Analysis Report | "Alibaba Mama + Tencent Advertising" highly favored, can the stock price rise by 60%?

CICC: Reiterates "Outperform" rating for Tencent and Alibaba, with target prices of HKD 475 and HKD 137 respectively.

Based on the latest closing prices, this implies an upside potential of 58% and 63% respectively!

The bank stated that on Monday, Alibaba's UC and Tencent's advertising platforms announced further collaboration to achieve direct traffic connection between WeChat and Taobao, and launched the "Double 11 Super Explosion Plan". The bank pointed out that the substantial connection and deepening of core business cooperation between Tencent and Alibaba's ecosystems.

In the first half of 2023, Tencent's advertising and Alibaba's UC launched cooperation in areas such as joint subsidies, video content, Moments ads, and direct access to Taobao APP. After this cooperation, WeChat's video content, Moments, and mini-programs can directly link to Taobao and Tmall stores, product pages, and live streaming rooms.

The bank believes that this cooperation is a substantial step taken by Tencent and Alibaba in the face of common competitors and the trend of interconnection, which is beneficial to mutual benefit and win-win for both companies.

JPMorgan: Reiterates "Overweight" rating for Hong Kong Exchanges and Clearing, with a target price lowered by 2% to HKD 370 from HKD 376.

Based on the latest closing price of HKD 288.2, this implies an upside potential of 28%!

The bank stated that even though the reduction of stamp duty on Hong Kong stocks has limited stimulating effect on trading volume, it actually enhances the impact of mutual market access, such as increasing the number of investable stocks and trading days, and including RMB counters in the southbound Stock Connect.

The report pointed out that even if the stamp duty on stocks is halved, although it helps improve trading volume, it is not enough to attract significant high-frequency trading. In August 2021, Hong Kong raised the stamp duty on stocks from 0.1% to 0.13%. In the three months after the measure took effect, the average daily turnover decreased by HKD 12.6 billion compared to the previous three months. Comparing the six months after the measure took effect, the average daily turnover decreased by HKD 40.9 billion. However, it is believed that the data is greatly influenced by market factors.

The bank estimates that the average daily turnover will be HKD 232 billion, HKD 299 billion, and HKD 344 billion respectively for the fiscal years 2023 to 2025.

UBS: Maintains "Buy" rating for Pinduoduo, with the target price raised by 9% to HKD 30 from HKD 27.4.

Based on the latest closing price of HKD 23.35, this implies an upside potential of 28%!

The bank expressed a more optimistic view on Pinduoduo's overseas expansion opportunities, believing that the market has not fully reflected the growth potential and profitability of its overseas business. The bank raised the company's profit forecast for the years 2023 to 2025 by 2% to 10%. Catalysts for the stock price include accelerated store openings in the United States, the opening of the Beijing theme park, third-quarter operational data, and the launch of new products. The contribution of overseas business to revenue and EBIT in the first half of the year was 13% and 14% respectively. The bank estimates that by 2025, these figures will increase to 29% and 33% respectively. Following China's development model, the bank will first expand to neighboring locations, then to more distant locations, transition from wholesale to direct customer sales, and evolve from robotic stores to retail stores. It is believed that with the expansion of overseas business, profitability will improve, as overseas direct sales channels have higher pricing and gross profit margins. The United States is expected to be the main overseas market for expansion next year.

Citigroup: Lowers AMC Theatres' target price by 226% to $4.75

Based on the latest closing price of $8.14, this price implies a 42% downside potential.