Zhitong Tip:
Credit Suisse will increase ZTE Corporation's (00763) earnings per share by 14%, 9% and 3% for the next three years, and is expected to achieve strong double-digit growth in the second half of the year, with a target price as high as HK $34.40.
UBS sees the Kuaishou Technology-W (01024) valuation as attractive and expects advertising revenue to grow by 101 per cent this year compared with the same period last year.
Xiaomo listed Li Ning Co. Ltd. (02331) as the preferred stock in China's sportswear industry, and the brand value may be further released. Driven by the continued improvement in efficiency, Xiaomo has confidence in its long-term structural growth.
Morgan Stanley believes that the mainland beer industry or potential price increase will be a catalyst, China Resources Beer (00291) share price may rise in the next 60 days, the target price of 78 Hong Kong dollars.
The target price of ZTE Corporation (00763) is as high as HK $36.82 and the lowest is HK $34.40.
Credit Suisse: raise the target price of ZTE Corporation's (00763) "outperform" rating to HK $34.40.
Credit Suisse said it raised ZTE Corporation's (00763) earnings per share forecast for 2021-23 by 14 per cent, 9 per cent and 3 per cent respectively. The company's third-quarter revenue rose 14 per cent year-on-year to 30.8 billion yuan, exceeding the bank's expectations, while net profit rose 108 per cent year-on-year to 1.8 billion yuan, higher than the median of its guidance and 32 per cent higher than the bank's original forecast, mainly due to a rise in gross profit margin. Gross profit margin rose 8.1 percentage points year-on-year to 38%, exceeding expectations, thanks to the improvement of the average sales price and cost structure due to the slowdown in home-designed chips and competition. Credit Suisse expects ZTE to achieve strong double-digit growth in the second half of the year, as the big three telecoms companies complete only 37 per cent of their total annual capital expenditure budget. The bank expects ZTE telecom services to grow by a further 25% in the last quarter, benefiting project shipments and revenue recognition. Overall gross profit margin in the fourth quarter may remain high.
Fu Rui: maintain ZTE Corporation (00763) "buy" rating target price raised to HK $36.82
Fu Rui said that due to the higher operating expenses of ZTE Corporation (00763), the short-term forecast was lowered, but the level of operating expenses was expected to be lower in 2023, believing that the expected profit level of the market was too low, and that the company's gross profit margin and market share growth potential remained unchanged. The report said that the company had earlier misestimated the company's revenue growth in the third quarter was delayed. Revenue growth in the third quarter rose 14% from a year earlier, in line with expectations. Based on the accelerated delivery of 5G base stations in the fourth quarter and the tender for the rest of the spectrum 2.6/3.5GHz base stations may be announced soon, revenue growth in the fourth quarter is expected to accelerate to 21% year-on-year, especially the weak performance in the same period last year.
In addition, the gross margin in the third quarter was 38%, better than expected, or driven by the high gross margin of the low-configuration 5G base station. The bank estimates that the gross profit margin of the above base stations will reach 45% Mur50%, similar to that of 4G base stations, so operators are expected to increase their gross profit margin by 1 percentage point between 2021 and 26. However, the bank believes that due to the cost of research and development, operating expenses are higher than expected, accounting for 17.3 per cent of revenue. The bank has raised its operating expenditure forecast for next year, but believes that high R & D spending is only short-term and will not rise further, especially as revenue is expected to fall from 2024. The bank expects R & D costs to remain in the range of 15 per cent of revenue and 17 per cent of revenue in 2021-26. In the fourth quarter, gross profit is forecast to be better than expected, and core operating profit and net profit are significantly better than expected.
Nomura: the target price for the first "buy" rating of China Literature (00772) is HK $75.
According to Nomura, China Literature (00772) has a strong full-value chain of literary business, ranging from IP production to commercialization. Mainly supported by shareholder Tencent (00700), the company has become a hot platform for writers to create literary content, which is willing to pay for reading because of its high-quality reader base; a well-designed incentive mechanism to encourage writers to create more attractive content; and flow support from Tencent. China Literature has successfully created popular IP such as Nirvana in Fire and Qingyu year, and it is expected that there will be more hot IP releases in the future.
Nomura said China Literature acquired Xinli Media in 2018 to commercialize high-quality IP into a variety of entertainment products, including movies, TV dramas and others. Tencent's strong content production ecosystem further supports China Literature, covering game development, comics, and animation products. As a result, according to the report, the company has entered an integrated platform to cultivate and cash in successful IP, paving the way for sustained revenue and net profit growth for many years to come.
UBS: target price for Kuaishou Technology-W (01024) "buy" rating increased by 34.6% to HK $140
UBS said it left its Kuaishou Technology-W (01024) 2021 GMV forecast unchanged at 664 billion yuan and found Kuaishou Technology's valuation attractive, equivalent to three times the 2022 forecast price-to-sales ratio, while the peer average was about four times. The company's growth in daily active users (DAU) and monthly active users (MAU) in the third quarter was in line with expectations, reflecting the ability to retain its core user base, the report said. UBS said the data showed that Kuaishou Technology's user engagement had increased, mainly from film content investment during the period, including skits and Olympic-related insiders, as well as algorithm adjustments. Kuaishou Technology's advertising revenue is expected to grow by 101 per cent this year compared with the same period last year.
The target price of Li Ning Co. Ltd. (02331) is as high as HK $112.8 and the lowest is HK $105m.
UBS: maintain Li Ning Co. Ltd. (02331) "buy" rating target price slightly raised to HK $112.8
UBS said Li Ning Co. Ltd. (02331) sold better than expected in the third quarter and was confident that the brand would improve and profit margins would expand. According to the report, Li Ning Co. Ltd. reported that retail sales in the third quarter grew by more than 40% year-on-year, better than the bank had expected. The bank is concerned that the company's discount level in the third quarter has improved in the number of medium units compared with the same period last year and is the same as the level in the third quarter of 2019. In terms of store network, the number of YOUNG points of sale of Li Ning Co. Ltd. and Li Ning Co. Ltd. accelerated, with a net increase of 99 and 96 respectively in the third quarter. In addition, management maintains year-round guidelines. UBS believes that due to Li Ning Co. Ltd. 's strong sales performance in the third quarter and the recent stock price correction, the market is expected to have a positive reaction to the stock.
Xiaomo: increase the target price of Li Ning Co. Ltd. 's (02331) "overweight" rating by 11.7% to HK $105
Xiaomo said that maintain Li Ning Co. Ltd. (02331) 2012-23 profit forecast, about 1% to 2% lower than market expectations, that Li Ning Co. Ltd. brand value will be further released, coupled with the continued improvement in efficiency, confidence in long-term structural growth. Li Ning is the first choice for China's sportswear industry. According to the report, the company's retail sales removal rate increased to about 40% in the third quarter, exceeding market expectations of 30% to 35%, while discounts, inventory, account structure and sales rate all improved year-on-year, encouraging. In addition, Li Ning Co. Ltd. achieved positive growth during the National Day Golden week in October, and the sales trend further accelerated. It is believed that Li Ning Co. Ltd. is expected to meet the annual growth guidance, with sales growth of more than 40% and net profit margin of 16% to 17.5%.
Morgan Stanley: the target price for China Resources Beer's (00291) "overweight" rating is HK $78.
Morgan Stanley expects the share price of China Resources Beer (00291) to rise in the next 60 days, with a probability of 70 to 80 per cent. After the recent adjustment of the company's share price, it is believed that the value is showing. It is believed that the adjustment has roughly reflected the 6% year-on-year decline in sales in the third quarter of this year (affected by the COVID-19 epidemic). According to the bank, China Resources Beer's high-end trend is stable, driven by major sub-brands and above products, including Super X, Heineken and Marrsgreen. Morgan Stanley believes that the mainland beer industry or potential price increase will serve as a catalyst, and believes that China Resources Beer's current price is only equivalent to 29 times the forecast price-to-earnings ratio in 2022 and is expected to have a compound earnings per share growth rate of 33 per cent from 2021 to 2023. He thinks its valuation is attractive.
CICC: the target price for Helens (09869) "outperform industry" rating is HK $24.
Helens (09869) is the leading bar operator in the mainland and is especially popular with the younger generation, CICC said. Earnings per share are expected to reach 4 cents this year and 55 cents next year, with an average annual compound growth rate of 216% in 2020-22. As a leader in the fast-growing bar industry, with operating scale, the company is expanding rapidly. CICC believes the company should be valued at 37 times next year's forecast earnings, with a target market capitalization of HK $30.4 billion.