Rating Quick Look | Tencent, NetEase are optimistic! XPeng, Bilibili, Beike's target prices have been raised!

TF Securities: Maintains Tencent's "Buy" rating with a target price of HKD 476

The firm pointed out that the company's gaming business growth has shown a clear upward trend, with gross margin improvement consistently exceeding market expectations. Market profit expectations are on an upward trajectory, and the firm expects further potential for improvement in the future. In the medium to long term, the company is actively deploying AI technology development, and its diversified product matrix corresponds to a broad potential application direction. Technological progress may become an important growth multiplier in the medium to long term.

Daiwa: Raises Bilibili's target price from HKD 93.4 to HKD 115

The firm raised its revenue forecast for the company for the next two years by 0.4% to 1.4%, based on strong advertising momentum and improvements in the game inventory to be launched. It maintains a "Hold" rating on the stock.

The firm noted that Bilibili's first-quarter user growth and engagement in stores have accelerated, with monthly active users reaching a new high of 341.5 million. The firm believes that the company's rapid achievement of balance between revenue and expenses and successful game launches will lead to a significant revaluation.

The firm also mentioned that the company's advertising revenue is picking up momentum, with second-quarter advertising revenue expected to increase by 28% year-on-year, benefiting from the expansion of advertising inventory and the high growth potential of displaying vertical advertising solutions in multiple industries. The firm also expects game revenue to recover, benefiting from increased game releases, including the launch of "Absolute Zero" by miHoYo in July.

Goldman Sachs: Raises XPeng's target price to HKD 47, maintains "Buy" rating

The report highlights that XPeng provides technical R&D services to mainstream automakers, driving the first-quarter gross margin improvement to 12.9%. Overall, the firm expects XPeng's R&D service revenue to be RMB 1.575 billion and RMB 1.95 billion in 2024 and 2025 respectively, with gross profits of RMB 1.418 billion and RMB 1.755 billion, directly translating into net profits.

Goldman Sachs: Raises Beike's target price from HKD 52 to HKD 54, maintains "Buy" rating

The report states that Beike's first-quarter profits exceeded expectations, maintaining a positive view. The firm raised its revenue forecast for 2024-2026 by 2% and non-GAAP net profit by 4%, mainly due to new housing policies helping to drive group revenue and profit.

The report mentions that as China's largest real estate brokerage company, Beike's integrated online and offline platform model provides strong operational leverage, and the firm believes the company will benefit from continued policy support in the Chinese real estate industry.

JP Morgan: Maintains NetEase's "Overweight" rating with a target price of HKD 200, reaffirms as the top pick in the mainland online gaming industry

The report states that regarding recent adjustments to monetization models in certain large-scale multiplayer online role-playing games such as "Fantasy Westward Journey" PC version, conclusions drawn from discussions with NetEase management indicate that there will be little short-term impact, and this strategic change should support the long-term healthy growth of these games.

The firm believes that the mainland game regulatory environment remains benign, as evidenced by the abundant supply of new game licenses. JP Morgan believes that NetEase's stock price performance has lagged the broader market since the beginning of the year, mainly due to investor concerns about its traditional game monetization and the outlook for new games.

NetEase's current stock price is equivalent to a 2024 P/E ratio of 13 times, at a low level over the past five years and lower than its Asian online gaming peers. The firm expects that new games to be launched by NetEase starting from the third quarter will accelerate game growth, leading to a revaluation of its valuation from current levels