Goldman Sachs released a research report indicating that Kuaishou (01024.HK) third quarter results largely met expectations, with a year-on-year revenue growth of 11% and Non-IFRS net profit growth of 24%. The performance of external advertising remained strong, benefiting from the rising demand for short videos, which currently contributes 10% to external advertising and has doubled quarter-on-quarter. It is believed that Kuaishou still has significant growth potential in advertising technology and user conversion rates, and the overall advertising business growth is expected to continue to exceed expectations, with predictions of more than 15% year-on-year growth in the advertising business for the fourth quarter and next year.
Goldman Sachs maintained a 'buy' rating, lowering the target price from 67 yuan to 63 yuan, considering that next year’s revenue and profit growth may reach double-digit percentages. It believes that the risk-return profile remains attractive, raising the full-year revenue forecast for this year to 127.059 billion yuan, while lowering the revenue forecasts for 2025 and 2026 to 139.46 billion and 151.94 billion yuan, respectively. It also lowered the net profit margin forecasts for 2024 to 2026 by up to 1.1 percentage points to reflect increased operating expenses and investments in AI research and development, which may hinder profit margin expansion.