ferment. For example, last month, Kuaishou released the world's first large-scale model for video generation that users can actually use, called 'Kelingu'. It is regarded as the first product in China that can be benchmarked against Sora for its effect. During the just-concluded 2024 World Artificial Intelligence Conference, Kuaishou's large-scale model, which includes Kelingu, was also collectively unveiled, with the core being the fast-language model, recommendation model, and visual generation model.

Just like seeing the tip of the Iceberg, in the midst of raging AI waves, Kuaishou is catching up. What can be expected is that with Kuaishou's latest technology and products continuously being put into use, the capital market will eventually give more positive feedback. To sum up, with reference to Citigroup's latest research report, investors at this moment may want to be optimistic about Kuaishou's deep growth potential.