Rating Quick Look | Tencent, Xiaomi, Li Auto are favored! Bilibili's target price has been raised

Morgan Stanley: Maintains "Overweight" rating on TENCENT, with a target price of HKD 450

The bank holds a constructive attitude towards Tencent's gaming prospects, expecting online games to accelerate from flat in the first quarter of this year to a 10% year-on-year increase in the second half.

It pointed out that "DnF Mobile" maintained strong momentum in its first week of release, ranking first on the mainland iOS app total list, free games, download volume, and total revenue list for 10 consecutive days, exceeding the bank's expectations. Tencent's subsidiary Supercell's "Squad Busters" went live on May 29th and also topped the global app store rankings.

CICC: Maintains "Buy" rating on TENCENT, with a target price of HKD 457

The bank expects Tencent's second-quarter game revenue to accelerate. Video accounts will benefit from the establishment of a merchant and user ecosystem, further enhancing monetization. Driven by the increase in the proportion of high-margin businesses in revenue, the trend of profit growth outpacing revenue growth for the whole year is expected to continue.

The report mentioned that Tencent launched the AI assistant app "Tencent Yuanbao" on May 30th, based on self-developed mixed-element models, including AI search, summarization, writing, and other functions to improve work efficiency in work scenarios, enriching daily scenarios with personalized interactions such as featured applications and personal intelligent creations. The bank believes that the comprehensive opening of Tencent Yuanbao will have a limited impact on profit margins. Sensor Tower data shows that the revenue from DNF mobile games on the mainland iOS channel reached $63 million in the first week of launch. The game's performance in the first month is expected to exceed the bank's previous expectations.

UBS: Maintains "Buy" rating on XIAOMI-W, with a target price of HKD 20

The report states that based on the strong performance in the first quarter of this year, XIAOMI-W will raise its smartphone shipment target by 5 million to 160 million to 165 million units, and management believes that the gross profit margin for the whole year can still be controlled at 12% to 13%. The core gross profit margin guidance for the whole year remains unchanged at 20% or above.

JP Morgan: Maintains "Neutral" rating on BILIBILI, raises target price from HKD 85 to HKD 110

The research report indicates that after BILIBILI announced its first-quarter performance in 2024, the view on its fundamentals became more optimistic. It is expected that supported by major advertising verticals such as mobile games, e-commerce, and artificial intelligence, the advertising business will grow strongly, outperforming peers. At the same time, value-added service revenue performance is improving, and the first-quarter loss narrowing significantly, with management confident that Non-GAAP operating profit can be positive in the third quarter.

JP Morgan expects BILIBILI to achieve full-year profitability in 2025, with forecast adjusted net profits reaching RMB 1.5 billion and RMB 3.2 billion in 2025 and 2026, respectively.

HSBC: Lowers XPENG-W's target price from HKD 73 to HKD 66, maintains "Buy" rating

The research report points out that due to the good delivery volume of XPENG-W's X9 model and the contribution of software service revenue, the performance in the first quarter of 2024 exceeded the bank's expectations. It is believed that in the second half of this year, new models will drive higher sales volumes, especially in 2025, equipped with XPENG's industry-leading intelligent driving software features, albeit at a lower price. Despite potential differences in the product mix, considering these lower prices, this product will be slightly diluted The bank raised its 2024 profit forecast by 8% to reflect the impact of higher gross profit margins and software service revenue. However, the bank believes that the increase in sales of low-priced new car models may dilute profit margins, hence lowering the profit forecasts for 2025 and 2026 by 29% and 56% respectively, and expects to return to profitability in 2026.

TF Securities: Maintains a "Buy" rating on Li Auto-W with a target price of HKD 136

Following the financial report, Li Auto faced significant adjustments. The bank believes the core reason is the decline in first-quarter profits and the delay in the pure electric platform, leading to a market adjustment of Li Auto's full-year sales/profit expectations and a corresponding valuation downgrade. The bank judges that the market may be overly pessimistic in assessing Li Auto's full-year sales and profits, and may have misjudged the deterioration of the competitive landscape (Li Auto's market share has not significantly declined).

With the ramp-up of L6 in the second quarter, Li Auto's market share is expected to further increase. However, the delay in pure electric vehicle models has also led the bank to make an overall downward adjustment to this year's performance expectations. The bank has adjusted this year's sales forecast to 550,000 vehicles, with L789 expected to recover to a monthly sales of 30,000-35,000 units, and L6 expected to reach 15,000-20,000 units