<Study>CLSA: Minimal Risk of Direct Competition Among Chinese Music Platforms
Stock Performance: NETEASE MUSIC (09899.HK) and TME-SW (01698.HK) experienced declines in share prices, with NETEASE down 2.83% and TME-SW down 11.75%, attributed to market concerns over competition from ByteDance's Soda Music.
Analyst Ratings: CLSA maintained an Outperform rating for both NETEASE MUSIC and TME-SW, suggesting that the risk of direct competition is low due to strategic positioning and product differentiation.
Market Sentiment: CLSA previously downgraded NETEASE MUSIC from High Conviction Outperform to Outperform due to high investor expectations, but now views the recent stock price decline as excessive.
Valuation Insights: NETEASE MUSIC is currently trading at a projected PE ratio of 1x for 2026, with a subscription model that offers resilience against economic cycles and potential for long-term profit, leading to a target price of $310.5.
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Citi Anticipates TME-SW (01698.HK) 4Q25 Results to Meet or Slightly Exceed Projections
4Q25 Results Outlook: Citi Research anticipates TME-SW's 4Q25 results will meet or slightly exceed expectations, driven by stable subscription services and growth in non-subscription music revenue.
2026 Focus Areas: Key areas to watch in 2026 include competition from Douyin's Soda Music, SVIP conversion rates, ARPU trends, online advertising revenue, concert income updates, and GPM and operating profit margin trends.
Competitive Concerns: While Soda Music's rapid user growth may not immediately affect TME-SW's core user base, ongoing competitive pressures are expected to hinder share price performance.
AI Integration Trends: The impact of AI on music creation and user behavior is a significant trend to monitor, with Citi maintaining a Buy rating on TME-SW's US stock and a target price of US$29.
<Research>CMS Suggests Favoring Meta, Pinduoduo, and NetEase; AI Productivity Influencing Divergence in Tech Sector
Sector Divergence: China Merchants Securities predicts significant divergence in the tech and internet sectors between 2H25 and 2026, with strong performance in AI infrastructure and tech hardware, while global consumer SaaS faces challenges.
Investment Recommendations: The report encourages investors to focus on AI leaders and selectively explore opportunities in the consumer SaaS sector following recent pullbacks.
Growth of Chinese Companies: Companies like Pinduoduo, NTES, BOSS ZHIPIN, and TME have shown solid growth and profitability, making them attractive investment options.
Brokerage Recommendations: The broker suggests overweighting stocks such as Alphabet, Meta, Netflix, Roblox, and several Chinese firms, indicating confidence in their future performance.
HSI Closes 78 Points Lower; HUA HONG SEMI Surges 7% to Over HKD100; POP MART Declines Over 5%
Market Performance: The HSI closed down 78 points (0.3%) at 26,844, with the HSCEI and HSTECH also experiencing declines, while total market turnover reached HKD255.079 billion.
Tech Sector Movements: KUAISHOU-W fell 1.5% due to new senior notes issuance, while BABA-W and NTES-S rose by 1%, and several other tech stocks like TENCENT and MEITUAN-W saw minor declines.
AI and Chip Stocks: UNISOUND plummeted 6.6%, while KNOWLEDGE ATLAS and MINIMAX-WP saw gains of 3.7% and 22.3%, respectively; chip stocks like SMIC and HUA HONG SEMI also performed well.
Other Notable Stocks: TRIP.COM-S and LI NING experienced gains, while POP MART and LAOPU GOLD faced significant declines, highlighting mixed performance across various sectors.
HSI Declines 71 Points at Noon; POP MART Falls Over 4%; MINIMAX-WP Rises Approximately 13%
Market Overview: The HSI fell 71 points (0.3%) to 26,851, with the HSCEI and HSTECH also declining, while total market turnover reached HKD140.79 billion at midday.
Stock Performance: KUAISHOU-W dropped 2.3% following a senior notes issuance, while other tech stocks like BABA-W and NTES-S saw slight gains, contrasting with declines in TENCENT and MEITUAN-W.
Sector Highlights: AI-related stocks experienced mixed results, with UNISOUND and GDS-SW declining significantly, while KNOWLEDGE ATLAS and MINIMAX-WP posted gains. The automotive sector saw LEAPMOTOR grow, while XIAOMI-W slid.
Economic Indicators: China's inflation rate for December was reported at 0.8%, slightly below the forecast, and outstanding loan growth remained steady at 6.4%.
KGI Projects HSI to Reach 30,000 by Year-End, Suggests 12 Stocks Including XPENG-W, UBTECH ROBOTICS, TENCENT, and BABA-W
China's GDP Growth Outlook: KGI estimates that external pressures will slow China's GDP growth to 4.6% this year, despite reduced risks from recent trade agreements.
HSI Forecast: KGI maintains a bullish outlook for the Hang Seng Index (HSI), predicting that Fed rate cuts will attract capital back into H- and A-shares, with a year-end target of 30,000, indicating a potential 14% increase.
Stock Recommendations: KGI has recommended 12 major stocks, including XPENG-W, UBTECH ROBOTICS, TENCENT, and BABA-W, highlighting their performance and short selling ratios.
Market Sentiment: The report reflects a positive sentiment towards the Chinese A-share market, driven by anticipated earnings growth, as noted by Jefferies.
BofA Securities' Updated Ratings and Price Targets for Chinese Internet Stocks (Table)
Stock Performance: Several stocks showed positive movements, with BABA-W increasing by 3.5% and ALI HEALTH by 3.3%, while BIDU-SW and JD HEALTH experienced declines of 1.4% and 1.2%, respectively.
Short Selling Data: Notable short selling activity was observed, particularly in BIDU-SW with a ratio of 28.7% and ALI HEALTH at 25.4%, indicating significant market interest in these stocks.
Citi Anticipates TME-SW (01698.HK) 4Q25 Results to Meet or Slightly Exceed Projections
4Q25 Results Outlook: Citi Research anticipates TME-SW's 4Q25 results will meet or slightly exceed expectations, driven by stable subscription services and growth in non-subscription music revenue.
2026 Focus Areas: Key areas to watch in 2026 include competition from Douyin's Soda Music, SVIP conversion rates, ARPU trends, online advertising revenue, concert income updates, and GPM and operating profit margin trends.
Competitive Concerns: While Soda Music's rapid user growth may not immediately affect TME-SW's core user base, ongoing competitive pressures are expected to hinder share price performance.
AI Integration Trends: The impact of AI on music creation and user behavior is a significant trend to monitor, with Citi maintaining a Buy rating on TME-SW's US stock and a target price of US$29.
<Research>CMS Suggests Favoring Meta, Pinduoduo, and NetEase; AI Productivity Influencing Divergence in Tech Sector
Sector Divergence: China Merchants Securities predicts significant divergence in the tech and internet sectors between 2H25 and 2026, with strong performance in AI infrastructure and tech hardware, while global consumer SaaS faces challenges.
Investment Recommendations: The report encourages investors to focus on AI leaders and selectively explore opportunities in the consumer SaaS sector following recent pullbacks.
Growth of Chinese Companies: Companies like Pinduoduo, NTES, BOSS ZHIPIN, and TME have shown solid growth and profitability, making them attractive investment options.
Brokerage Recommendations: The broker suggests overweighting stocks such as Alphabet, Meta, Netflix, Roblox, and several Chinese firms, indicating confidence in their future performance.
HSI Closes 78 Points Lower; HUA HONG SEMI Surges 7% to Over HKD100; POP MART Declines Over 5%
Market Performance: The HSI closed down 78 points (0.3%) at 26,844, with the HSCEI and HSTECH also experiencing declines, while total market turnover reached HKD255.079 billion.
Tech Sector Movements: KUAISHOU-W fell 1.5% due to new senior notes issuance, while BABA-W and NTES-S rose by 1%, and several other tech stocks like TENCENT and MEITUAN-W saw minor declines.
AI and Chip Stocks: UNISOUND plummeted 6.6%, while KNOWLEDGE ATLAS and MINIMAX-WP saw gains of 3.7% and 22.3%, respectively; chip stocks like SMIC and HUA HONG SEMI also performed well.
Other Notable Stocks: TRIP.COM-S and LI NING experienced gains, while POP MART and LAOPU GOLD faced significant declines, highlighting mixed performance across various sectors.
HSI Declines 71 Points at Noon; POP MART Falls Over 4%; MINIMAX-WP Rises Approximately 13%
Market Overview: The HSI fell 71 points (0.3%) to 26,851, with the HSCEI and HSTECH also declining, while total market turnover reached HKD140.79 billion at midday.
Stock Performance: KUAISHOU-W dropped 2.3% following a senior notes issuance, while other tech stocks like BABA-W and NTES-S saw slight gains, contrasting with declines in TENCENT and MEITUAN-W.
Sector Highlights: AI-related stocks experienced mixed results, with UNISOUND and GDS-SW declining significantly, while KNOWLEDGE ATLAS and MINIMAX-WP posted gains. The automotive sector saw LEAPMOTOR grow, while XIAOMI-W slid.
Economic Indicators: China's inflation rate for December was reported at 0.8%, slightly below the forecast, and outstanding loan growth remained steady at 6.4%.
KGI Projects HSI to Reach 30,000 by Year-End, Suggests 12 Stocks Including XPENG-W, UBTECH ROBOTICS, TENCENT, and BABA-W
China's GDP Growth Outlook: KGI estimates that external pressures will slow China's GDP growth to 4.6% this year, despite reduced risks from recent trade agreements.
HSI Forecast: KGI maintains a bullish outlook for the Hang Seng Index (HSI), predicting that Fed rate cuts will attract capital back into H- and A-shares, with a year-end target of 30,000, indicating a potential 14% increase.
Stock Recommendations: KGI has recommended 12 major stocks, including XPENG-W, UBTECH ROBOTICS, TENCENT, and BABA-W, highlighting their performance and short selling ratios.
Market Sentiment: The report reflects a positive sentiment towards the Chinese A-share market, driven by anticipated earnings growth, as noted by Jefferies.
BofA Securities' Updated Ratings and Price Targets for Chinese Internet Stocks (Table)
Stock Performance: Several stocks showed positive movements, with BABA-W increasing by 3.5% and ALI HEALTH by 3.3%, while BIDU-SW and JD HEALTH experienced declines of 1.4% and 1.2%, respectively.
Short Selling Data: Notable short selling activity was observed, particularly in BIDU-SW with a ratio of 28.7% and ALI HEALTH at 25.4%, indicating significant market interest in these stocks.
