Key Takeaways:
Haitong International initiated coverage on Kingsoft Cloud Holdings Limited (KC.US) with an Outperform rating and a $25 price target, citing artificial intelligence as its core growth driver.
The bank’s report highlighted Kingsoft Cloud's independence as an advantage, noting it “does not develop its own large language models (LLMs) and does not engage in substantive business competition with its customers.”
The $25 target is based on a forecast price-to-sales ratio of three times for next year. Haitong expects the company’s AI-related revenue, which it sees rising 108% year-over-year in 2025 to comprise 45% of public cloud revenue, to become the main engine for growth. The bank projects this contribution will increase to 60% in 2026 and 73% in 2027.
Haitong laid out a clear profitability path for the cloud provider, forecasting its adjusted operating profit will turn positive in 2026 to RMB113 million and reach RMB457 million in 2027. A turn to adjusted net profit of RMB185 million is projected for 2028, driven by expanding revenue, a richer AI mix, and improved cost controls.
The new coverage and bullish forecast could draw investor attention to the company's valuation, which Haitong noted is at a significant discount to major cloud providers. Kingsoft Cloud's ability to meet the aggressive AI revenue growth and profitability timelines will be a key focus for investors.
This article is for informational purposes only and does not constitute investment advice.
