Big moves | Why did TENCENT's target price get lowered? Alibaba still has 66% room to rise?
Goldman Sachs reiterated that TENCENT is still one of the preferred stocks in the Chinese Internet industry. The company's stock price has fallen from its high point since the beginning of the year, possibly due to concerns about the slowdown in game revenue growth compared to the same period last year, the weak growth prospects of cloud business in the first half of the year, and the worries about Prosus' reduction.
Goldman Sachs: Maintains "Buy" rating on Alibaba, target price of HKD 133
At the latest closing price of HKD 80.2, this price implies a 66% upside!
The bank expects Alibaba's advertising and commission to resume positive growth in the first fiscal quarter of 2023, and the live shopping model to stabilize.
The report pointed out that the market underestimated the transformation of Tmall's growth, and expected losses in other businesses to shrink faster to defend its retail leadership position. At the same time, the group's restructuring will allow for effective capital allocation to Alibaba shareholders when other businesses turn to financial independence.
The bank continues to view Alibaba as one of the best value stocks for advertising recovery, structural growth in financial technology and cloud computing, and there is a lot of room for valuation multiples to be revalued as its revenue growth recovers.
Goldman Sachs: Maintains "Buy" rating on TENCENT, target price lowered 1% from HKD 447 to HKD 442
At the latest closing price of HKD 329.6, this price implies a 34% upside!
The bank said that considering the growth in advertising spending and the recovery of payment services this year, TENCENT is still one of the bank's preferred stocks in the Chinese Internet industry. The company's performance from the beginning of the year to the present is relatively more resilient compared to the sector. The decline in stock price from its high point may be due to concerns about the slowdown in year-on-year growth of game revenue, the weak growth prospects of cloud business in the first half of the year, and the reduction of Prosus holdings.
The bank believes that most investors' concerns are still temporary. TENCENT's video and WeChat advertising have rebounded, so it continues to be optimistic about the development of its advertising business and believes that the advertising revenue of video will reach RMB 11 billion this year. At the same time, with the launch of new games, the recovery of cloud and financial technology business growth momentum, and the implementation of cost control measures, it is expected that TENCENT's net profit growth this year will accelerate, with a year-on-year growth of 30%.
Credit Suisse: Maintains "Neutral" rating on Sunny Optical, target price of HKD 101
At the latest closing price of HKD 83.1, this price implies a 22% upside!
The bank believes that the continuous improvement of the company's smartphone products is due to Android phone manufacturers replenishing inventory. As for the recent launch of new Android phones and the "618" shopping festival replenishment, it may provide support for Sunny Optical's shipment volume in the short term, but the market's expectations for the overall recovery trend of smartphones are too high.
The report stated that the company's smartphone camera module shipments fell by 10% year-on-year in April, an increase of 27% month-on-month; smartphone lens shipments fell by 25% year-on-year, an increase of 13% month-on-month; and shipments of automotive lenses increased by 23% year-on-year, an increase of 8% month-on-month. The year-on-year shipments of smartphone camera modules, smartphone lenses, and automotive lenses in the first four months fell by 23%, 33%, and increased by 27%, respectively.
Deutsche Bank: Maintains "Buy" rating on Shopify, raises target price by 22% to $67 from $55
At the latest closing price of $63.89, this price implies a 5% upside!
The bank stated that the company's first-quarter performance exceeded expectations, with accelerated growth in gross merchandise volume, highlighting its ability to continue to outpace e-commerce growth.
Analysts believe that the sale of the logistics business is a "meaningful positive factor" and believe that this allows the company to focus on its key strengths and address pain points for merchants. The bank stated that while it may be necessary to lower assumptions for mid-term rates to account for the impact of the sale, the impact on gross profit and free cash flow for the same period is much smaller.