Rating Quick Look | Meta's target price raised! "Buy" for Tencent, JD, "Price cut" for NetEase

Nomura: Maintains "Buy" rating on Tencent Holdings, with a target price of HKD 400

The bank noted that Tencent has accelerated its share buyback pace this year. In recent weeks, the volume of share buybacks has accounted for over 10% of the company's daily stock trading volume. The bank believes that the proactive share buyback actions align with the management's earlier commitment to return more value to shareholders.

The bank expects Tencent Holdings' non-GAAP net profit for the first quarter of fiscal year 2024 to increase by 33% year-on-year. Due to weak performance in the online gaming business, operating income is expected to maintain a 6% year-on-year growth. The bank believes that Tencent may see a 4% year-on-year decline in online game revenue in the first quarter of fiscal year 2024 due to the high base effect from a year ago, while domestic game revenue may decline by 6% year-on-year.

Additionally, Tencent's international gaming business may see a 2% year-on-year growth. The company's online advertising revenue is expected to grow by 19% compared to the previous year, with video account ads estimated to account for 13% of the total. With the increase in revenue share from higher-margin businesses like video account ads, Tencent's gross profit margin is expected to continue expanding. The expected gross profit margin increase by 3 percentage points to 49% year-on-year will support the company's robust profit growth of 33%.

The report mentioned that the second quarter of this year is a busy time for the Chinese gaming industry, with Tencent and NetEase set to launch multiple blockbuster games in the second quarter and summer. The bank believes that both companies may increase marketing expenses before and after the release of new games to improve success rates, and expects advertising publishers like Weibo-SW, Bilibili-W, and Douyin to benefit from this.

Fubon: Maintains "Buy" rating on JD.com-SW, with a target price of HKD 147

The bank expects the first-quarter revenue and profit performance to meet expectations, maintaining assumptions for JD's retail revenue and operating margin. The bank holds a positive view on JD's prospects for the year, driven by its execution in user experience, total transaction volume, profitability, and cash flow; annual assumptions remain unchanged; capital returns reflect confidence in long-term prospects.

The bank expects JD's total revenue in the first quarter to grow by 6% year-on-year to RMB 258 billion. By business segment, considering expenses on the CCTV Spring Festival Gala and user experience investments, JD's retail revenue is estimated to grow by 6% year-on-year.

At the group level, the estimated non-GAAP net profit is around RMB 7 billion, with the non-GAAP net profit margin expected to decrease by 40 basis points year-on-year to 2.7%.

JD's earlier decision to abandon the acquisition of the UK electronics retailer Currys was not entirely unexpected by the market, as JD has multiple overseas strategies in various fields. In terms of capital returns, JD announced an annual dividend and a 3-year share buyback plan to return value to shareholders.

Goldman Sachs: Maintains "Buy" rating on NetEase, lowers target price from HKD 210 to HKD 202

The bank pointed out that the market has concerns about the sustainability of NetEase's game "FWJ," and the underperformance of "The Return of the Condor Heroes" in revenue, as well as limited information on the release timing of the mobile game "Yanyun Sixteen Songs," have all affected the stock price performance The bank expects that NetEase's first-quarter revenue growth will slow down, with game revenue increasing by 4%. However, profitability is still improving, with estimated net profit increasing by 10% to 8.3 billion yuan annually. Mobile game revenue is revised from an initial expectation of a 12% increase to an 11% increase, while PC game revenue is revised from an initial expectation of a 7% annual decline to a 14% decline.

In addition, the bank has lowered its revenue forecast for NetEase for the years 2024 to 2026 by 2.1% to 2.6%, to reflect the revenue pressure from "FWJ" and the delayed launch of the mobile game "Yanyun Sixteen Sounds". Profit forecast is lowered by 3% to 4%, but the company is expected to accelerate its game revenue in the middle of the year. Once the mobile game "Yongjie Wujian" confirms its release date, the market will shift its focus to the release of new games such as "Yongjie Wujian" and "Yanyun Sixteen Sounds" between May and July.

The bank points out that NetEase's current price is equivalent to a forecasted P/E ratio of 13 times this year, making the risk-return ratio attractive.

Jefferies: Maintains a "Buy" rating on Bilibili with a target price of HKD 14

Jefferies predicts that Bilibili's performance in the first quarter of this year is expected to meet the bank's expectations, with a year-on-year increase of 10% to 5.59 billion yuan, and adjusted losses narrowing to 554 million yuan. In terms of segmented markets, advertising is expected to maintain rapid growth, with a year-on-year increase of 26% to 1.6 billion yuan; value-added services are also expected to increase by 15% to 2.5 billion yuan, offsetting the weakness in mobile games.

Gross profit margin in the first quarter is expected to increase by quarter to 27%. The new game "Three Kingdoms: Strategy to Conquer the World" will begin testing on April 17, with the other two expected to be released at the end of the second quarter and the third quarter, respectively.

Citi: Lists Meta as the industry's top pick, raises its target price from $525 to $590, maintains a "Buy" rating

The bank stated that due to continued improvement in engagement, it has raised its first-quarter ad tracking for Instagram Reels by 90 basis points to 20% quarterly. According to SenorTower data, daily active users per app spent 4% more time on Instagram in the first quarter.

With the company's latest advertising innovations, new AI video structures, and higher overall ad adoption rates, the bank believes that demand for Reels and the company will continue to improve. The report indicates that based on sustained engagement rates, ad adoption rates, and operational efficiency, the company's revenue is expected to grow by 14% annually in 2025, with earnings per share at $24.23