Rating Quick Look | Buy Ideal and BYD! KUAISHOU-W and BIDU-SW target prices lowered

UBS: Bullish on leading stocks in the electric vehicle sector such as BYD and CATL, optimistic about NIO among start-ups

The report points out that due to weak demand and continued price competition in the automotive market, Chinese auto stocks have fallen by 10% to 35% year-to-date. The risk-return profile of the Chinese auto industry is currently more attractive, with a preference for leading companies in the electric vehicle sector and existing domestic Chinese automakers.

The bank expects domestic Chinese automakers to achieve a 30% increase in revenue this year. While start-up companies in the electric vehicle sector generally benefit from the growth of electric vehicles, companies such as Chang'an and Geely in China benefit from export growth, capturing market share from foreign brands, and profiting from the upgrading of their product portfolios through high-endization. More importantly, these companies are funding their own electrification and intelligent transformation without external financing.

The bank believes that it is time to increase investment in the Chinese auto industry due to its global competitiveness in electrification, intelligent development, and cost control. The bank is more bullish on leading stocks in the electric vehicle sector such as BYD and CATL, rather than loss-making companies. It also favors domestic brands such as Geely and Chang'an, rather than state-owned enterprises that rely on profits from foreign joint ventures.

As for start-up companies in the electric vehicle sector, the bank continues to be more optimistic about NIO than NIO-SW and Xiaopeng. The bank rates BYD, CATL, Geely, Chang'an, and NIO as "buy" and rates NIO-SW and Xiaopeng as "neutral".

CICC: Lowers Baidu's target price to HKD 141.99, maintains "outperform" rating

The bank states that the recovery of consumer confidence on the mainland is slower than expected, leading to more cautious advertising spending by companies. Therefore, the bank has a more conservative view on Baidu's advertising performance in the fourth quarter of last year, lowering its advertising revenue forecast, but raising its gross profit forecast due to better cost control.

The bank estimates that Baidu's revenue in the fourth quarter of last year increased by 5% YoY to RMB 34.9 billion, and its non-GAAP net profit increased by 16% YoY to RMB 6.2 billion, both of which are 2% lower than market expectations.

The bank maintains its "outperform" rating on Baidu, lowering its target price for its H shares from HKD 150.45 to HKD 141.99, and its target price for Baidu's US shares from USD 154.7 to USD 146.

JPMorgan: Gives NetEase-S an "overweight" rating, target price of HKD 195

The bank reiterates that the company is one of the preferred stocks in the Chinese internet sector and believes that it will continue to outperform its peers by 2024. With the launch of new games, the bank expects the stock price to rebound in the next 3-6 months.

The bank believes that NetEase has leading game development capabilities, allowing it to continuously launch successful games in the global market. Game revenue has achieved double-digit growth since 2015, and it is expected to grow by 10% YoY this year with the release of more than five new games.

CICC: Cuts Kuaishou's target price by 16.7% to HKD 75, maintains "buy" rating

The bank maintains its forecast for the GMV of e-commerce in the fourth quarter. It is expected that the YoY growth of e-commerce GMV in the fourth quarter will be 30%, with monthly active buyers reaching 126 million, which remains the main driver. The bank expects the e-commerce commission rate to be around 1.1% and drive a 40%+ increase in e-commerce revenue. It maintains a 20% growth expectation for advertising revenue. The bank expects the growth rate of domestic advertising revenue to be slightly higher than the growth rate of e-commerce GMV, and expects the growth of overseas advertising to maintain double-digit growth YoY. The bank has raised its net profit forecast for 2024 by 9%. Considering the downward shift in industry valuation, based on a 0.4x average PEG for comparable companies in 2024, the target price has been lowered from HKD 90 to HKD 75. The bank believes that there is still room for improvement in the commercialization of short video platforms, and the trend of cost/expense optimization is confirmed. The profitability will continue to be released, and the "buy" rating is maintained.

Goldman Sachs: Gives BYD a "buy" rating with a target price of HKD 346

The company's management expects new energy vehicle sales to reach 3.9 to 4 million units in 2024, with 20% of the revenue expected to come from high-end brands. It is also estimated that the total wholesale volume of new energy vehicles in the industry will reach 11 million units.

The report states that BYD's management believes that the sluggish January sales in the automotive industry are due to weak demand since the beginning of the year. Although the passenger car industry is growing slowly, the penetration rate is still expected to increase. It is expected that the penetration rate of new energy vehicles in 2024 will reach 45% or even 50%. At the same time, the competition is expected to be the most intense in the price range of RMB 200,000 to 300,000, while the competition in the price range of RMB 150,000 to 200,000 is relatively moderate.

Citigroup: Lowers target price for Disney and AMC Theatres

The bank expects these two companies to be adversely affected by weak box office performance in 2024. Citigroup has lowered the target price for Disney from $110 to $106, but maintains a "buy" rating; and has lowered the target price for AMC Theatres from $5.75 to $4.10, maintaining a "sell" rating.

Citigroup analyst Jason Bazinet stated that due to the continued impact of the 2023 Hollywood strike, it is now predicted that US box office revenue in 2024 will decline by about 6%.