Big moves | Apple's target price gets raised! Why is Wall Street optimistic about TENCENT, MEITUAN-W, and KUAISHOU-W?

Morgan Stanley: Maintains Tencent's "Buy" rating with a target price of HKD 450.

"If calculated at the latest closing price of HKD 340.8, this price means there is still a 32% upside!"

The bank's research shows that Tencent's video advertising demand surged last year, ranking among the top three advertising platforms. The prospects for Video Number are healthy, and nearly 60% of advertisers plan to increase their budgets on the platform this year.

Since the launch of in-feed ads in July last year, Video Number has quickly become one of the top three most popular advertising platforms, second only to the top-ranked Douyin. In the field of short video advertising, about 64% of advertisers placed ads on Video Number last year, ranking second only to Douyin, but surpassing Kuaishou.

The report expects that Video Number will become a key driving force for Tencent's profits in the next 2 to 3 years and will bring in RMB 50 billion in advertising revenue by 2025, with a compound annual growth rate of 20% over the next 3 years.

Morgan Stanley: Gives Meituan-W a "Buy" rating with a target price of HKD 180.

"If calculated at the latest closing price of HKD 134.2, this price means there is still a 34% upside!"

The bank believes that Meituan-W will follow the overall service consumption and advertising industry budget recovery. Despite facing competition, the group's better return on investment and the prospect of improving advertising business both foresee the recovery of Meituan-W's core business.

The report points out that the overall outlook for advertising spending is very optimistic, and it is expected that 90% of advertisers will increase their advertising budgets this year. The advertising spending on catering and consumer services is expected to increase by 10.4% and 9.2% respectively. The total transaction volume (GTV) of tourism has recovered to 20% and more than 75% in the first three weeks of March compared to the same period last year. The strong momentum of service consumption is expected to continue into the second quarter and the rest of this year.

Morgan Stanley: Gives Kuaishou a "Buy" rating with a target price of HKD 85.

"If calculated at the latest closing price of HKD 51.85, this price means there is still a 64% upside!"

The bank is optimistic about the investment concept of Kuaishou's market share increase. The bank cited its survey that it is optimistic about Kuaishou's short video and performance advertising; the impact of Tencent's "Video Number" is limited, and the gap with Douyin is narrowing.

The bank said that 90% of advertising customers expect to increase their spending this year, and Kuaishou's advertising business has become more diversified since the restructuring. Short video is the second most widely used advertising model, and the launch of shelf e-commerce is expected to accelerate its advertising and e-commerce growth in the second half of the year.

The bank also mentioned that Kuaishou's advertising revenue is currently discounted by about 50% compared to the daily average active users, and it is believed that it will narrow to about 25%; the usage of Kuaishou's advertising is also expected to continue to rise, as it overlaps less with Tencent's Video Number advertisers. The report pointed out that the stock price of Kuaishou has been lower than the market since the beginning of the year, due to the valuation being constrained by macro weakness, and the mainland branch's forecasted P/E ratio seems to be higher than its peers. Based on the fact that the group accounts for more than 10% of internet users' usage time in mainland China, it is expected that its e-commerce and advertising market share will continue to rise driven by the launch of shelf e-commerce in the second half of the year.

However, the expected profit-making ability and potential capital return of the group in the second quarter may support its valuation level. Its forecasted P/E ratios for 2023 and 2024 are 12 and 11 times, respectively.

Morgan Stanley: Maintains "Buy" rating on Apple, raises target price by 3% to $185 from $180

If calculated based on the latest closing price of $173.57, this price means there is still 7% upside potential!

After Apple's second-quarter results were "better than expected," analysts reiterated that Apple is their top pick. Analysts expect Apple's revenue and EPS to grow by 1% and 3%, respectively, in 2023. Although analysts say that the iPhone 15 and AR/VR headsets are Apple's next catalysts, the company's growth story in emerging markets and India is also worth paying attention to.