LongBridge Takeaway | Alibaba price target boosted by JP Morgan, Daiwa and Macquarie! Why?

JPMorgan Chase: Reaffirm Alibaba-SW "overweight" rating, raise target price by 3.85% from HK $130 to HK $135

Based on today's closing price of HK $117, this price means that there is still 15% room for growth!

Reason: The bank said that Ali is still one of the top choices in the Internet field, and it is expected that monthly customer management revenue (CMR) will fall by 9% year over year in the June quarter, and investment in new businesses may be further reduced in this quarter, so losses may improve more than expected.

The bank said that its forecast for the company's first fiscal quarter ending at the end of June this year is lower than market expectations, but it believes that there is still room for positive surprises in terms of cost optimization. In addition, due to the cancellation of orders due to the disruption of the logistics network earlier, there may not be much room for positive surprises in core CMR revenue, which will have a negative impact on Tmall's commission revenue.

The bank expects that the company's stock price will be driven by a positive earnings correction, and then return to more than 20% earnings growth in 6-12 months, and expects first quarter revenue to rise 0.4% year over year, adjusted earnings per share to fall 42% year over year, fiscal 2023 revenue to rise 6% year over year, and adjusted earnings per share to fall 8% year over year.

Daiwa: Maintain Alibaba-SW "Buy" rating, target price increased from HK $145 to HK $150

If calculated at today's closing price, this price means that there is still 28% room for improvement!

Reason: The bank said that after referring to the company's 618 shopping festival sales data, although consumer confidence is weak and the core e-commerce business has not seen a significant reversal, it believes that short-term capital inflows may drive the stock price. The bank forecasts that in the first fiscal quarter to the end of June, revenue fell 2% year over year to 201.4 billion yuan, and adjusted net profit 27.2 billion yuan. Total merchandise turnover (GMV) is expected to fall by 10 % year over year, which is lower than earlier expectations; the recovery of customer management revenue (CMR) is expected to lag behind GMV.

The bank believes that although the recovery of consumer confidence in the second half of 2022 is limited, the profitability will exceed market expectations. The bank expects that the "Amoy Vegetable" business in the community e-commerce business is expected to lose significantly in the first quarter; the cloud business is expected to accelerate revenue growth year over year during the same period.

Macquarie: Reiterates Alibaba-SW "outperform" rating, raising target price from HK $138 to HK $145

If calculated at today's closing price, this price means that there is still 24% room for improvement!

Reason: Before Ali disclosed the results of the first quarter of fiscal year 2023, the bank fine-tuned its profit forecast, believing that the company's overall outlook has limited changes, and it is believed that the continuous optimization of costs in various business areas can support a healthy recovery of earnings in the next few quarters.

In addition, the bank estimated that total merchandise turnover (GMV) in Ali's core market could trend down 8% year-on-year, mainly driven by the recovery of logistics and strong merchant demand during the "618" promotion period. The bank maintained its revenue forecast for Ali, but raised its adjusted earnings for the 2023-2024 fiscal year by 2% each.

Macquarie: First "outperform" rating on NetEase-S, target price HK $202

If calculated at today's closing price of HK $142.3, this price means that there is still 42% room for improvement!

Reason: The bank expects double-digit annual earnings growth in the next few years, and its domestic market share continues to expand, with a target price of HK $202. The company's overseas expansion, growth in premium game IP and services, and strong R & D capabilities are all factors supporting earnings growth.

The bank believes that the company's domestic market share is expected to grow to 21% this year due to its strong game IP and good product quality. It also expects to continue to expand its global presence after its success in the Japanese market, and recently opened its first studio in the United States. Global expansion should provide new growth drivers. The company aims to increase its R & D resources in overseas markets from less than 20% to 40% in the medium term. The bank expects revenue contribution from overseas games to increase from 11% in 2021 to 22% in 2024.

HSBC: Maintain "Buy" rating on BYD, raise target price by 9% to HK $442 from HK $407

If calculated at today's closing price of HK $317.4, this price means that there is still 39% room for improvement!

Reason: The bank believes that the strong sales momentum of electric vehicles is expected to continue in the second half of 2022 due to the continued increase in orders for its new models Seal and D9, as well as more product launches. The increase in monthly sales will further drive the stock price on the back of recovering demand and increased visibility of the introduction of medium and long-term electric vehicle policies. Meanwhile, external battery orders are expected to accelerate in the second half of 2022 as BYD becomes a battery supplier to Tesla.

Goldman Sachs: rating ZH-W "Neutral", target price HK $41

Calculated at today's closing price of HK $27.5, this price means that there is still room for 49% to rise!

Reason: The bank expects ZH to achieve a 10 % CAGR for MAUs (monthly active users) and a 31% CAGR for revenue over 2021-24. At the same time, Zhihu is expected to continue to gain market share from online advertising as advertising budgets gradually shift from regular ad platforms to emerging content-based marketing platforms.

Morgan Stanley: Maintain Apple's "overweight" rating, target price of $185

If the previous trading day's closing price of $141.56 is calculated, this price means that there is still 31% room for improvement!

Reason: According to the latest data released by Sensor Tower, the bank estimates that Apple's App Store revenue growth slowed in June due to its poor performance in the Chinese market. Specifically, App Store revenue growth slowed to 2.5% year over year in June, down from 4% growth in May.

The bank expects App Store net revenue to grow 5% year over year to $6.5 billion in the fiscal third quarter ending in June, about $67 million below its current forecast of 6% year over year.

At the same time, analysts pointed out that App Store revenue growth is likely to accelerate again in the second half of this year as the base "becomes easier" year over year and the economy rebounds after epidemic prevention restrictions are eased.

Barclays cuts target prices for digital advertising companies

The bank lowered Alphabet's price target by 6% from $3,200 to $3,000, which means there is still 32% room to rise based on the previous trading day's closing price!

Cut Meta's price target by 24% from $370 to $280, which means there is still 66% room to rise based on the previous trading day's closing price!

Pinterest's price target is down 16% from $24 to $20, which means it's basically flat at the previous session's closing price.

Snap's price target is slashed by 52% from $42 to $20, which means there is still 39% room to rise based on the previous trading day's closing price!

Reason: The bank believes that spending and conversion rates across the internet ecosystem are likely to "decline". In addition, challenges from ByteDance's TikTok and Apple have made the market increasingly competitive.

"We believe this chain of events could lead to the industry's lowest revenue growth rate in years, with annual revenue growth of just 3 per cent expected for the industry as a whole. We believe this is already partially reflected in the valuation and hope that the guidance in the second quarter results report will set the stage for future expectations and stabilize the shares of these stocks."