Quick Look at Major Stocks | Tencent, NetEase Could Still Rise 40%? New Oriental's Target Price Gets Raised!

Guotai Junan Securities: Maintains Tencent's "Buy" rating with a target price of HKD 430

Based on the latest closing price of HKD 302, this price implies a 42% upside potential!

The bank stated that Tencent has significant potential in various business lines: WeChat is accelerating its commercialization and monetization; the gaming product line has a rich reserve both domestically and internationally, with projected Non-IFRS net profit attributable to shareholders of RMB 150.6 billion, RMB 176.8 billion, and RMB 198.2 billion for 2023-2025.

On September 25th, the "Alimama UDx Tencent Advertising Deep Communication Conference" was held, and both parties announced further deepening of cooperation to achieve full direct connection of WeChat and Taobao advertising traffic. They also launched the "Double 11 Super Explosion Plan," upgrading the traffic and system. WeChat's video account, Moments, and mini-program advertising traffic can be directly connected to Taobao and Tmall through Alimama UD's effective delivery.

Guotai Junan: Maintains NetEase's "Buy" rating with a target price of HKD 216.77

Based on the latest closing price of HKD 155.2, this price implies a 40% upside potential!

On September 5th, "Egg Party" announced that the August MAU and cumulative map production both exceeded 100 million. On average, users produce about 210,000 maps per day. In just over a year since its official launch, it has demonstrated the strong vitality of UGC games.

The bank believes that "Egg Party" has built a UGC ecosystem positive feedback loop through gameplay iteration and user operations. Despite the increasingly fierce competition in the party game market, it still has the potential to achieve long-term operation and grow into a national-level IP.

In addition, multiple games from NetEase have shown strong performance. The mobile game "Nishuihan" exceeded 40 million players in its first month, and it has remained in the top 3 of the iOS bestseller list since September, demonstrating even stronger vitality than traditional MMOs. After the launch of "Peak Speed" for 10 days, it has consistently ranked first on the iOS download list and remained in the top ten of the bestseller list for three consecutive weeks.

The bank believes that NetEase's mobile games are expected to accelerate their recovery, driven by the industry's upward trend and the strong performance of new and old products. In the second half of the year, game and value-added service revenue is expected to steadily increase, relying on the performance of mobile games.

CICC: Maintains Pop Mart's "Outperform" rating with a target price of HKD 31

Based on the latest closing price of HKD 22.85, this price implies a 36% upside potential!

As Pop Mart's first offline amusement park, the bank believes that it is expected to expand the company's brand and IP influence in the core area of Beijing, which is also of great significance for exploring business diversification.

In addition, the amusement park provides a high-quality venue for immersive IP experiences. The bank believes that it is expected to help enrich the connotation of IP and enhance emotional connections with consumers. It is optimistic about the broad prospects of the company's diversified monetization based on the trendy IP platform ecosystem.

Daiwa: Reiterates "Buy" rating on New Oriental, raises target price by 4% to HKD 48

Based on the latest closing price of HKD 45.85, this price implies a 5% upside potential!

The bank believes that New Oriental's revenue for the first quarter of fiscal year 2024 will increase by 38% YoY, compared to the company's guidance of 32% to 35% growth and market expectations of 35% to 36% growth. This growth is mainly driven by the new initiatives (STEAM and study tours) and strong demand for overseas exam preparation this summer. The bank expects the company's non-GAAP operating margin to expand by 210 basis points to 15.1%, in line with market expectations.

Looking ahead to the second quarter of fiscal year 2024, the bank expects New Oriental's revenue growth to slow down compared to the first quarter due to the high base of the Oriental Selection live broadcasting business. It is projected to increase by 29% YoY to USD 822 million, with an operating margin of 6.4%. In addition, the bank has raised its profit forecast for fiscal year 2024 to 2025 by 1% to 4% based on strong demand.

Daiwa: Initiates "Buy" rating on Beike

Beike announced a reduction in the commission for second-hand housing transactions in Beijing from 2.7% to 2%, causing the stock price to drop more than 10% on the 26th. The bank believes that this action is in line with the recent policies of the mainland government to stimulate housing demand. The bank points out that since second-hand housing sales in Beijing account for 15% to 17% of Beike's total revenue, it is estimated that the impact of the policy on the company's profitability will be only about 2% to 3% starting from the fourth quarter.

With the Mid-Autumn Festival and National Day holidays in mainland China, the bank expects property viewings and transactions to normalize in the coming weeks, which may put pressure on the company's stock price. However, the bank believes that further adjustment in Beike's stock price would be a good opportunity to accumulate, as the company is actively conducting share buybacks and remains a representative of the recovery in second-hand housing sales, while benefiting from potential positive policies.