BofA Securities maintained its Buy rating on Kuaishou with a HKD 63 price target, valuing its Kling AI unit at USD 18 billion. The broker said Kuaishou's stock trades at a discount to the combined value of Kling AI and cash, implying negative value for the core business.
BofA Securities valued Kuaishou's Kling AI at USD 18 billion, saying the stock trades at a discount that implies negative value for the core business.
"Kuaishou's share price is trading at a discount relative to the combined value of Kling AI plus cash, implying a negative value for the core business," BofA Securities said in a report following the company's management investor meeting.
The broker maintained its Buy rating and HKD 63 price target. In its sum-of-the-parts valuation, BofA assigned HKD 31 per share to Kling AI, equivalent to USD 18 billion, based on a projected FY2026 price-to-sales multiple of 35 times. The broker said it expects upside to Kling AI revenue forecasts and will monitor model upgrades and potential value-unlocking events. BofA described Kling AI's video generation model as holding a world-leading position with accelerating commercialization, putting it in competition with OpenAI's Sora and Runway.
Kuaishou announced in May that it is evaluating restructuring plans for Kling AI that may involve external financing, with management citing talent retention and attraction as the primary motivation. A potential initial public offering of Kling AI would require regulatory approval, which typically takes time, the broker noted. The restructuring could drive a revaluation of Kuaishou's AI assets.
The valuation gap implies that investors are effectively assigning no value — or negative value — to Kuaishou's core short-video and advertising business, which generated the bulk of the company's revenue. While core business growth was expected to slow this year as the macro environment weakened, BofA anticipated a return to growth next year as the comparison base normalizes. CICC also highlighted Kuaishou as one to watch in a separate report on the online platform sector, noting that most companies' AI investments in 2026 are expected to be partially offset by operational optimization. Investors will watch for further details on Kling AI's restructuring plan and any progress toward a potential listing.
This article is for informational purposes only and does not constitute investment advice.
