Big Moves to Watch | Alibaba, KUAISHOU-W Could Rise at Least 60%? NIO-SW Target Price Significantly Lowered!

JPMorgan: Upgrades BABA-SW to "Overweight" with a target price of HKD 135

If calculated based on the latest closing price of HKD 83, this price implies a 63% upside potential!

The bank believes that Alibaba's restructuring will have a significant impact on its long-term business fundamentals and stock price, and that its long-term growth prospects are attractive. The company announced the spin-off of its cloud intelligence, Cainiao, and Hema Fresh businesses, and launched external financing for Alibaba's international digital business group. The clear fundraising and listing timetable has brought surprises to the market and is positive for the stock price.

The bank believes that from a three-to-five-year perspective, Alibaba's loss of market share in the domestic e-commerce market is still a key fundamental issue, but investors underestimate the profit potential of the company's non-core businesses. From a five-year perspective, the bank expects Alibaba's non-core businesses to drive group revenue growth, with an expected annual compound growth rate of 10% for revenue and 15% for profit.

UBS: Maintains "Buy" rating on KUAISHOU-W with a target price raised by 3.5% to HKD 88

If calculated based on the latest closing price of HKD 55.15, this price implies a 60% upside potential!

The bank pointed out that KUAISHOU-W's current valuation is attractive, with a predicted P/E ratio of 17 times and 9 times for the next two years respectively. Among large and medium-sized internet stocks, KUAISHOU-W has the fastest business growth. The bank also welcomes the company's HKD 4 billion share buyback, which helps alleviate market concerns about potential exits by venture capital and private equity.

UBS pointed out that KUAISHOU-W's first-quarter revenue and profit margins exceeded expectations, benefiting from better monetization of gross merchandise volume (GMV) on its e-commerce platform and improved cost control. The factors that drove better-than-expected first-quarter performance are expected to continue for the rest of the year.

The bank maintains its forecast of a 30% year-on-year increase in KUAISHOU-W's e-commerce platform GMV this year, and expects the company's e-commerce-related revenue, including commission income and internal advertising, to outperform GMV growth. This is based on improved business sentiment among merchants driving internal advertising budgets, higher completion rates without interference from the COVID-19 pandemic, and internet celebrities selling products purchased by the company, resulting in higher commissions.

The bank also pointed out that the management has committed to maintaining sales and promotion expenses flat year-on-year this year, and the improvement in revenue growth and operating leverage has led to an upward revision of the bank's net profit forecast for KUAISHOU-W.

Daiwa: Maintains "Buy" rating on Meituan with a target price of HKD 205

If calculated based on the latest closing price of HKD 132.8, this price implies a 54% upside potential!

The bank pointed out that Meituan-W is more price competitive than Deliveroo and Foodpanda on the KeeTa food delivery platform outside Hong Kong. According to the report, as of November 2021, Foodpanda's market share in Hong Kong was 51%, while Deliveroo was 46%. Daiwa Securities expects competition to intensify in the short term as KeeTa is more price competitive. KeeTa offers individuals value-for-money meal packages starting from HKD 60, including delivery fees.

The bank compared Deliveroo and KeeTa's minimum order fees, delivery fees, and platform fees. For example, for a set meal from Maxim's MX, KeeTa's minimum order fee is HKD 70 and delivery fee is HKD 8, while Deliveroo's minimum order fee is HKD 75 and delivery fee is HKD 16. The bank also ordered a fish ball noodle dish for comparison, with KeeTa's total cost being HKD 86, Deliveroo's being HKD 92.2, and Foodpanda's being HKD 93.6, mainly due to Deliveroo's minimum order fee and Foodpanda's delivery fee.

The report stated that Meituan has reportedly invested HKD 1 billion in KeeTa. As the order density in Hong Kong may be lower at present, Daiwa Securities believes that the delivery cost per order will be higher than that of mainland users. However, as the Hong Kong market is small, they are not worried about losses and believe that Hong Kong is Meituan's first pilot city before expanding to overseas markets such as Southeast Asia.

CICC: Maintains Neutral Rating on NIO-SW, Target Price Cut by 20% to HKD 66.6

At the latest closing price of HKD 67.65, this price implies a 2% downside.

Given the current intense competition, the bank holds a conservative view on NIO's mass-market brand prospects, while also seeing difficulties in expanding into the high-end market.

The bank expects NIO's gross margin to come under pressure in the first half of 2023 due to 1) promotions and subsidies to reduce inventory of old models; 2) high proportion of ET5 sales dragging down profit margins; and 3) slow transition of model upgrades in the first half of the year, with most upgraded models starting to be delivered in the second or third quarter.

The bank expects profit margin pressure to continue into the second half of the year due to weak orders and intense market competition. In addition, the bank expects NIO to spend RMB 24.3 billion on R&D/sales in the 2023 fiscal year (higher than the previous estimate of RMB 22 billion) to support the development of its battery swap stations and maintain high-quality customer service, which will further drag down profit margins.

Goldman Sachs: Gives Apple a "Buy" Rating with a Target Price of USD 209

At the latest closing price of USD 174.2, this price implies a 20% upside!

The bank believes that Apple's AR/VR headset can succeed in areas where other companies may not be able to.

Analysts said that although they recognize that the entire AR/VR industry is disappointing, the differentiating factor of Apple's AR/VR headset compared to its competitors is its potential for success. These key points include "install base of billions of devices and services users, mature developer ecosystem for iOS/iPadOS/macOS, existing IP content investment and applications available for AR/VR, direct in-store and online sales model (which is crucial to introducing a relatively new consumer product category to consumers), and the benefits of the ecosystem."

Analysts believe that Apple's AR/VR headset and related services "may contribute annual revenue of $11 billion to $20 billion in fiscal years 2024-2028." In other respects, improvements to Apple's operating system will help strengthen its ecosystem and minimize user churn, while the new MacBook may help accelerate the upgrade cycle.

Jefferies: Raises Google's target price from $130 to $150, up 15%

If calculated at the latest closing price of $125.05, this price implies a 20% upside potential!