Rating Quick Look | Xiaomi, Dell, KE, BYD, Target Prices All Raised!

Morgan Stanley: Raises Xiaomi's target price from HKD 20 to HKD 25, maintains "overweight" and preferred stock rating

The research report indicates that Xiaomi Group's first-quarter performance is optimistic, and both the shipment volume and profit margin of electric vehicles are expected to further increase this year. The bank has raised Xiaomi's 2024 revenue forecast by 5%, gross margin forecast by 1 percentage point, and profit forecast by 29%.

In addition, the bank has raised the forecast for Xiaomi's electric vehicle sales volume for 2024-2026 to 118,000/200,000/350,000 units; and increased the gross margin forecast for 2024-2026 to 7.8%/10.3%/14.6%. Therefore, the cumulative forecast for Xiaomi Group's automotive gross profit for 2024-2026 has been raised from RMB 5.8 billion to RMB 20.5 billion.

Morgan Stanley: Maintains "overweight" rating for Kuaishou-W, target price at HKD 95

The report states that the outlook for Kuaishou-W's stock price in the next 1 to 2 years is more optimistic, as it is bullish on the profitability brought by fundamental developments. The report maintains an "overweight" rating, raising the adjusted net profit forecast for 2024 by 6% to RMB 17 billion, citing strong cost control capabilities, continuous improvement in gross margin, and a three-year decline in marketing costs for daily active users, believing that profit margins are expected to further improve.

The bank expects Kuaishou's first-quarter advertising revenue to increase by 27% year-on-year, mainly driven by strong growth in internal and external advertising; further increase in advertising load; and the impact of the "Kuaiyi" AI large model, expecting a 25% year-on-year growth in advertising revenue for the full year. In terms of e-commerce business, it is expected that SKU (stock-keeping unit) and monthly active customer penetration rates will increase, driving a 25% year-on-year growth in GMV (gross merchandise volume) and a 30% increase in e-commerce revenue.

J.P. Morgan: Maintains "overweight" rating for KE-W, target price raised to HKD 51

With the most aggressive real estate support policies in the past three years being introduced, the bank's view on KE's stock performance has turned more positive.

The report states that both KE's core business and new businesses continue to make progress. The market share of the core agency business continues to grow. New home transaction volume outperformed the industry by 10% in the first quarter. In terms of new businesses, revenue from home decoration/leasing businesses in the first quarter grew strongly by 71%/189%, contributing a total of 35% of total revenue (compared to 33% in the fourth quarter of 2023).

In the first five months of this year, the company repurchased shares worth USD 340 million, representing 2% of the total outstanding shares. Looking back at the full year of 2023, the company repurchased shares accounting for approximately 3.7% of the total outstanding shares. This indicates that the pace of share buybacks so far this year is slightly faster than last year.

Citi: Raises BYD's target price to HKD 475

The report considers BYD's strong product cycle and sales momentum, and raises the sales forecast for new energy vehicles and passenger cars for the fiscal years 2024 and 2025 from 3.67 million and 4.17 million to 3.85 million and 5.01 million, respectively. Based on better economies of scale and cost control, the gross margin forecast for fiscal years 2024 and 2025 has also been raised by 1 to 1.4 percentage points, to 18.1% and 19% The bank raised BYD's net profit forecast for the fiscal years 2024 and 2025 to 35.7 billion and 51.7 billion respectively, with a forecast of 62.7 billion for fiscal year 2026. The H-share target price was raised from HKD 463 to HKD 475.

The bank expects BYD's second-quarter sales volume to increase significantly by 55% quarter-on-quarter, while estimating that sales, management, and expenses will increase moderately within the quarter, supporting a strong profit recovery. The bank predicts that the net profit per vehicle for BYD in the fiscal year 2024 will be adjusted by the market to between 8,000 and 10,000 yuan, and monthly sales in May, June, and July are expected to continue to grow positively.

Bank of America: Raises Dell's target price from $130 to $180

Considering: 1) AI server demand, 2) storage demand driven by IBM mainframe updates, and 3) demand from PC updates, the bank believes that Dell will have a positive layout by 2025.

The bank points out that Dell remains an undervalued and underweighted stock, with the potential catalyst of artificial intelligence and the possibility of being included in the S&P index. The bank adjusted its F25 revenue/EPS from $93 billion/$7.78 to $92.9 billion/$7.84.

Morgan Stanley: Lowers Lululemon's target price from $490 to $404