On Friday, Citi initiated coverage on Kuaishou Technology (1024:HK), a leading short video platform in China, bestowing a Buy rating and setting a price target of HK$69.00. The firm highlighted several positive aspects of Kuaishou, which stands as the second-largest player in China's short video market, trailing behind Douyin.
Kuaishou boasts an impressive 394 million daily active users (DAU) and an average daily time spent per user of approximately 130 minutes in the first quarter of 2024. Citi emphasized Kuaishou's advantageous position and its growing influence in lower-tier cities, alongside a consistent user engagement that supports a diversified monetization strategy.
The firm also pointed to Kuaishou's robust growth in ecommerce gross merchandise value (GMV) and rising ecommerce advertising revenues, particularly from brands that have yet to fully exploit this marketing channel. Additionally, Citi noted the potential for continued margin expansion due to higher-margin advertising revenues.
The report further mentioned that Kuaishou is making strides in improving monetization and reducing losses in its overseas operations. Citi views Kuaishou as an attractive investment alternative for gaining exposure to the high user time spend in the short video sector.
Citi's analysis concluded that Kuaishou's track record of financial performance and the outlook for sustainable earnings growth make the company's current valuation, at 8 times its estimated 2025 earnings, reasonable and not demanding.
In other recent news, Constellation Brands (NYSE:STZ) has kicked off fiscal year 2025 with robust growth, primarily driven by its Beer division. The company's enterprise net sales have outperformed the overall consumer packaged goods sector by 4.5 percentage points.
Constellation Brands has returned $185 million to shareholders through dividends and executed $200 million in share repurchases. Despite a 7% decline in net sales in the Wine and Spirits business, the company remains on track to meet its full-year guidance, targeting low double-digit comparable EPS growth.
The company's Beer portfolio achieved high-single digit net sales growth, marking a 57th consecutive quarter of depletion growth. Despite a challenging quarter for the Wine and Spirits business, Constellation Brands remains optimistic about the second half of the year. The company anticipates 6% to 7% growth in Enterprise net sales for the first quarter of FY2025 and expects full-year Enterprise comparable operating income growth of 8% to 10%.
Modelo Especial was highlighted as a top-performing brand during key holiday periods. The company's executives conveyed confidence in navigating potential challenges, emphasizing the success of their multi-year hedging policy in managing currency fluctuations.
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