Rating Quick Look | "Buy" Tencent! "Increase holdings" for Microsoft and Amazon! Target price for Alibaba and XPENG-W lowered

Citi: Maintains "Buy" rating on TENCENT with a target price of HKD 497

The bank is optimistic about the continued development of WeChat in strengthening the connection between videos, mini programs, Moments, and Official Accounts. It believes that there is still further monetization potential in the WeChat ecosystem, with a target price of HKD 497.

The report states that WeChat recently held the 2024 WeChat Open Class PRO, but this year's event was not open to the public. It is believed that TENCENT may want to keep the event on a smaller scale to facilitate deeper communication with merchants, service providers, and business partners.

Driven by strong growth in commodity supply and user demand, the GMV (Gross Merchandise Volume) of Video Accounts is expected to triple YoY in 2023. It is believed that Video Accounts, with its social networking capabilities, high-quality content supply, strong user interest, and growing brand, has gradually become a reputable trading ecosystem that contributes to further growth in the future.

Citi: Lowers XPeng's target price to HKD 39.6

The bank expects the pure electric vehicle market to face challenges this year due to oversupply, especially in the market segment of RMB 200,000 to RMB 300,000, where XPENG-W mostly positions its products. Competition will be more intense. In addition, the price reduction of Tesla in the Chinese market may also pose a threat to XPENG-W. The bank has lowered the target price of XPENG-W from HKD 41 to HKD 39.6, maintaining a "Sell" rating but removing the high-risk rating.

UBS: Lowers Alibaba's target price to USD 125, maintains "Buy" rating

The bank expects total revenue for the third fiscal quarter ending in December last year to increase by 5% YoY to RMB 259 billion, with adjusted EBITA remaining at approximately RMB 52 billion YoY. The GMV of platforms such as Taobao and Tmall may rebound, but customer management revenue growth lags behind, based on strong sales of low-priced products on Taobao.

The bank points out that international retail may be another bright spot, but cloud computing showed moderate growth in the second fiscal quarter ending in September last year. Wu Yongming now serves as the CEO of Taotian Group and will prioritize user and technology-driven growth, as well as invest more, thereby limiting the improvement of profit margins.

J.P. Morgan: Significantly lowers Li Ning's target price to HKD 14, downgrades to "Underweight"

The bank expresses concerns about Li Ning's recent fundamental issues as the company is affected by the slowdown in domestic demand. In addition, the market competition is becoming increasingly fierce (Anta adopts a more aggressive product/channel strategy, Adidas launches products with lower average selling prices), which may increase the uncertainty of Li Ning's sales and profitability and increase investment in operating expenses.

In the face of challenges in the macro and industry-wide environment, compared to a well-executed multi-brand portfolio strategy, a single-brand strategy has more uncertainties.

CICC: Raises Pinduoduo's target price by 11.8% to USD 180

The bank expects Pinduoduo's advertising revenue to increase by 44% YoY to RMB 44.7 billion, which is in line with VisibleAlpha's expectation of a 45% YoY increase. Compared to the 40% increase in the third quarter, this reflects the expectation of accelerated growth in GMV driven by major promotions. In addition, it is expected that the main business will maintain steady growth in 2024, and the advantage of price-sensitive users will drive an increase in frequency and market share. Morgan Stanley has raised its expectations for the main station and TEMU in 2024, increasing revenue/profit by 7%/14% for that year. It is expected that revenue in 2024 will increase by 40% YoY to 334.1 billion yuan, and adjusted net profit will increase by 36% YoY to 80.7 billion yuan.

Morgan Stanley has reiterated its "overweight" rating on Microsoft, with a target price of $415. The bank points out that IT technology budgets are expected to accelerate by 3.3% annually, and generative AI has become a top priority for CIOs. Microsoft is in a unique position, and most CIOs are expected to use Microsoft AI products in the next 12 months. The bank also notes that Microsoft seems ready to continue benefiting from supplier consolidation, especially in the areas of observability, automation, and RPA.

Morgan Stanley has raised its target price for Amazon to $185 and reiterated its "overweight" rating. With Amazon's introduction of advertising on Prime Video starting on January 29th, coupled with the accelerated improvement in its North American retail profitability (delivery/transportation efficiency, product profit), the bank has raised its EBIT and EPS estimates for Amazon by approximately 9% and 14% respectively for the next two years. The bank expects the company's EPS to reach $5.55 and free cash flow per share to be $7.4 next year. Amazon is listed as a preferred stock, and the target price has been raised from $175 to $185. The bank estimates that Prime Video advertising will contribute $5.2 billion in revenue and $3.7 billion in EBIT for the company next year.

Morgan Stanley has raised its target price for Xiaomi to HKD 19.5. This adjustment is mainly based on optimistic expectations for Xiaomi's electric vehicle business. The upward revision of the target price reflects Morgan Stanley's recognition of the potential and market prospects of Xiaomi's electric vehicle business, believing that it could become a future growth driver.