Big Move Watch | Microsoft's rating and target price have been significantly raised! CLOUD MUSIC is the top choice for gaming stocks, and TENCENT can still rise by 30%?

Downward Revision of Target Prices for Chinese Concept Stocks

See "Why have target prices for Alibaba, Tencent, JD.com, and Baidu all been revised downward?" for details.

Credit Suisse: Maintains "Buy" rating on Tencent, with a target price of HKD 470

Based on the latest closing price of HKD 352.6, this price implies a 33% upside potential!

The bank expects Tencent's second-quarter revenue to grow by 12% YoY to CNY 150 billion, and its non-GAAP net profit to increase by 27% YoY to CNY 36 billion. The bank indicates that, based on business segmentation, it expects overall online gaming revenue (including domestic and overseas) to grow by 8.6% YoY to CNY 46 billion. With the execution of planned business strategies, overseas revenue is expected to grow faster than domestic revenue.

Considering the strength of advertising technology, video accounts, and the 618 marketing campaign, the bank is optimistic about the performance of online advertising in the second quarter, with revenue expected to increase by 22% YoY to CNY 22.8 billion. The bank also mentions that the performance focus will be on the updates of generative AI, industry-scale language models, and Model as a Service (MaaS) strategies, as well as the competitive landscape and upcoming new games in the domestic gaming industry.

J.P. Morgan: Reiterates NetEase-S as the top choice in the mainland's online gaming sector, with a target price raised by 3% to HKD 185

Based on the latest closing price of HKD 166.9, this price implies an 11% upside potential!

The bank expects NetEase's second-quarter performance to meet expectations, as most new games were launched at the end of June. It estimates that the third and fourth quarter game revenues will exceed market expectations by 3% and 8% respectively, with online game revenue growth driven by strong performance of new games, increasing by 14% and 23% YoY. The bank also predicts that the company will continue to outperform the market.

Credit Suisse: Maintains "Buy" rating on JD Logistics, with a target price of HKD 21

Based on the latest closing price of HKD 12.6, this price implies a 67% upside potential!

The bank expects JD Logistics' second-quarter revenue to meet its expectations, and the non-GAAP net profit margin is expected to outperform, benefiting from the company's selective customer strategy, improved resource allocation, and cost optimization.

The bank maintains its forecast of a 31% YoY growth in JD Logistics' second-quarter revenue to approximately CNY 40.8 billion. It also predicts that the gross profit margin will increase to 7.6%, up from the previous forecast of 7.1%. Considering the optimization of customer portfolio and improved resource allocation, the bank estimates that the non-GAAP net profit margin will increase to 1.7% on a quarterly basis, up from the previous forecast of 0.8%. The full-year revenue growth expectation has been adjusted to 20% YoY.

Goldman Sachs: Maintains "Buy" rating on Miniso, raises target price by 2% to HKD 46

Based on the latest closing price of HKD 37.6, this price implies a 22% upside potential!

The bank stated that Miniso achieved adjusted net profit of RMB 483 million for the third quarter ending in March 2023, surpassing the bank's expectations. It believes that the company's accelerated pace of opening new stores in mainland China demonstrates the confidence of its retail partners, and the increase in the proportion of stores in first- and second-tier cities confirms the success of its brand upgrade strategy.

Daiwa: Maintains "Buy" rating on Sunny Optical, lowers target price by 10% to HKD 95

Based on the latest closing price of HKD 78.7, this price implies a 21% upside potential!

The bank expects that Sunny Optical's operating profit for the first half of the year will decline by 28% YoY to RMB 1.051 billion, and its net profit will also decline by 28% YoY to RMB 980 million. The bank pointed out that despite the decline in profit in the first half of the year due to weak demand for smartphones, it expects the company's profitability to recover steadily from the second half of 2023 to 2024. This recovery will be driven by the upgrade of smartphone accessories, the strong trend of new energy vehicles, advanced driver-assistance systems (ADAS), and the benefits from Apple iPhone orders.

Affected by the subdued investment sentiment, the bank expects that Sunny Optical's stock price may continue to fluctuate in the short term. However, it advises investors to seize the opportunity to accumulate shares in the upcoming favorable trend. The bank has lowered its earnings forecast for Sunny Optical by 21% to 24% per share for the years 2023 to 2024, reflecting a more cautious outlook on profit margins.

UBS: Upgrades Microsoft from "Neutral" to "Buy," raises target price by 16% to USD 400

Based on the latest closing price of USD 342.66, this price implies a 17% upside potential!

Jefferies: Maintains "Hold" rating on Snap, raises target price by 44% to USD 13

Based on the latest closing price of USD 13.51, this price implies a 4% downside potential.

The bank expects that Snap's second-quarter revenue will exceed market expectations, thanks to its strength in the advertising market. It has raised its revenue forecasts for the second quarter and fiscal year 2023 by 2% and 1% respectively. However, due to concerns about slowing expense growth and changes in the advertising platform, the bank maintains a cautious outlook on the company's performance.