JPM Maintains NTES-S as Industry Favorite While Reducing Target Price to HKD280
JPMorgan's Target Price Adjustment: JPMorgan has lowered its target price for NetEase (NTES-S) from HKD295 to HKD280 and for NetEase (NTES.US) from USD190 to USD180, due to a 3% reduction in the 2026 EPS forecast linked to delays in new game launches.
Game Launch Delays: The report indicates that the launch of "Sea of Remnants" is now expected in Q3 2026 (previously Q2 2026) and "Ananta" in 1H 2027 (previously 2H 2026).
JPMorgan's Market Positioning: Despite the target price reduction, JPMorgan maintains an Overweight rating for both NTES-S and NTES-US, positioning NTES-S as a top pick in China's digital entertainment sector over a 6- to 12-month outlook.
Competitive Landscape: JPMorgan suggests that KUAISHOU-W may outperform NTES-S in the short term due to its focus on generative AI and related themes.
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HSI Closes 465 Points Lower; AIA and Stanchart Drop 4%; Commodity Stocks Decline
Market Overview: The DJIA fell 1.3% as tech stocks were sold off, leading to a similar decline in the Hong Kong stock market, where the HSI ended down 1.7% at 26,567.
Financial Sector Performance: Major financial stocks like HSBC and HKEX dropped by 2.7% and 2.1%, respectively, while Bank of East Asia plunged 11% after reporting a significant profit drop and dividend cut.
Commodity and Gold Prices: Gold prices fell below USD 5,000/oz, impacting gold mining stocks, which saw declines of 5.9-7.6%. Oil prices also dropped nearly 3%, affecting major oil companies.
Tech Sector Decline: The tech sector experienced minor declines, with Tencent and Alibaba seeing drops of around 0.7% to 2.0%, while other tech stocks like Meituan and Baidu fell over 3%.
G Sachs Maintains Buy Rating on KUAISHOU-W; Market Underestimates Kling Business
Goldman Sachs Report: Goldman Sachs has maintained a Buy rating on KUAISHOU-W (01024.HK) with a target price of HKD87, despite a recent stock price decline of 2.085%.
Investor Concerns: The report addresses investor concerns regarding KUAISHOU-W, including the impact of Kling AI, competition from Seedance 2.0, and potential tax pressures expected in 2026.
Market Valuation: Goldman Sachs suggests that the current market undervalues KUAISHOU-W's AI/Kling business, making the risk-reward scenario more favorable for investors.
Tax Burden Reflection: The analysis indicates that the potential impact of tax burdens has already been largely factored into the stock price, suggesting limited downside risk.
JPM Maintains NTES-S as Industry Favorite While Reducing Target Price to HKD280
JPMorgan's Target Price Adjustment: JPMorgan has lowered its target price for NetEase (NTES-S) from HKD295 to HKD280 and for NetEase (NTES.US) from USD190 to USD180, due to a 3% reduction in the 2026 EPS forecast linked to delays in new game launches.
Game Launch Delays: The report indicates that the launch of "Sea of Remnants" is now expected in Q3 2026 (previously Q2 2026) and "Ananta" in 1H 2027 (previously 2H 2026).
JPMorgan's Market Positioning: Despite the target price reduction, JPMorgan maintains an Overweight rating for both NTES-S and NTES-US, positioning NTES-S as a top pick in China's digital entertainment sector over a 6- to 12-month outlook.
Competitive Landscape: JPMorgan suggests that KUAISHOU-W may outperform NTES-S in the short term due to its focus on generative AI and related themes.
HSI Declines by 392 Points; KNOWLEDGE ATLAS Surges 5% Amid Ongoing AI Stock Rally
Market Overview: The HSI opened 1.5% lower at 26,640, with significant declines in tech stocks such as TENCENT and KUAISHOU, which dropped 1.7% and 1.9% respectively.
Short Selling Activity: Notable short selling was observed in several tech stocks, including BIDU and BILIBILI, with ratios exceeding 20%, indicating bearish sentiment among investors.
PPI Data: China's Producer Price Index (PPI) YoY for January showed a decline of 1.4%, slightly better than the previous value of -1.9% and above the forecast of -1.5%.
AI Stock Rally: The AI sector saw gains with MINIMAX-WP rising 11.9% after launching a new programming model, while KNOWLEDGE ATLAS also experienced a significant increase of 16.9%.
HSI Closes with a 233-Point Decline; BUD APAC Drops Over 5%; KNOWLEDGE ATLAS Soars Nearly 30%
Market Performance: The HSI closed at 27,032, down 233 points (0.9%), with significant declines in the HSCEI and HSTECH, while total market turnover reached HKD238.705 billion.
Company Earnings: BUD APAC was the worst-performing blue-chip stock, down 5.2% after reporting a 32.6% drop in net profit. Other companies like Lenovo and NetEase also saw declines despite some reporting increased profits.
Regulatory Actions: The Beijing Municipal Market Supervision Bureau engaged with 12 online ticket sales platforms, resulting in declines for companies like Trip.com and Meituan, which fell 3.9% and 4.5%, respectively.
AI Sector Growth: Following Premier Li Qiang's call for AI innovation, AI stocks like SenseTime and Knowledge Atlas saw significant gains, with Knowledge Atlas soaring 28.7% after launching a new product.
<Research>CMSI: Acceleration of Domestic Model Iteration Supports Valuation Recovery in Hong Kong Tech Sector; Preferred Stocks Include BABA, TENCENT, and More
Chinese Internet Companies' AI Models: Leading Chinese internet firms, including ByteDance and Kuaishou, have made significant advancements in AI models, enhancing video generation capabilities as noted in a CMSI research report.
Investment and Valuation Recovery: The focus on AI has strengthened investment logic for these companies, contributing to the recovery of Hong Kong's tech sector valuations.
Upcoming AI Models: Major upcoming AI models such as DeepSeek-V4 and Alibaba's Qwen 3.5 are anticipated to act as catalysts for further growth in the sector.
Broker Recommendations: CMSI's top stock picks include Alibaba, Tencent, and Kuaishou, reflecting confidence in their potential amidst market concerns over regulatory and tax policies.
HSI Closes 465 Points Lower; AIA and Stanchart Drop 4%; Commodity Stocks Decline
Market Overview: The DJIA fell 1.3% as tech stocks were sold off, leading to a similar decline in the Hong Kong stock market, where the HSI ended down 1.7% at 26,567.
Financial Sector Performance: Major financial stocks like HSBC and HKEX dropped by 2.7% and 2.1%, respectively, while Bank of East Asia plunged 11% after reporting a significant profit drop and dividend cut.
Commodity and Gold Prices: Gold prices fell below USD 5,000/oz, impacting gold mining stocks, which saw declines of 5.9-7.6%. Oil prices also dropped nearly 3%, affecting major oil companies.
Tech Sector Decline: The tech sector experienced minor declines, with Tencent and Alibaba seeing drops of around 0.7% to 2.0%, while other tech stocks like Meituan and Baidu fell over 3%.
G Sachs Maintains Buy Rating on KUAISHOU-W; Market Underestimates Kling Business
Goldman Sachs Report: Goldman Sachs has maintained a Buy rating on KUAISHOU-W (01024.HK) with a target price of HKD87, despite a recent stock price decline of 2.085%.
Investor Concerns: The report addresses investor concerns regarding KUAISHOU-W, including the impact of Kling AI, competition from Seedance 2.0, and potential tax pressures expected in 2026.
Market Valuation: Goldman Sachs suggests that the current market undervalues KUAISHOU-W's AI/Kling business, making the risk-reward scenario more favorable for investors.
Tax Burden Reflection: The analysis indicates that the potential impact of tax burdens has already been largely factored into the stock price, suggesting limited downside risk.
JPM Maintains NTES-S as Industry Favorite While Reducing Target Price to HKD280
JPMorgan's Target Price Adjustment: JPMorgan has lowered its target price for NetEase (NTES-S) from HKD295 to HKD280 and for NetEase (NTES.US) from USD190 to USD180, due to a 3% reduction in the 2026 EPS forecast linked to delays in new game launches.
Game Launch Delays: The report indicates that the launch of "Sea of Remnants" is now expected in Q3 2026 (previously Q2 2026) and "Ananta" in 1H 2027 (previously 2H 2026).
JPMorgan's Market Positioning: Despite the target price reduction, JPMorgan maintains an Overweight rating for both NTES-S and NTES-US, positioning NTES-S as a top pick in China's digital entertainment sector over a 6- to 12-month outlook.
Competitive Landscape: JPMorgan suggests that KUAISHOU-W may outperform NTES-S in the short term due to its focus on generative AI and related themes.
HSI Declines by 392 Points; KNOWLEDGE ATLAS Surges 5% Amid Ongoing AI Stock Rally
Market Overview: The HSI opened 1.5% lower at 26,640, with significant declines in tech stocks such as TENCENT and KUAISHOU, which dropped 1.7% and 1.9% respectively.
Short Selling Activity: Notable short selling was observed in several tech stocks, including BIDU and BILIBILI, with ratios exceeding 20%, indicating bearish sentiment among investors.
PPI Data: China's Producer Price Index (PPI) YoY for January showed a decline of 1.4%, slightly better than the previous value of -1.9% and above the forecast of -1.5%.
AI Stock Rally: The AI sector saw gains with MINIMAX-WP rising 11.9% after launching a new programming model, while KNOWLEDGE ATLAS also experienced a significant increase of 16.9%.
HSI Closes with a 233-Point Decline; BUD APAC Drops Over 5%; KNOWLEDGE ATLAS Soars Nearly 30%
Market Performance: The HSI closed at 27,032, down 233 points (0.9%), with significant declines in the HSCEI and HSTECH, while total market turnover reached HKD238.705 billion.
Company Earnings: BUD APAC was the worst-performing blue-chip stock, down 5.2% after reporting a 32.6% drop in net profit. Other companies like Lenovo and NetEase also saw declines despite some reporting increased profits.
Regulatory Actions: The Beijing Municipal Market Supervision Bureau engaged with 12 online ticket sales platforms, resulting in declines for companies like Trip.com and Meituan, which fell 3.9% and 4.5%, respectively.
AI Sector Growth: Following Premier Li Qiang's call for AI innovation, AI stocks like SenseTime and Knowledge Atlas saw significant gains, with Knowledge Atlas soaring 28.7% after launching a new product.
<Research>CMSI: Acceleration of Domestic Model Iteration Supports Valuation Recovery in Hong Kong Tech Sector; Preferred Stocks Include BABA, TENCENT, and More
Chinese Internet Companies' AI Models: Leading Chinese internet firms, including ByteDance and Kuaishou, have made significant advancements in AI models, enhancing video generation capabilities as noted in a CMSI research report.
Investment and Valuation Recovery: The focus on AI has strengthened investment logic for these companies, contributing to the recovery of Hong Kong's tech sector valuations.
Upcoming AI Models: Major upcoming AI models such as DeepSeek-V4 and Alibaba's Qwen 3.5 are anticipated to act as catalysts for further growth in the sector.
Broker Recommendations: CMSI's top stock picks include Alibaba, Tencent, and Kuaishou, reflecting confidence in their potential amidst market concerns over regulatory and tax policies.
