Rating Quick Look | Li Auto's rating and Amazon's target price have been raised! Meituan faces a significant "price cut"
Citigroup expects Meituan to announce its fourth-quarter performance for last year by the end of March, which is expected to roughly meet expectations. We are paying attention to the management's outlook for the first quarter and the whole year of this year. We believe that the transaction volume of food delivery will maintain moderate growth, but revenue and unit profitability will be affected by macroeconomic factors.
Citi: Lowers MEITUAN's target price to HKD 113, maintains "buy" rating
The bank expects MEITUAN to announce its fourth-quarter performance for last year at the end of March, which is expected to roughly meet expectations. The focus is on the management's outlook for the first quarter and the whole year of this year. It is believed that the food delivery transaction volume will maintain moderate growth, but revenue and unit profitability will be affected by the macroeconomic downturn.
With intensified market competition and increased promotion and discounts, it is estimated that the profit margin of MEITUAN's in-store business will decline to 29% this year. MEITUAN's selection and overseas expansion strategies will be the focus of the market's attention.
The report points out that under the adjustment of industry valuation and the threat of market competition, MEITUAN's target price is lowered from HKD 179 to HKD 113, maintaining a "buy" rating. The revenue forecast for the three-year period from 2023 to 2025 is reduced by 0.3%, 4.7%, and 7.7% respectively, and the non-GAAP profit forecast is reduced by 0.9%, 17%, and 22% respectively, to reflect the slowdown in core local business and new business revenue growth, as well as the narrowing profit margin of takeaway and in-store services.
CICC: Maintains "buy" rating on NTES-S, target price of HKD 206
It is expected that game revenue will increase by 13% in 2024, with mobile games increasing by 15%. NetEase's key game focus in 2024 is on martial arts RPG, which has a milder competition compared to the anime/shooting game track. NetEase has a leading advantage and stronger growth certainty.
The report states that NetEase's recent game "Egg Party" has a first-mover advantage and has increased its operational efforts after the launch of competing products. Recently, its iOS daily revenue and downloads have surpassed competing products. It is expected that the competition in the party game track will remain intense, and marketing investment during the Spring Festival may continue. However, the impact on profits will be partially offset by optimization of game channel revenue sharing.
NetEase continues to expand its product category layout. The female-oriented game "Beyond the World" was launched in January, with a monthly revenue of about RMB 150-200 million. The shooting game "Firefly Assault" has a leading search popularity among other upcoming shooting games.
The bank expects NetEase's fourth-quarter revenue to increase by 12% YoY to RMB 28.4 billion, in line with market expectations. The adjusted net profit is expected to be RMB 7.9 billion, a 65% YoY increase, consistent with market expectations. It is expected that game and value-added service revenue will increase by 17% YoY, driven by new mobile games. The primary goal of Youdao is to turn losses into profits, and the impact of adjustments to low-return hardware channel business is expected to end in the fourth quarter of 2023. It is expected that the improvement in the gross profit margin of the music business and the narrowing of revenue sharing in live broadcasting will drive the expansion of adjusted operating profit on a quarterly basis.
Bank of America: Raises Amazon's target price to USD 204, reiterates "buy" rating
The bank stated that Amazon's business performed well in the fourth quarter of last year, with revenue and profit reaching USD 170 billion and USD 13.2 billion, respectively, both higher than market expectations of USD 166.2 billion and USD 10.5 billion. The retail profit margin in the North American market reached 6.1%, far exceeding the market's expectation of 4.1%. It is believed that this is mainly due to the decrease in logistics and fulfillment service costs, and there is anticipation for further improvement in the future.