Focus Today

1. China Banking International: the downgrade of LPR led to the rise of A shares and Hong Kong stocks, and the quarterly report of the Internet giant was the focus of this week.

2. Guotai Junan: the policy of the media Internet industry is solid, and it is suggested that we should actively pay attention to the repair of Internet valuation.

3. CITIC: the automobile consumption stimulus policy will fall to the ground, and it is recommended to overmatch the car plate at the current point.

4. Central Plains Securities: the momentum of recovery increased in May, and real estate relaxation intensified.

5. UBS: upgrade XIAOMI Group to "buy" rating, target price lowered to HK $14.60

6. Bank of America: maintain XPeng Inc.-W "Buy" rating and lower target price to HK $155m

7. Founder Securities: maintain Hua Hong Semiconductor's "highly recommended" rating with a target price of HK $67.78

8. BoCom International: maintain NetEase, Inc-S "buy" rating with a target price of HK $189,

9. Haitong International: maintain Hong Kong Exchanges and Clearing's "better than the market" rating, with a target price of HK $403.6

10. Credit Suisse: give BYD a "outperform" rating with a target price of HK $368

11. Soochow Securities: maintain Geely Automobile's "buy" rating, strong long-term competitiveness

12. HSBC: maintain Shanghai Fosun Pharmaceutical's "buy" rating and lower its target price to HK $50
    

Selected viewpoints of research and newspaper

I. Macro-market

• China Banking International: the downgrade of LPR led to the rise of A shares and Hong Kong stocks, and the quarterly report of the Internet giant was the focus of this week.

China Bank International reported that last week (May 16-20), the U. S. stock market continued to fall, but emerging markets rebounded as the dollar fell. The domestic / Hong Kong stock market rose as the people's Bank of China cut its benchmark lending rate. There are some signs of improvement in fundamentals and sentiment in Hong Kong as earnings per share forecasts for the Hang Seng Index appear to stabilize, while short selling ratios and the Hang Seng Index volatility Index (VHSI) fall.

Looking forward to this week, the focus is still on the first-quarter results and performance guidance of Internet giants (such as BABA, Baidu, Inc., Kuaishou Technology, NetEase, Inc). Chinese real estate stocks are expected to outperform under policy support (a nationwide cut in first-home mortgage rates and a five-year LPR cut) and a month-on-month improvement in resuming work and production.

II. Industry plate

• Guotai Junan: the policy of the media Internet industry is solid, and it is suggested that we should actively pay attention to the repair of Internet valuation.

Guotai Junan said in a research report that the bank believes that the policy bottom of the overall media Internet industry has appeared, and the top leaders have continued to speak out within two months, supporting the healthy development of the platform economy, and various support measures have been gradually implemented. it is believed that the current policy bottom of the overall media interconnection industry is relatively solid, and the performance-to-price ratio of valuation is prominent. with the gradual release of substantive policies, it is expected to continue to catalyze the share prices of the whole sector to rise.

The bank recommends that we actively pay attention to the repair of Internet valuation and recommend the target:$Tencent (00700.HK) $、$Kuaishou Technology-W (01024.HK) $、$Bilibili Inc.-SW (09626.HK) $、$China Literature (00772.HK) $And so on, it is recommended to pay attention to:$NetEase, Inc-S (09999.HK) $Wait. The popularity of the game plate is expected to be revised after the re-release of the version number, and the recommended targets are: Panax notoginseng mutual entertainment, Perfect World, Yaoji technology, heartbeat company, middle-hand games, etc., suggest attention: gigabit, Baotong technology, etc.; and recommend video leading targets$mango supermedium (300413.SZ) $。

• CITIC: the automobile consumption stimulus policy will fall to the ground, and it is recommended to overmatch the car plate at the current point.

CITIC reported that the National standing Committee proposed a phased reduction of 60 billion yuan in the purchase tax on some passenger cars and a number of other policies conducive to the recovery and development of the automobile industry. The bank believes that the purchase tax relief is one of the most effective policies to boost car sales, which exceeds market expectations and is expected to boost 10-2 million new demand for passenger cars. The worst time of the automobile industry has passed, and it is expected to continue to improve marginally in the future. We are optimistic about the overall recovery and long-term development of the automobile industry.

The policy stimulus of this National standing Committee is stronger than expected, and the purchase tax relief is expected to have a significant pulling effect on car sales, and is optimistic about the recovery and development of the automobile sector as a whole. This policy will obviously benefit car companies with large sales flexibility and good marginal profits, especially those with traditional fuel vehicles as the profit core:$Great Wall Motor (02333.HK) $Pickup trucks benefit most from policies such as cars going to the countryside.$Geely Automobile (00175.HK) $、$Guangzhou Automobile Group (02238.HK) $, Changan Automobile, SAIC, etc.

• Central Plains Securities: the momentum of recovery increased in May, and real estate relaxation intensified.

Zhongyuan Securities said that relaxation in the real estate sector has intensified: on May 20, the central bank further cut 15 BP of five-year LPR to 4.45%, the largest reduction in more than five-year LPR since the establishment of the new LPR mechanism. Superimposing the previous regulatory authorities "the first set of housing commercial personal housing loan interest rate adjustment" policy, mortgage interest rates will have more room to decline. At present, the credit contraction in the real estate sector is relatively significant, and transactions in the secondary market continue to decline. It is expected that after the resumption of production and work, the effectiveness of the new real estate policy will gradually show, driving real estate investment to rebound, forming a pattern of economic bottom for the whole year in the second quarter.

III. Individual stocks

• UBS: l$XIAOMI Group-W (01810.HK) $Rated to "buy" and the target price lowered to HK $14.6

UBS reported that XIAOMI's share price was expected to hit bottom and decided to upgrade its rating from "neutral" to "buy" and lower its target price from HK $15 to HK $14.6, equivalent to 16.5 times the average price-to-earnings forecast for 2022 to 2023. According to the bank, XIAOMI's share price has fallen 38% so far this year, which is believed to reflect the slowdown in global consumer demand, the pressure on 5G costs and the loss of XIAOMI's smartphone market share. Given the current valuation, coupled with the positive indicators shown in the bank's consumer smartphone survey, XIAOMI's risk and return is attractive. The bank pointed out that the key catalysts include the progress of the reopening of Shanghai and the relief of supply chain pressure.

• Bank of America Securities: maintain$XPeng Inc.-W (09868.HK) $"Buy" rating, lower target price to HK $155

According to a research report released by Bank of America Securities, XPeng Inc. 's first-quarter results were in line with expectations, with income of 7.5 billion yuan, an annual increase of 153%, but a quarterly decline of 13%. The gross profit margin for cars was 10.4%, up from 10.1% in the same period last year, but down from 10.9% in the previous quarter. The quarterly decline was mainly due to an improvement in the product mix, which was offset by a reduction in subsidies for new energy vehicles and higher battery costs. The bank said XPeng Inc. expected gross profit margin in the second quarter to be affected by higher battery costs, but it is expected to continue to improve in the second half as orders for new prices begin to ship in the third quarter.

BofA Securities cut XPeng Inc. 's sales forecast for this year by 2%, lowered the target price of shares from HK $178to HK $155, and maintained its "buy" rating.

• Founder Securities: maintain$Hua Hong Semiconductor (01347.HK) $Highly recommended rating with a target price of HK $67.78

Founder Securities released a research report saying that to maintain Hua Hong Semiconductor's "highly recommended" rating, revenue in 2022-24 is expected to be 25.3max 29.6 / 3.28 billion US dollars, with a net profit of 3.6max 4.1 / 510 million. According to the DCF valuation method, the target price is 8.63 US dollars, which translates to 67.78 Hong Kong dollars at exchange rate. The company's 22Q1 revenue was $590 million, a better-than-expected increase from the $560 million revenue guidance. 22Q2 revenue is expected to be $615 million, or + 3.4% month-on-month.

• BoCom International: maintenance$NetEase, Inc-S (09999.HK) $Buy rating with a target price of HK $189

BoCom International released a research report that maintained NetEase, Inc-S "buy" rating, with a target price of HK $189. The company held a 2022 game conference on May 20, announcing new developments in more than 50 games (36 in China and 15 overseas), mainly including new information videos, new skin, IP linkage, new games launch plans, etc., overseas new games are rich in reserves, and it is expected that the proportion of overseas revenue will increase to 14% by the end of the year, so it is optimistic about its production ability and long-term operation ability.

According to the report, the company's domestic flagship games maintain stable content updates and game innovation, industry-leading production capabilities and operational capabilities to build core competitiveness. 24 games have announced new expansion plans, which will be launched one after another from May to summer, with continuous innovation in game versions, scenes, characters and gameplay. In addition, the global release of the layout of overseas games has been accelerated in the second half of the year. among the 15 new developments of overseas games announced, there are 9 new games waiting to be launched, with equal emphasis on PC and mobile games, strengthening competitive categories, shooting categories and other dominant categories, and actively expand strategies, sandboxes and other new categories.

• Haitong International: maintain$Hong Kong Exchanges and Clearing (00388.HK) $"better than the market" rating, with a target price of HK $403.6

Haitong International released a research report saying that to maintain HKEx's "better than market" rating, total operating revenue from 2022-24e is expected to be HK $207Universe 224 / 24.5 billion (year-on-year-1 per cent). Net profit attributable to shareholders is HK $123 / 13.6 billion (year-on-year-2 per cent), with a target price of HK $403.6, corresponding to 41.6 times 2022EPE. HKEx reported first-quarter 2022 results: realized income and other income of HK $4.69 billion (- 21% year-on-year) and net profit of HK $2.668 billion (- 31%). The bank expects the decline to be mainly related to factors such as continued market volatility.

• Credit Suisse: to$Byd Company Limited (01211.HK) $"outperform the market" rating, with a target price of HK $368

Credit Suisse released a research report that gave BYD shares an "outperform" rating with a target price of HK $368. The company upgraded its battery technology to CTB to further integrate the battery into the car body, and the top cover of the battery pack forms the floor of the car body. This integration simplifies the body structure and production process, thereby reducing costs, improving safety and greater vehicle space.

The report said that as BYD's first product using CTB technology, the Seal large sedan sells for 212800 yuan to 289800 yuan and will compete directly with Tesla, Inc. Model3, XPeng Inc. P7 and Feiyue C01. BYD said it had ordered 22637 seals on its first day, with monthly sales of about 20000 under management guidance. Given the super profitability of the Han EV car with a gross profit margin of more than 30 per cent, Seal is expected to make a positive contribution to BYD's product portfolio and profit margins.

• Soochow Securities: maintain$Geely Automobile (00175.HK) $"Buy" rating, strong long-term competitiveness

Soochow Securities released a research report saying that to maintain Geely Automobile's "buy" rating, it is estimated that the total revenue in 2022-24 is 1379max 1680 / 198.2 billion yuan, and the net profit attributed to the parent company is 66max 92 / 12.9 billion yuan, corresponding to EPS 0.66 PE 0.92 scarp 1.29 yuan, corresponding to PE 17-12-9 times, the average valuation of the five comparable companies in A shares is 41-26-18 times. Relying on the parent company Geely Holdings, multi-acquisition integration, to build a huge automobile ecological industrial chain covering upstream and downstream multi-brands, to help the company's long-term competitiveness. Given the continued accumulation of technology and the continued volume of the strong product cycle, the bank believes the company should enjoy higher valuations.

• HSBC: downgrade$Shanghai Fosun Pharmaceutical (02196.HK) $Target price to HK $50, maintaining a "buy" rating

HSBC Research released a research report saying that it raised Shanghai Fosun Pharmaceutical's income forecast for 2022 and 2023 by 4%, and was more optimistic about the growth of the pharmaceutical and device industries, and the sales growth of the new drug and medical beauty industry was stronger than expected. however, the net profit forecast for 2022-2023 was reduced by 12% Fosun 17% to take into account the depreciation of Fosun financial assets due to the fall in share prices. As well as the gross margin pressure brought about by the sale of novel coronavirus products with low gross profit margin. The bank lowered the target price of Shanghai Fosun Pharmaceutical's H shares from HK $70 to HK $50, maintaining its "buy" rating.