Rating Quick Look | PDD, KUAISHOU-W's target price raised after earnings release! TENCENT faces price cuts
Morgan Stanley has lowered TENCENT's target price from HKD 430 to HKD 400 by 7%, expecting a 4% year-on-year decline in TENCENT's mainland game revenue. It is anticipated to hit a low point in the first quarter of 2024, with the launch of "Dungeon & Fighter" in the second quarter potentially serving as a catalyst for a turnaround
CICC: Raises PDD's Target Price by 9% to $187, Maintains "Outperform" Rating
The report states that PDD's revenue in the last quarter increased by 123% year-on-year to RMB 88.9 billion, exceeding market expectations by 11%. Both transaction services and advertising revenue significantly surpassed market expectations. Non-GAAP net profit was RMB 25.5 billion, exceeding market expectations by 52%, mainly due to improved operating leverage from increased monetization rates.
CICC believes that PDD's domestic price advantage comes from traffic distribution mechanisms, operational efficiency, and economies of scale. Until substantial progress is made in adjusting traffic mechanisms and improving operational efficiency on various e-commerce platforms, the competitive risks faced by PDD are manageable.
At the same time, it is judged that Temu's key investment direction this year will shift from North America to Europe, the Middle East, Japan, Korea, and Latin America. The North American region is expected to significantly reduce losses under the combined impact of increasing average order value, slowing customer acquisition, and changes in the semi-managed model, coupled with improved domestic operating leverage. PDD's non-GAAP net profit this year is expected to be RMB 105.9 billion.
CICC has raised its revenue forecasts for PDD for the current and next year by 15% and 2% to RMB 392.7 billion and RMB 498.4 billion, mainly benefiting from the increase in PDD's domestic and overseas monetization rates. It has also raised its non-GAAP net profit forecasts for the current and next year by 25% and 15% to RMB 105.9 billion and RMB 152.3 billion, mainly benefiting from improved operating leverage and Temu's continued loss reduction.
Morgan Stanley: Maintains "Overweight" Rating on TENCENT, Lowers Target Price by 7% to HKD 400
The bank expects TENCENT's mainland game revenue to decline by 4% year-on-year, reaching a low point in the first quarter of 2024. The launch of "Dungeon & Fighter" in the second quarter may become a turning point catalyst. TENCENT's Video Accounts (VA) will continue to drive strong advertising growth, with a projected 21% year-on-year increase in the first quarter. Financial technology and enterprise services will remain stable, with a 15% growth in the first quarter, benefiting from increased payment activities and live streaming of video accounts.
Macquarie: Raises Kuaishou's Target Price from HKD 61 to HKD 64.4, Maintains "Outperform" Rating
The report indicates that Kuaishou's performance in the last quarter exceeded expectations, with revenue growing by 15% year-on-year supported by robust advertising demand and continued e-commerce growth. Adjusted net profit reached RMB 4.4 billion, a record high, exceeding the bank's and market expectations by 26% and 30% respectively.
The bank points out that Kuaishou is entering a period of stable profit margin expansion, with continued business growth. Similar to other entertainment industry peers, Kuaishou has been actively developing its live streaming business, leading to a short-term decline in revenue. It is predicted that with the improvement of the content ecosystem, the company's live streaming revenue will decline by 8% this year, while the overall adjusted net profit is forecasted to grow by 64% year-on-year to RMB 16.8 billion.
Macquarie has raised profit forecasts for the current and next two years by 4% and 3%, exceeding market expectations by 9%, anticipating that Kuaishou will continue to unleash its profit potential in the future.
Morgan Stanley: Gives XPeng Motors a $18 Price Target, Rates it as "Overweight"
The report indicates that XPeng Motors has recently been sold off, making its short-term valuation relatively attractive, therefore it is expected that there is about a 70% to 80% chance that its stock price will rise in the next 45 days The bank pointed out that XPeng's weak performance in the first quarter of this year may have been reflected in its recent stock price performance. It is anticipated that sales volume may rebound from the second quarter onwards. At the same time, the group and its shareholder, the German carmaker Volkswagen, may reveal more details of their cooperation. XPeng may also announce the launch cycle of new car models and the progress of more advanced Advanced Driver Assistance Systems (ADAS). Morgan Stanley expects these developments to have a positive impact on its stock price.