Analysis Report | CLOUD MUSIC and Kuaishou's target prices raised after their performance! MEITUAN-WR faces "bargaining", but still manages to rise by 40%?

Bank of America: Reiterates "Buy" rating on Meituan, slight downward adjustment of 2% to target price from HKD 189 to HKD 186

Based on the latest closing price of HKD 132.2, this price implies a 41% upside potential!

Meituan's second-quarter performance exceeded expectations, with sustained growth in core business. However, the bank believes that the growth of the third-quarter food delivery business may slow down due to reasons including macroeconomic headwinds, improved offline dining/tourism activities during the summer vacation reducing demand for online food delivery, and the impact of hot weather on demand in certain regions. These factors are attributed to the high base effect from last year.

The report points out that Meituan is actively exploring new demands and launching several new products, including group-buying meal delivery products that offer more favorable prices for price-sensitive users, as well as upgrading its membership system. The bank has lowered its forecast for Meituan's third-quarter food delivery revenue growth from 22% to above 10% on a quarterly basis, with a slight increase in order volume but a slight decrease in average revenue on a quarterly basis.

JPMorgan: Maintains "Overweight" rating on Kuaishou, upward adjustment of 12.5% to target price from HKD 80 to HKD 90

Based on the latest closing price of HKD 65.25, this price implies a 38% upside potential!

The bank states that Kuaishou's second-quarter performance reflects stable execution capability and improved operational efficiency. It has adjusted its earnings forecasts per share for the next two years, with increases of 84% and 15% respectively. The bank's forecasts are 4% higher than the industry average, and it believes there is further potential for earnings forecasts to improve.

The report indicates that Kuaishou's platform traffic is strong, and e-commerce infrastructure continues to improve. Over the next two to three years, it will continue to drive steady growth in Gross Merchandise Volume (GMV). The monetization rate in the second quarter reached 4% and is expected to continue to increase. The bank estimates that e-commerce-related revenue will grow by 49% and 26% in the current and next year, respectively.

The bank has also raised its gross margin forecasts for the next two years by 3.2 and 3.6 percentage points to 50% and 52%, respectively, to reflect a revenue mix that is more inclined towards e-commerce and advertising businesses.

Goldman Sachs: Maintains "Buy" rating on NetEase, upward adjustment of 10% to target price from HKD 182 to HKD 200

Based on the latest closing price of HKD 153.5, this price implies a 30% upside potential!

The bank states that NetEase's adjusted operating profit for the second quarter increased by 20% YoY to CNY 6.8 billion, surpassing the bank's and market expectations. The company's solid pipeline execution will pave the way for growth in various types of games and monetization share in the second half of this year and next year. The bank has raised its forecast for NetEase's third and fourth quarter game revenue growth to 19% and 23% YoY, respectively (previously expected to increase by 13% and 15%).

The bank has raised its revenue forecasts for NetEase from this year to 2025 by 1%, 2%, and 3% respectively, and adjusted its operating profit forecasts by 7%, 9%, and 11% respectively. The net profit forecasts have also been raised by 18%, 9%, and 10%.

Jefferies: Maintains "Outperform" rating for Dolphin Research, raises target price by 17% to HKD 27

Based on the latest closing price of HKD 24.8, this price implies a 9% upside potential!

The bank stated that Dolphin Research's sales and net profit for the first half of the year increased by 19% and 42% respectively, slightly higher than the profit forecast. The performance in the third quarter continued to improve, with sales in July growing by over 40% YoY. The bank expects profit margins to further recover in the second half of the year.

The bank currently predicts that Dolphin Research's compound annual growth rates for sales and net profit from 2023 to 2025 will be 19% and 25% respectively, reflecting the recent recovery in gross profit margins and the mid-term global expansion.