Greater China Sector
China – Internet
Recent AI conferences by internet companies unveiled a variety of upgraded AI products that showcase their development in AI infrastructure and monetization potential. The prevailing trend in adtech upgrades focuses on enhancing marketing efficiency and driving GMV growth, leading to monetization improvement. We remain optimistic given the favorable regulatory environment and industry development.
Tencent (700 HK)
Recommendation: BUY
Share Price: HK\$419.0
Target Price: HK\$570
Potential Upside: 36%
Tencent is currently trading at 16x 2025F PE, below its historical mean of 26x. We assign a 5x 2024-25F PS to the Tencent Cloud segment. Tencent is poised to benefit from monetization opportunities emerging from the integration of its upgraded Hunyuan Turbo LLM into its core offerings. The company demonstrates strong performance in generative AI patent filings, leading the field with 2,074 patents.
Alibaba (9988 HK)
Recommendation: BUY
Share Price: HK\$96.1
Target Price: HK\$130
Potential Upside: 35%
Alibaba is trading at 12x FY25F PE, 1SD below its historical mean of 24x. We assign 3x EV/Sales FY25 to Alibaba Cloud Intelligence Group. The company is expected to deliver remarkable progress in integrating LLM with its products, driving a 13% EPS CAGR from FY25-28.
Baidu (9888 HK)
Recommendation: HOLD
Share Price: HK\$88.3
Target Price: HK\$90
Potential Upside: 2%
Baidu’s current trading is at 7.3x 2025F PE, below its historical mean of 14.7x. The company faces declining ad revenue growth and uncertain monetization capabilities in its autonomous driving business.
Kuaishou (1024 HK)
Recommendation: BUY
Share Price: HK\$48.2
Target Price: HK\$70
Potential Upside: 46%
Kuaishou focuses on comprehensive AI model matrix, including its video generation model Kling AI and image generation model Kolors. The company is trading at 1.2x 12-month forward EV/sales, below its historical mean of 2x.
Hong Kong Developers and Landlords
The primary property market in Hong Kong showed signs of recovery in October 2024, with a notable increase in transaction volume. However, retail landlords continue to face challenges from GBA integration. We maintain a MARKET WEIGHT rating and prefer developers over landlords.
New World Development (17 HK)
Recommendation: SELL
Share Price: HK\$9.66
Target Price: HK\$7.02
Potential Downside: 27.3%
New World Development faces challenges, with a high PE ratio of 23.4x and a modest dividend yield of 4.1%.
Hysan Development (14 HK)
Recommendation: BUY
Share Price: HK\$14.26
Target Price: HK\$17.99
Potential Upside: 26.2%
Hysan Development shows promise with a PE ratio of 8.5x and a high dividend yield of 7.5%.
Sun Hung Kai Properties (16 HK)
Recommendation: BUY
Share Price: HK\$90.80
Target Price: HK\$94.55
Potential Upside: 4.12%
Sun Hung Kai Properties is expected to benefit from rising rental yields and supportive macro factors, with a PE ratio of 11.1x and a dividend yield of 4.5%.
Wharf Real Estate Investment Co Ltd (1997 HK)
Recommendation: BUY
Share Price: HK\$29.00
Target Price: HK\$31.20
Potential Upside: 7.6%
Wharf Real Estate shows positive prospects with a PE ratio of 14.2x and a dividend yield of 4.4%.
Link REIT (823 HK)
Recommendation: BUY
Share Price: HK\$39.15
Target Price: HK\$45.05
Potential Upside: 15.15%
Link REIT remains an attractive option with a PE ratio of 15.1x and a dividend yield of 6.7%.
Xiaomi Corp (1810 HK)
Recommendation: BUY
Share Price: HK\$27.30
Target Price: HK\$31.70
Potential Upside: 16.1%
Xiaomi’s 3Q24 revenue is expected to grow 28.0% yoy to Rmb90.7b, driven by a recovery in smartphone shipments and strong IoT product sales. The company is anticipated to report an adjusted net profit of Rmb6.0b, 7% above Bloomberg consensus estimates. Xiaomi’s IoT segment is expected to rake in revenue of Rmb26.7b, with a margin expansion to 21.0%.
Indonesia Sector
Bumi Serpong Damai (BSDE IJ)
Recommendation: BUY
Share Price: Rp1,170
Target Price: Rp1,440
Potential Upside: 23.1%
BSDE’s 3Q24 net profit fell to Rp369b, due to higher expenses and reduced associate income. However, 9M24 net profit surged 53% yoy to Rp2.7t, driven by strong development sales. Expectations for 4Q24 remain optimistic, as anticipated handovers and land-plot sales are expected to lift earnings, and marketing sales could hit Rp9.6t in 2024.
Bukalapak.com (BUKA IJ)
Recommendation: HOLD
Share Price: Rp120
Target Price: Rp120
Potential Upside: 0.0%
BUKA’s adjusted EBITDA worsened to a Rp165b loss in 3Q24. The company will focus on Mitra, gaming, investment, and retail going forward, implementing restructuring programs that may lead to employee terminations and inventory write-off costs. GTV is likely to fall 30-40% as BUKA focuses on profitability.
GoTo GoJek Tokopedia (GOTO IJ)
Recommendation: BUY
Share Price: Rp66
Target Price: Rp86
Potential Upside: 30.3%
GOTO recorded a net loss of Rp1,614b in 3Q24, but its on-demand service recorded the third consecutive quarter of positive adjusted EBITDA. GOTO Financial is forecasted to generate positive EBITDA by 4Q24. The company expects to achieve breakeven EBITDA in 2024, with significant improvements in its fintech and on-demand service divisions.
Malaysia Sector
My EG Services (MYEG MK)
Recommendation: BUY
Share Price: RM0.85
Target Price: RM1.42
Potential Upside: 67.1%
MYEG’s prospects remain rejuvenated with emerging catalysts such as earnings growth from Zetrix-related services and involvement in multiple Malaysian e-government projects. The recent commercial launch of Zetrix cross-border services provides assurance on stable recurring revenue and healthy cash flows.
Singapore Sector
PropNex (PROP SP)
Recommendation: BUY
Share Price: S\$0.815
Target Price: S\$0.98
Potential Upside: 20.2%
PropNex’s outlook for the next 12-18 months appears solid with stable to higher transaction volumes in the private and HDB markets. The company expects a significant increase in new launch units based on property developers’ timelines. PropNex offers a defensive yield of 6.4% for 2024.
Thailand Sector
PTT (PTT TB)
Recommendation: BUY
Share Price: Bt33.25
Target Price: Bt38.00
Potential Upside: 11.3%
PTT’s 3Q24 net profit is expected to decrease both qoq and yoy, primarily due to lower profits from subsidiaries and affiliates. However, 4Q24 core profit is expected to recover, driven by improvements in the E&P and refinery businesses. The company remains a strong investment with a diverse portfolio and promising future prospects.
