Kuaishou Shares Rise After Reporting Narrower Loss

Published: 2022-05-24 22:55:02 ET 1024.HK

By Justina Lee

Shares of Chinese video-sharing company Kuaishou Technology rose Wednesday after the company's first-quarter loss narrowed alongside a rise in revenue.

Shares rose as much as 5.6% to 66.90 Hong Kong dollars (US$8.52) in morning trade before paring gains to HK$66.75, taking year-to-date losses to 7.6%.

Kuaishou said late Tuesday that its first-quarter loss narrowed to 6.25 billion yuan (US$939.3 million) from net loss of CNY57.75 billion a year earlier, while revenue rose 24% on strength in marketing services, the e-commerce business and livestreaming.

Daiwa Capital analysts Carlton Lai and Steven Nie said in a research note that Kuaishou's second quarter may be challenging due to China's Covid-19 lockdowns, and cut the target price to HK$122 from HK$150 due to macroeconomic headwinds.

Still, the Daiwa analysts maintained a buy rating, saying "we believe Kuaishou will outperform the industry and gain market share," helped by efforts to expand product offerings.

Nomura analysts Jialong Shi and Thomas Shen cautioned in a note that Kuaishou may have to rely on more aggressive cost controls, given severe lockdowns and supply-chain disruptions in the second quarter that could hurt revenue.

"The condition has improved a bit since May, but remains a far cry from the normal state," the Nomura analysts said. Given the "strict and unpredictable" nature of lockdowns by local governments in China, "it is difficult even for the industry players to give a sound forecast on when the e-commerce industry can be completely out of the woods."

Nomura maintained a buy rating and a HK$100 target price on Kuaishou.

Write to Justina Lee at [email protected]

(END) Dow Jones Newswires

05-24-22 2254ET