KUAISHOU-W (01024): Initial investors intend to increase their investment in Beijing Kaleido by $2.028 billion.

KUAISHOU-W (01024) announced that on July 2, 2026, Beijing Keling (the company's indirect wholly-owned subsidiary and expected to hold Kuaishou Group's Keling AI-related assets and business after the restructuring), 21 independent investors, Party A and Party B (collectively referred to as "Initial Investors"), Beijing Keling Group Company, Lucky Labs (directly and indirectly owned by Beijing Kualirui Holding Beijing Keling), and Beijing Kualirui entered into a capital increase agreement, whereby the Initial Investors agreed to collectively inject RMB 13.824 billion (or USD 2.028 billion) in cash capital into Beijing Keling, subject to certain conditions being met or waived. According to the capital increase agreement, additional investors may, within 60 days from the date of signing (or a longer period approved by investors holding more than 50% of the subscribed amount) (subscription period), become party to the capital increase agreement by signing an accession agreement (accession agreement) upon Beijing Keling's approval. However, the total capital increase under the capital increase agreement (including all accession agreements) must not exceed RMB 20.447 billion (or USD 3 billion) (approximately 16.67% of Beijing Keling's expanded registered capital) (subscription limit). The accession agreement shall be part of the capital increase agreement. On the same day as the capital increase agreement, 15 additional investors (including 13 independent investors, Party C, and Party D) each entered into an accession agreement with Beijing Keling, becoming parties to the capital increase agreement and collectively agreed to inject RMB 5.2235 billion (or USD 0.766 billion) in cash capital into Beijing Keling, subject to certain conditions being met or waived. Beijing Keling may further enter into accession agreements with new additional investors within the subscription limit during the subscription period. Party A is a company wholly-owned by a limited partnership (with independent non-executive director Ms. Lu Rong as its general partner); Party B includes two companies controlled by Tencent (the company's major shareholder); Party C is a company wholly-owned by independent non-executive director Mr. Zhang Fei; Party D is a company controlled by the family of Mr. Yang Yuanxi, director of Beijing Kuaishou Advertising (a subsidiary of the company). On July 2, 2026 (after trading hours), the board of directors and shareholders' meeting and board of Beijing Keling approved the adoption of the Beijing Keling Share Incentive Plan, the Beijing Keling Holding Plan, and the Beijing Keling Stock Option Plan (collectively referred to as the "Subsidiary Equity Participation Plan"). The Subsidiary Equity Participation Plan aims to recognize the contributions made or to be made by participants and provide them with equity ownership in Beijing Keling to retain them for the continuous operation and development of Beijing Keling, as well as to attract suitable talent for Beijing Keling's further development. As Beijing Keling is not a major subsidiary of the company, the Subsidiary Equity Participation Plan does not constitute a share plan under Chapter 17 of the Listing Rules. The total plan authorization limit of the Subsidiary Equity Participation Plan is equivalent to 15% of Beijing Keling's registered capital after the implementation of the Subsidiary Equity Participation Plan (assuming the full use of the subscription limit and the plan authorization limit of the Subsidiary Equity Participation Plan). On July 2, 2026 (after trading hours), the shareholders' meeting and board of Beijing Keling approved the grant of a total of 7.1651 million share awards and options (corresponding to RMB 7.1651 million of registered capital of Beijing Keling) to key personnel of Beijing Keling under the Subsidiary Equity Participation Plan, representing approximately 7.45% of Beijing Keling's registered capital after the implementation of the Subsidiary Equity Participation Plan (assuming the full use of the subscription limit and the plan authorization limit of the Subsidiary Equity Participation Plan). In the first grant, a total of 0.9618 million share awards (corresponding to RMB 0.9618 million of Beijing Keling's registered capital) have been granted to non-executive director Mr. Cheng Yixiao (related grant) under the Beijing Keling Share Incentive Plan at zero cost. The share awards granted to Mr. Cheng Yixiao may not be disposed of for at least three years after the grant and before Beijing Keling's listing, and if Mr. Cheng Yixiao ceases to be employed by Beijing Keling within six years of the grant, deductions (and other restrictions) shall apply in accordance with its terms. After trading hours on July 2, 2026, Beijing Keling introduced external financing. Beijing Keling, Beijing Dajia, Huayihui Long, Beijing Kuaishou Technology, Lucky Labs, and Fortune Ever entered into a restructuring framework agreement to enable Beijing Keling to hold Kuaishou Group's Keling AI-related assets and business. The completion of the restructuring is expected to be implemented within nine months after the latest payment date under the capital increase agreement (unless extended by investors holding more than 50% of the subscribed amount). It is understood that Beijing Keling is primarily engaged in the development and operation of the world's leading video generation large model Keling AI. The Keling AI is independently developed by the company, leveraging its deep expertise in video data processing and advanced algorithms. As the world's first user-oriented video generation large model, Keling AI aims to become a comprehensive AI creative engine, empowering everyone to create engaging stories through AI technology. Since the release of Keling AI 1.0 in June 2024, Keling AI has undergone more than 30 major version updates, continuously enriching the user experience through ongoing technological and product innovation. With a clear business strategy in place, Keling AI offers paid subscription services to professional consumers and API services to enterprise clients. Assuming the completion of the restructuring and based on unaudited financial information of Beijing Keling as of December 31, 2025, Beijing Keling's total assets, total liabilities, and net assets are approximately RMB 2.44 billion, RMB 2.53 billion, and negative RMB 9 million, respectively. Beijing Keling's unaudited net losses (pre- and post-tax) for the years ended as of December 31, 2024 and December 31, 2025 were RMB 500 million and RMB 1.9 billion, respectively. The company believes that the introduction of external financing and restructuring for Beijing Keling under the capital increase agreement is commercially advantageous for both the company and Beijing Keling, and is in the best interests of all shareholders for the following reasons: (a) The introduction of external financing and restructuring will better reflect the inherent value of Beijing Keling and Kuaishou Group's Keling AI-related assets and business. Investors will be able to independently and clearly evaluate Beijing Keling's performance and potential separately from Kuaishou Group (excluding Beijing Keling); (b) Beijing Keling's business will attract a group of investors focused on AI video generation development and application businesses, different from Kuaishou Group's (excluding Beijing Keling) content community and social platform business model; and (c) The introduction of external financing and restructuring will benefit both the company and Beijing Keling by enhancing Beijing Keling's image among customers, suppliers, and potential strategic partners, allowing the company to benefit from Beijing Keling's growth through its equity in Beijing Keling; allowing Kuaishou Group (excluding Beijing Keling) to more effectively allocate financial resources; and directly linking the responsibilities and accountabilities of the company and Beijing Keling's management to their respective operational and financial performance, thereby enhancing management focus and corporate governance.