LB Takeaway | Tencent, Google and Snap price target cut, NetEase and Kuaishou "Outperform"

Shenwan Hongyuan Securities: Maintain Tencent's "Buy" rating, lower target price to HK $477 from HK $481

Based on today's closing price of HK $326.4, this price means that there is still 46% room for growth!

The bank expects Tencent Holdings to achieve revenue of 130 billion yuan in the second quarter of this year, down 6% year over year (the first quarter was flat year over year), down 4% month-on-month; Non-IFRS net profit attributable to the parent 26.1 billion yuan, down 23% year over year, up 2% month-on-month. In the second quarter, affected by the epidemic, advertising, offline payment, cloud, etc. are expected to continue to decline month-on-month; however, the company actively promoted measures to reduce costs and increase efficiency, and the profit margin in the second quarter improved month-on-month. The bank expects the fundamental inflection point to come in the third quarter, focusing on new game products and WeChat Channels advertising rhythm.

CICC: Maintain NetEase -S "Outperform" rating, target price of HK $210

If calculated at today's closing price of HK $150.3, this price means that there is still 40% room for growth!

The company may release 2Q22 results in late August. The bank expects 2Q22 revenue to increase by 12% to 23 billion yuan (23 billion yuan), and Non-GAAP net profit to increase by 17% to 4.9 billion yuan (4.8 billion yuan). The blockbuster game "Diablo: Immortal", which was originally scheduled to be launched on the national server on June 23, was launched today (July 25). The bank believes that the negative factors about the delay of the game have been lifted.

According to the report, the company's head classic game "Fantasy Westward Journey" and other flow 2Q22 were generally stable, and some new games achieved a rebound in flow: "Endless Lagrange" (launched in August 2021) through gameplay innovation, scientific user acquisition Through ads and marketing, the ranking of the domestic iOS best-selling list in June increased by more than 20 places month-on-month to 9th, achieving a rebound in flow, demonstrating the company's continuous iterative operation ability of stock products.

CICC: give Kuaishou -W "Outperform" rating, target price of HK $112

Based on today's closing price of HK $83.3, this price means that there is still 34% room for growth!

The bank believes that the company's organizational structure adjustment and strategy iteration on the user growth side may continue to release results in 2Q22, superimposing the longer home time during the epidemic and the 618 promotion. The bank expects the DAU of the 2Q22 company to be basically the same as the historical high of 1Q22. 346 million, MAU is also the same as 597 million month-on-month; but considering the Spring Festival holiday in 1Q22, the bank expects the single user usage time in 2Q22 to be slightly adjusted to 125.1 minutes, and the total traffic increased by 38.1% year over year.

Stiefel: Snap downgraded to "hold", price target lowered to $14

Based on the previous trading day's closing price of $9.96, this price means that there is still 41% room for improvement!

Snap's second-quarter revenue growth was weak, the bank said, after market expectations had been slashed following the company's negative announcement in May. Snap did not provide an official quarterly outlook given the uncertain macro environment, but the quarter-to-date trend is flat year over year, while expected growth is around 15-17%. This, combined with comments indicating an uncertain near-term trajectory, has analysts on the sidelines.

JPMorgan: Snap downgraded to "underweight", target price lowered to $9

Based on the previous trading day's closing price, this price implies a 9% downside.

Analysts said Snap's 13% revenue growth showed a bigger deterioration than expected, and the trend so far in the third quarter of last year is flat year over year, which could mean a quarter-to-quarter decline, and the company did not provide guidance for the third quarter of this year.

The bank said that while Snap believes that the main driver of its advertising weakness is the macro environment, changes in Apple's platform policy and increased competition are also important factors. The bank believes that Snap management now needs to rebuild credibility and re-establish a track record of execution.

Mizuho: Maintain Google's "Buy" rating, cut price target by 14% to $150 from $175

Based on the previous trading day's closing price of $107, this price means that there is still 40% room for improvement!

Analyst forecasts for Google Ads suggest that price trends remain strong in the second quarter in terms of a shift in travel/services mix, increased offline retail demand and inflation in ad pricing. However, the bank believes the consensus of 15% year over year revenue growth in 2023 "appears too aggressive" given a likely slowdown in consumer spending. Still, analysts expect Google to be more resilient than its peers as its diverse advertiser base is capturing offline and services revenue.