Morgan Stanley's research report states that outbound travel and music are still the most attractive parts of the online sector in mainland China. In terms of online travel, bullish on the guidance for outbound travel and related companies in the third quarter of this year, especially due to the visa-free policy driving international travel and the recovery of most flights. It is believed that the average room rate (ADR) of local hotels, which has fallen due to increased supply, will gradually return to normal in the fourth quarter. The bank has chosen Tongchengtravel (00780.HK) as its preferred company and rated it as 'shareholding', with a target price of 20 yuan.

Online gaming will face the most intense competition during the summer vacation season. The bank pointed out that multiple games have been recently released, including Tencent's Dungeon & Fighter Mobile and Bilibili's Three Kingdoms: Plan to Conquer the World. It is expected that more than 100 games will be released this summer, including NetEase's Once Human and Eternal Land which will be released on July 25th. Although rapid growth is expected in the second half of the year, declining average revenue per paying user (ARPPU) and rising costs will lead to a decline in return on investment (ROI). It is believed that advertising platforms with higher game exposure rates can benefit. Morgan Stanley has lowered the target price of Bilibili from $15 to $14, and rated it as 'in line with the market'; it gives a 'in line with the market' rating to NetEase with a target price of $100.

The bank mentioned that due to the gradual decline in market share of Kuaishou (01024.HK) and the slowdown in gross profit expansion due to rising sales and marketing expenses, its rating has been downgraded from 'shareholding' to 'in line with the market', and the target price has been lowered from 70 yuan to 55 yuan.