Rating Quick Look | Li Auto, XPeng-W, NetEase! Target prices significantly raised!

Credit Suisse: Reiterates "Buy" Rating on Li Auto, Raises Target Price by 34% to HKD 239.34

Current conservative estimates suggest that Li Auto's MEGA monthly sales could reach around 3,000 units, with room for growth. The company recently held a spring launch event, unveiling its first all-electric MPV, the "Li Auto MEGA," and upgraded L-series models. The Li Auto MEGA will only offer the high-end Max version, priced at nearly RMB 560,000, and is expected to be delivered starting next Monday (the 11th), in line with the bank's expectations.

The report states that after the configuration upgrade, Li Auto's L7 and L8Pro will see a price increase of RMB 10,000, while the prices of other new L-series models remain unchanged. Credit Suisse points out that the pricing of the new L-series versions should help alleviate the company's profit pressure.

Li Auto's revenue guidance for the first quarter of 2024 is set at RMB 31.3 billion to 32.2 billion. This means that with the launch of the MEGA and upgraded L-series models, large-scale deliveries will begin immediately, with the average selling price expected to increase by 2% per quarter. The pricing strategy reflects the company's confidence in maintaining its high-end brand image in a highly competitive pricing environment in the industry, which is believed to significantly alleviate investors' concerns about the profitability of the L-series models in the short term.

China Merchants Securities: Raises XPeng-W Target Price by 78% to HKD 69, Maintains "Buy" Rating

XPeng delivered 4,545 new vehicles in February, a year-on-year/month-on-month decrease of 24.5%/44.9%, mainly due to the spring off-season, certain supply chain issues, and the company's failure to adjust prices according to market conditions.

However, the firm stated that the group's delivery volume was under pressure in the first two months, with increased terminal promotions starting in March and the accelerated expansion of channels with new dealership partners, expecting a rebound in XPeng-W's delivery volume in March, presenting a trading opportunity.

The report also mentioned that the XPeng-W X9, launched in the market, has delivered approximately 4,000 units so far, and it is expected that the speed of new vehicle deliveries for this model will increase from March onwards. Additionally, the company previously announced strategic partnerships with distributor groups in the Middle East and Africa, including the UAE and Egypt, with several models set to be launched and delivered in the second quarter of this year in these regions, potentially driving monthly sales growth for the company.

The firm pointed out that the group's recent organizational restructuring will enhance management efficiency, potentially improving operational efficiency; joint procurement with Volkswagen will effectively reduce the group's raw material costs, better positioning the company to face industry competition.

Goldman Sachs: Maintains "Buy" Rating on Baidu Group-SW, Target Price at HKD 167

The bank mentioned that they recently held a meeting with Baidu's investor relations officer, discussing the recent revenue trends in online marketing and cloud computing, analyzing the contribution of incremental generative AI revenue and traditional revenue. The new generative AI tools have been increasingly recognized by customers in the past two quarters, and with the growing contribution of generative AI, cloud business revenue is expected to accelerate growth for the remainder of this year.

The report cited management stating that recent industry price reductions for IaaS (Infrastructure as a Service) pose limited competitive risks. The group continues to tightly control costs to offset the impact of AI investments, with profit margins likely to remain stable year-on-year; in terms of capital deployment, share buybacks will continue this year, capital expenditures may be lower than last year, and the acquisition of YY Live will be terminated.

J.P. Morgan: Raises Netease-S Target Price to HKD 200, Included in Positive Watchlist

J.P. Morgan has raised the target price for Netease-S to HKD 200, mainly due to Netease entering a new game release cycle. It is expected to release major games such as "The Legend of the Condor Heroes" at the end of this month and the mobile game "Endless of Ages" in the second quarter, anticipating a positive response in the first half of the year.

The bank pointed out that Netease's previous game release cycle was in the third quarter of last year when it launched major games such as "Justice" and "Peak Speed," driving its stock price to outperform the KraneShares CSI China Internet ETF (KWEB) by over 20% from June to November last year.

Netease will hold its annual game launch event on May 20th, increasing visibility of its game product line from 2025 to 2026. J.P. Morgan expects this to be another catalyst for stock price, raising the target price to HKD 200, showing confidence in this year's gaming business profit outlook and reaffirming Netease as the preferred choice in the Chinese gaming industry.

CICC: Raises Cloud Music's Target Price to HKD 106.5

CICC believes that Cloud Music's core music business is solid and is optimistic about the future development and margin expansion of its core business. The target price has been raised from HKD 99.5 to HKD 106.5, maintaining a "buy" rating.

According to Cloud Music's performance last year, the company's total revenue fell by 13% year-on-year to RMB 7.87 billion, in line with CICC's and market expectations. In the second half of the year, revenue fell by 16% year-on-year, mainly due to adjustments in social entertainment business, leading to a 42% year-on-year decline in related revenue.

However, due to a significant year-on-year increase of 12.3 percentage points in gross profit margin, Cloud Music's adjusted net profit reached RMB 819 million last year, exceeding CICC's and market expectations. CICC is particularly bullish on the prospects of Cloud Music's core music business. As Cloud Music focuses more on its core music business, online music revenue is expected to achieve a 17% annual growth by 2024.

Morgan Stanley: Raises Disney's Target Price from USD 110 to USD 135, Maintains "Overweight" Rating

Morgan Stanley believes that Disney's Direct-to-Consumer (DTC) business is the most important driver of its stock price growth. With the continuous expansion of the streaming media market and the increasing consumer demand for high-quality content, Disney, with its rich IP resources and strong brand influence, is expected to achieve profitability in its streaming media business in the coming years. In addition, the brokerage firm predicts that by the 2026 fiscal year, Disney's EBIT margin may reach double digits, further confirming its strong profit potential.

Recent performance, management actions, and a stable macroeconomic environment have also provided strong support for Disney's future growth. Morgan Stanley stated that these factors have raised the company's expectations for Disney's compound annual growth rate by around 20% over the next few years, with the compound annual growth rate per share expected to be close to USD 6 by 2025. This implies that investors may witness a significant increase in Disney's stock price in the coming years.