GMT EIGHT - Research

UBS maintains a "neutral" rating on Bank of East Asia (00023) and raises its target price to 10.2 Hong Kong dollars.

UBS released a research report stating that it maintains a "neutral" rating on BANK OF E ASIA (00023) with the target price raised from HK$9.9 to HK$10.2. The bank's forecasts for 2025 to 2028 for East Asia have been revised upwards by 5% to 11% based on the bank's stronger-than-expected performance last year. UBS points out that BANK OF E ASIA's net profit in 2024 increased by 14% year-on-year, significantly exceeding UBS and market expectations, indicating a year-on-year net profit growth of 85.7% in the second half of last year. This was mainly driven by robust net interest income. The net non-interest income, operating expenses, and asset impairment provisions for the period were broadly in line with UBS's expectations. The dividend for the year was HK$0.69 per share, with the dividend payout ratio increasing to 45.4%, which also met expectations.

21/02/2025

JP Morgan reiterates "overweight" rating on BYD Company (01211) and raises the target price to 600 Hong Kong dollars.

J.P. Morgan released a research report stating that they have reiterated their "overweight" rating for BYD COMPANY (01211), raising the target price from 475 Hong Kong dollars to 600 Hong Kong dollars. They hope that BYD Company Limited can become the "Toyota" in the global electric vehicle market. Over the past week, the bank has had discussions with nearly 200 investors and participated in BYD Company Limited's reverse roadshow, giving them the opportunity to test drive the latest models. Overall, the bank believes that investors are increasingly optimistic about the long-term growth prospects of BYD Company Limited in both domestic and international markets. The bank expects that BYD Company Limited's global deliveries next year (including the Chinese market) will reach as high as 6.5 million units, with overseas markets accounting for about 1.5 million units. This means that its market share in the global light vehicle market will increase from 3% in 2023 to 7% next year; and in the field of new energy vehicles, its market share is expected to remain at around 22%.

21/02/2025

Tianfeng: The current gold and jewelry industry is experiencing a major transformation cycle. We recommend paying attention to LAOPU GOLD (06181) and other companies.

Tianfeng released a research report stating that the overall demand for the domestic gold jewelry industry in 2024 is stable. LAOPU GOLD (06181), a company in the traditional gold jewelry industry, is able to achieve far higher growth rates than the industry average, reflecting a change in the industry's long-term logic. The industry is currently experiencing a shift from channel-driven growth to product upgrading-driven transformation. In the past, the gold jewelry industry relied on channel expansion for growth, with a high degree of product homogeneity. With the diminishing channel dividends, the industry's growth momentum is shifting from channels to product upgrades, with companies that offer higher product differentiation taking the lead. Key points from Tianfeng are as follows: - LAOPU GOLD's positive profit forecast for 2024: The company expects to achieve a net profit of 14-15 billion yuan in 2024, a year-on-year increase of 236%-260%. The net profit for the first half of 2024 is 5.9 billion yuan, a year-on-year increase of 199%. The calculated net profit for the second half of 2024 is expected to be 8.1-9.1 billion yuan, a year-on-year increase of 270%-315%, continuing the high growth trend. - Drivers of high growth for LAOPU GOLD in 2024: Same-store sales growth + store expansion. Store expansion: Compared to the end of 2023 (30 stores), 7 new stores are expected to be added in 2024, with the total number of stores reaching 37 by the end of 2024. Optimization and expansion of 4 existing stores will also contribute to incremental revenue. Same-store sales: The LAOPU brand has become a strong consumer brand in China in 2024, with its brand influence continuing to expand, leading to a market advantage. The company's continuous optimization, new product releases, and iterations have led to a significant increase in overall revenue from existing stores (both online and offline). Tianfeng predicts that same-store sales growth will far exceed new store openings. - Opening the first overseas store in a high-end mall in Singapore, providing long-term expansion opportunities overseas. The LAOPU GOLD store in Singapore has begun renovations, located in the Marina Bay Sands Hotel in Singapore. Marina Bay Sands Hotel is a landmark building and high-end shopping district in Singapore, known for hosting luxury brands and being a leisure destination. The overseas expansion opens up long-term development opportunities for LAOPU GOLD, moving towards internationalization, with the potential to establish the brand as a high-end luxury brand in China. LAOPU GOLD is a rare high-growth brand, with strong brand momentum. The current brand momentum of LAOPU GOLD has been validated, with the expansion of brand influence driving high growth in performance, making it very valuable in the domestic consumer environment. Since the beginning of 2025, with gold prices rising, mall activities, holidays, etc., the popularity of LAOPU GOLD's retail stores has remained high, potentially driving further growth in performance. It is recommended to pay attention to the sales peak season driven by the company's new round of price increases at the end of February, as well as the progress of opening stores in Singapore. Recommended targets to watch: LAOPU GOLD (06181), Guangdong CHJ Industry (002345.SZ), CHOW TAI FOOK (01929). Risk warning: Significant fluctuations in gold prices, weak end demand, intensified industry competition.

21/02/2025

JP Morgan: Hong Kong real estate industry prefers LINK REIT (00823) and avoids WHARF REIC (01997).

JPMorgan released a research report stating that the preferred choices in the Hong Kong real estate industry are LINK REIT (00823), SWIRE PROPERTIES (01972), and SINO LAND (00083), and to avoid WHARF REIC (01997). The bank predicts that most Hong Kong real estate companies will see a year-on-year decrease in profits over the next six weeks due to reduced property development profits, declining rental income, and the risk of devaluation for some developers. JPMorgan also mentioned that most Hong Kong real estate companies and conglomerates will announce their performance over the next six weeks, with the expectation that profits of most companies will decrease year-on-year due to reduced property development profits and declining rental income, especially in office and luxury retail sectors. The risk of devaluation will also be present for developers like CK ASSET (01113) and HENDERSON LAND (00012). In terms of dividend distribution, the bank is more certain about Sun Hung Kai Properties, SWIRE PROPERTIES, etc. However, if the earnings per share of CKH HOLDINGS (00001), Cheung Kong Property, and Wharf Real Estate are below expectations, they may face downward risks. As for HENDERSON LAND, the bank's baseline forecast is stable dividend per share, but they also see downward risks. Overall, the performance may be mediocre, but indicators related to capital cycles (such as Wheelock, Taikoo, and LINK) may be highlights. Meanwhile, attention will also be paid to potential improvements in luxury retail sales in mainland China in the second quarter (related to HANG LUNG PPT).

21/02/2025

JP Morgan: Lower BANK OF E ASIA (00023) target price to HK$8.4, maintain "underweight" rating.

J.P. Morgan released a research report stating to maintain a "underweight" rating on BANK OF E ASIA (00023), with the target price lowered from HKD 8.5 to HKD 8.4. The bank has raised its profit forecast for East Asia for the next two years by 1% and 5%. Last year's performance roughly met the bank's expectations but exceeded market expectations, mainly due to the resilience of its pre-provision operating profit (PPOP) despite high credit costs.

21/02/2025

BOCOM INTL: Focus on New Changes and Potential Categories in Consumer Trends in 2025.

BOCOM INTL released a research report stating that the new trends since 2025 reflect the optimization and upgrade of consumption structure, with significant growth potential in areas such as sports, traditional cultural IP, electronics, and service consumption. In the future, with further policy support, technological innovation, and the release of consumer demand, the consumption market is expected to continue to inject new momentum into economic growth. It is optimistic about the long-term growth prospects of categories such as sports health, domestic promotion and overseas expansion of national trend culture, smart electronics, and service consumption, these areas will become important drivers of the future consumption market. The main views of BOCOM INTL are as follows: Sports consumption is on the rise, with impressive performance in lower-tier markets Consumers' emphasis on sports health continues to increase. Data from the State Administration of Taxation shows that sales revenue of sports venues and sports fitness services increased by 135% and 224.1% respectively year-on-year, reflecting strong demand from consumers for sports and health. This trend is particularly noticeable in lower-tier markets, with 361 DEGREES having over 70% of its stores located in lower-tier cities, achieving double-digit year-on-year sales growth during the Spring Festival period. With the enhancement of health awareness, sports consumption is rapidly penetrating from first and second-tier cities to lower-tier cities, offering vast growth potential in the future. The combination of traditional culture and modern consumption, Chinese IP is expected to go global Traditional cultural elements have performed well in consumer categories, for example, LAOPU GOLD, which focuses on traditional craftsmanship, saw sales growth of 152%, 75%, and 143% in SKP malls in Beijing, Xi'an, and Chengdu respectively in January, attracting a large number of consumers. At the same time, the domestic animated film "Ne Zha 2" broke 12 billion yuan in box office revenue and has entered the top ten in global box office rankings. Besides the domestic market, the film was released in North America on February 14th, ranking fifth in weekly box office sales with only 660 theaters screening it (compared to over 3000 theaters for other top films released at the same time). Although IP consumption is gradually becoming a popular trend, characters with Chinese characteristics often find it difficult to enter the top IP ranks. The successful promotion of "Ne Zha 2" is not only for cultural dissemination but also expected to drive the process of going global for a series of domestic cultures. Policy-driven upgrade of electronic appliance consumption, smart categories become new favorites Policy dividends are driving rapid growth in electronic appliance consumption. During the Spring Festival period, the nation-wide activity of trading in old for new products had significant results, with sales of home appliances and audio-visual equipment increasing by 166.4% year-on-year, and communication equipment sales increasing by 181.9% year-on-year. In the new round of policies, smartphones, smart wearable devices, air conditioners, and supported small appliances (such as microwaves and dishwashers) will benefit, and with the continued reinforcement of policy support, these categories are expected to maintain strong growth in the future. Service consumption leads growth, diversified demands unleash potential Service consumption has become an important engine driving economic growth. During the Spring Festival period, the daily sales revenue of consumer-related industries increased by 10.8% year-on-year, with service consumption growing by 12.3% year-on-year, higher than the 9.9% growth in goods consumption. Box office revenue reached a new high of 9.51 billion yuan, and dining consumption also performed well, with the online transaction volume of dining group purchases contributed by out-of-town consumers increasing by over 48% year-on-year, and the decline in sales at JIUMAOJIU during the Spring Festival holiday period narrowed significantly compared to the same period last year. With the improvement of income levels and the diversification of consumer demand, service consumption is expected to continue to grow.

21/02/2025

Goldman Sachs: Gives XIAOMI-W (01810) a "buy" rating, raises target price to 58 Hong Kong dollars.

Goldman Sachs has released a research report stating that it has given XIAOMI-W (01810) a "buy" rating with a target price raised from HK$38 to HK$58. The bank stated that after launching several cost-competitive, benchmark-leading, and open-source artificial intelligence LLMs in the past few months, the use cases have been continuously increasing. They believe that Xiaomi is ready to enhance its artificial intelligence technology capabilities in a more efficient way, utilize artificial intelligence to expand its "smart home" ecosystem, boost sales, and build an operating system-level AI agent and ubiquitous ecosystem. Goldman Sachs predicts that Xiaomi's revenue in the fourth quarter of last year was 105 billion yuan, a year-on-year increase of 44%, and the adjusted net profit under non-IFRS was 6.6 billion yuan, a year-on-year increase of 34%. Excluding losses from the EV business and other losses of 900 million yuan, the bank estimates the core adjusted net profit to be 7.5 billion yuan.

21/02/2025

Goldman Sachs: Maintains "buy" rating on BABA-W (09988) and raises target price to HKD 156.

Goldman Sachs Group, Inc. released a research report stating that it maintains a "buy" rating for BABA-W (09988, BABA.US), with a target price for US stocks raised from $117 to $160 and a target price for Hong Kong stocks raised from HK$114 to HK$156. The bank said that Alibaba's performance in the third quarter of last year exceeded expectations, and management's guidance on capital expenditure related to artificial intelligence in the earnings conference call was higher than expected. The bank mentioned that the reason for raising the target price is that the core e-commerce business in mainland China is stable, and the revenue growth of Alibaba Cloud in fiscal years 2026 and 2027 is expected to accelerate to 23% and 25%, compared to the previously projected growth of 13% and 14%.

21/02/2025

Goldman Sachs: Maintains "Buy" rating on LENOVO GROUP (00992), raises target price to 14.9 Hong Kong dollars.

Goldman Sachs released a research report stating that it maintains a "buy" rating on LENOVO GROUP (00992) with a target price raised from HK$13.28 to HK$14.9. The bank considered the company's performance in the last quarter and raised its net profit forecast for the fiscal years 2025 and 2026 by 23% and 4% respectively, mainly due to increased revenue. This reflects optimism about Lenovo's AI personal computer capacity expansion in the fiscal year 2025, as well as AI server expansion. Forecasts for fiscal years 2027 to 2028 remain largely unchanged. Goldman Sachs stated that it is optimistic about LENOVO GROUP as an early beneficiary of AI personal computers (AIPC) due to its high brand recognition, high exposure in commercial and mid to high-end models, and leading market position. This can attract more leading chip platform and basic model suppliers to cooperate, and envision AIPC and servers driving Lenovo's future product portfolio upgrade.

21/02/2025

Morgan Stanley: Maintains "in line with the market" rating for DONGFENG GROUP (00489) with a target price of HK$3.9.

Morgan Stanley released a research report stating that it maintains a "in line with the market" rating on DONGFENG GROUP (00489) with a target price of 3.9 Hong Kong dollars. According to the bank's estimation, the current price of Dongfeng Motors is significantly lower than its net tangible assets value. Due to the lack of details on the restructuring plan, if the restructuring at the parent company level can be successfully implemented, the operating efficiency of the listed company can be improved, and its intrinsic value will be reflected in the long term. Morgan Stanley stated that the company's stock price outperformed the market yesterday (20th), with a close increase of 5%, compared to a 1.6% decline in the Hang Seng Index. It is believed that the fluctuation in the market was driven by news of the parent company's restructuring, and the market showed doubts about the implementation of the restructuring. As the details of the parent company's restructuring deal have not been disclosed, it is expected that the future stock price will still be influenced by related reports, such as personnel changes, etc.

21/02/2025

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