LB Select
2023.11.27 08:33
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Quick Look from Major Banks: Alibaba's Singles' Day Performance Receives Positive Outlook! CHOW TAI FOOK's Target Price Significantly Lowered!

Bank of America Merrill Lynch has raised its target price for Ctrip to nearly HKD 400, believing that the current price and valuation of Ctrip are attractive. The bank is optimistic about the company's ability to consolidate its leadership position in the mid-to-high-end and outbound travel segments. It also sees Trip.com, a subsidiary of Ctrip, as a major beneficiary of the development of China's tourism trend.

Tianfeng Securities: Maintains "Buy" rating on Alibaba

The bank believes that Alibaba's overall performance is stable, with continuous positive growth in CMR. It has gradually demonstrated its operational resilience in a fierce competitive environment. Considering the macroeconomic environment faces certain uncertainties, the bank has lowered its revenue forecast for FY2024-FY2026 to RMB 958.2 billion / RMB 1058.7 billion / RMB 1163.8 billion respectively (previously RMB 970.2 billion / RMB 1070.7 billion / RMB 1173.2 billion).

The report states that in 2023, Tmall's "Double 11" achieved significant growth in both user and merchant scale. The expansion of scale advantages drove a comprehensive increase in order volume and transaction value. In terms of price promotion, 80 million products achieved the lowest price of the year, bringing consumers a more convenient and affordable Double 11 experience. 402 brands achieved transaction volume exceeding RMB 100 million; the cumulative number of visiting users exceeded 800 million, and the transaction volume of 38,000 brands increased by over 100% YoY. There were 20 million new purchasing users in third-tier and below markets, with an additional 140 million orders.

In terms of content strategy, private domain operations have become an important growth engine for merchants. Taobao and Tmall have brought in over 100 million new merchant members. The number of actively operated merchants increased by over 150% YoY, and the daily average number of merchants paying for advertising increased by double digits YoY. There were 38 live streaming rooms with transactions exceeding RMB 100 million, accounting for over 60% of the live streaming rooms with transactions exceeding RMB 100 million, and 451 live streaming rooms with transactions exceeding tens of millions.

The bank believes that the good performance of Double 11 is expected to drive steady growth in China's business in FY24Q3, and the emphasis on price promotion has also played a promoting role in the overall growth of Double 11.

Bank of America: Reiterates "Buy" rating on Ctrip, target price of HKD 393

Based on the latest closing price of HKD 279.6, this price implies a 41% upside!

The bank points out that Ctrip's current price and valuation are attractive, and it is optimistic about the company's ability to consolidate its leading position in the mid-to-high-end and outbound travel segments. It believes that Trip.com, its subsidiary, is a major beneficiary of the development of China's tourism trend.

Macquarie: Gives Chow Tai Fook a "Underperform" rating, lowers target price by 25% to HKD 8.9 from HKD 11.8

Based on the latest closing price of HKD 11.04, this price implies a 19% downside.

The bank stated that Chow Tai Fook's interim revenue as of the end of September increased by 6.4% YoY, or 11.3% when calculated at the same exchange rate, which is 12% and 6% lower than the bank's and market's respective forecasts. Although the gross profit margin increased to 24.9% during the period, due to the negative impact of the product mix, the management has revised the gross profit margin guidance for 2024 from an increase of 10 to 30 basis points to a decrease of 50 to 60 basis points.The bank described the gloomy outlook for the gross profit in the second half of the fiscal year and expected the company to continue focusing on improving store efficiency and investing in concentrated marketing to enhance brand value. Based on the latest performance, the bank raised its net profit forecast for the fiscal year 2024 by 7.8%, but lowered its forecasts for the fiscal years 2025 and 2026 by 3.5% and 6.7% respectively to reflect weaker-than-expected revenue expectations.

Lyon: Reiterates Li Ning's "outperform the market" rating, target price lowered by 24% to HKD 26 from HKD 34

At the latest closing price of HKD 22.2, this price implies a 17% upside potential!

The bank pointed out that Li Ning's retail revenue growth in the third quarter of 2023 was in the single digits year-on-year, and lowered its sales guidance for the fiscal year 2023, which has disappointed the market. The management plans to reduce sales to distributors in the fourth quarter of 2023 to help alleviate inventory pressure for distributors.

In terms of revenue growth, the bank believes that average selling price will no longer be the driving factor, while sales volume will remain key. In 2024, Li Ning will pay more attention to mid-range price segments, launching basketball shoes priced at around RMB 400 to 500 per pair and sports leisure running shoes priced above RMB 300.

Brand premium growth is no longer rapid. This is due to the low visibility of sales growth and gross margin recovery trajectory for the fiscal year 2024, and the expectation of increasing advertising expenses as the Paris Olympics approaches, with moderate expectations for operating leverage.