Big Moves | Alibaba, TENCENT Target Prices Both Cut! BYD Still Has 76% Upside Potential?

Daiwa: Reiterate Alibaba "Buy" rating, target price lowered by 2.5% to HKD 158

If calculated at the latest closing price of HKD 82.45, this price implies a 92% upside potential!

The bank believes that the restructuring plan will unlock business value. The spin-off of the loss-making cloud business may increase the profit margin of Alibaba's remaining e-commerce business. The company is expected to raise additional funds from external sources of its multiple subsidiaries, and is expected to further repurchase shares and the unfinished USD 19.4 billion repurchase plan.

The report stated that Alibaba's performance in the fourth quarter of the 2023 fiscal year met expectations. Although cloud revenue fell by 2% year-on-year, the bank expects the growth momentum to gradually recover in the next few quarters.

For more Wall Street sharp comments on Alibaba, see "Wall Street's interpretation of Alibaba's cloud spin-off listing: a key surprise for stock prices! But..."

Daiwa: Maintain BEKE-W "Buy" rating, target price lowered by 5% to HKD 60

If calculated at the latest closing price of HKD 38.95, this price implies a 54% upside potential!

The key positive of the company's first quarter 2023 performance is that its new house revenue and existing house contribution rate are better than expected. The bank believes that investors will reset their expectations for existing home sales. As of September 2023, there is still USD 771 million remaining in the company's stock repurchase plan, which the bank believes will be a key catalyst.

The report stated that BEKE-W's second quarter 2023 revenue guidance is 4%-6% higher than market expectations. Due to the normalization of suppressed demand, the bank expects that the gross transaction value (GTV) of completed houses in the second quarter of 2023 will increase by 25% year-on-year and decrease by 26% month-on-month. Due to the uncertainty of housing demand, the bank believes that May and June will remain at the current level, so the bank expects second-quarter completed house revenue to increase by 20% year-on-year.

As for new home transactions, the bank expects revenue to increase by 30% year-on-year and believes that the group may cooperate with more high-quality developers. Overall, it is predicted that BEKE-W's non-GAAP net profit margin in the second quarter of 2023 will increase by 12.6 percentage points year-on-year to 8.1%.

Macquarie: Maintain Tencent "Outperform" rating, target price lowered by 1% to HKD 491

If calculated at the latest closing price of HKD 333.2, this price implies a 47% upside potential! The bank said that Tencent's first-quarter net profit rose 27% year-on-year to RMB 32.5 billion, roughly in line with market and the bank's expectations, while the gross profit margin improved to 45.5% in the first quarter, benefiting from operational efficiency.

The bank reiterated its positive view on Tencent based on its steady growth trajectory and expected synergies from video accounts and artificial intelligence, which are expected to drive its growth. The bank said it would raise its earnings per share forecast for Tencent by 1%, 4% and 4% for this year, next year and 2025, respectively.

Credit Suisse: Maintains BYD's "Outperform" rating, raises target price by 2% to HKD 430

At the latest closing price of HKD 244, this price implies a 76% upside!

The bank said that BYD has officially lowered the price of its "Han DM-i" plug-in hybrid electric vehicle (PHEV) by 13% to 14%, from RMB 218,000 to RMB 292,000, to boost sales. The "Han DM-i" is currently the cheapest large PHEV in China.

The bank expects this price adjustment to have a significant impact on the prices of large cars and trigger a price war in the PHEV and internal combustion engine car industry. The bank raised its sales forecast for the fiscal years 2023 to 2025 to 2.8 million, 3.4 million and 3.6 million vehicles, respectively, and raised its earnings per share forecast by 2.8%, 1% and 1.5%, respectively.