Rating Quick Look | Netflix, Bilibili Target Price Raised! Tencent, Kuaishou "Buy", JD, NetEase Face "Price Cut"

Citigroup: Maintains "Buy" rating on Tencent Holdings, target price of HKD 459

The bank is optimistic about its strong execution capabilities and sustainable fast profit growth momentum. Citigroup expects Tencent's domestic gaming revenue to recover year-on-year in the second quarter, with the seasonality of e-commerce potentially supporting video account advertising and live broadcast fees, believing that total revenue will accelerate growth from the second quarter to the fourth quarter.

The report states that Tencent will announce its first-quarter results on May 14, with revenue expected to meet market expectations and profits possibly slightly higher than market expectations. With a high base and a lack of meaningful game product releases, domestic gaming revenue in the first quarter is expected to decline by 6% year-on-year, while international gaming revenue is expected to increase by 1.5% year-on-year. Total revenue is expected to grow by 5.3% year-on-year, gross profit by 14.7% year-on-year, and non-IFRS net profit by 35% year-on-year.

Jefferies: Maintains "Buy" rating on Kuaishou Technology, target price of HKD 78

The bank continues to forecast a 15% year-on-year increase in first-quarter revenue to RMB 29 billion, with non-IFRS profit reaching RMB 3.1 billion.

The report states that the company's gross profit margin is expected to increase by about 6 percentage points to around 52% during the period. By business segment, the bank expects the group's gross merchandise volume (GMV) to grow by 29% in the quarter, online sales to rise by 26% to RMB 16.4 billion, and other revenue to increase by about 40%, with e-commerce revenue expected to increase by 41 driven by commission income %.

Goldman Sachs: Raises Bilibili's H-share target price from HKD 105 to HKD 107, maintains "Neutral" rating

The bank notes that Bilibili's stock price trend over the past month has been largely in line with the Shanghai and Shenzhen China Internet ETF. As for the strong growth in advertising revenue in March and the brief outperformance of the stock price in the past two weeks, coupled with the anticipation of new game launches in the second quarter of this year, the company is moving towards a direction where it is expected to achieve a balance between revenue and expenses in the third quarter of this year.

The bank has re-examined the company's performance forecast for the first quarter and full year of 2024. Revenue growth in the first quarter and full year of this year is expected to be 11% and 13% respectively; advertising revenue growth is expected to be 26% and 24% respectively; and net losses are expected to be RMB 470 million and RMB 500 million respectively. The bank also points out that the company's profit margin is expected to show more significant improvement in the second half of this year.

Bank of America: Raises Netflix's target price from USD 650 to USD 700, maintains "Buy" rating

Morgan Stanley: Lowers JD.com's target price to USD 25, rating "In line with the market"

Citigroup: Lowers NetEase's target price from USD 138 to USD 116, maintains "Buy" rating

The bank notes that NetEase's latest performance forecast will take into account the group's re-collaboration with Blizzard, weaker-than-expected performance after the launch of "The Legend of the Condor Heroes," temporary impacts from recent updates to "FWJ," and forecasts for upcoming new and old games.

Entering the second quarter or the second half of the year, the bank believes the market will focus on the launch of "Endless Rebirth" in the second quarter and "Sixteen Sounds of Swallows" in the third quarter. With the group releasing more casual games such as "Egg Party" and "Peak Speed" in more overseas countries, along with the gradual recovery of Blizzard games from the summer, any revenue growth will help offset the declining trend of aging games Citi has lowered NetEase's revenue for the fiscal years 2024 to 2026 by 7.3%, 8.1%, and 8.7% respectively, while non-GAAP net profit has been adjusted down by 5.3%, 5.4%, and 8.1% to reflect the assumption of lower contributions from traditional games and new games, partially offset by the recovery of contributions from Blizzard-authorized games.

The bank has revised its first-quarter revenue forecast down by 6.4% to 25.6 billion yuan, and also lowered its non-GAAP net profit forecast by 6.4% to 6.96 billion yuan. The bank expects the group's second-quarter total revenue to increase by 3.9% year-on-year to 24.9 billion yuan, with non-GAAP net profit at 6.3 billion yuan