Investment Rating - Maintain BUY rating with a target price of US$183.0, reflecting a potential upside of 65.2% from the current price of US$110.75 [3][4][12] Core Insights - Baidu's 1Q24 revenue was RMB31.5 billion, up 1.2% YoY, aligning with Bloomberg consensus, while non-GAAP net income for Baidu Core was RMB6.6 billion, exceeding consensus expectations due to effective cost control [2] - The company is focusing on AI-related advertising and cloud revenue, which are expected to drive long-term business growth despite short-term volatility in ad revenue [2] - Baidu's Cloud business is generating sustainable operating profit with decent margins, and long-term margin expansion is anticipated with increased AI cloud revenue contributions [2] Financial Performance - Baidu Core's online ads revenue increased by 3% YoY to RMB17.0 billion in 1Q24, slightly above consensus [2] - Non-ad revenue rose by 6% YoY to RMB6.8 billion, accounting for 29% of Baidu Core revenue [2] - Gross profit margin (GPM) improved to 51.5% in 1Q24, up 0.2 percentage points YoY, while non-GAAP operating profit margin (OPM) was 23.5%, exceeding consensus by 1.6 percentage points [2] Revenue Projections - Revenue for FY24 is projected at RMB138.5 billion, with a YoY growth of 2.9%, and adjusted net profit is expected to be RMB27.7 billion [11][18] - Baidu Cloud revenue is estimated to recover to a 14% YoY growth in 2024E, driven by the ramp-up in Gen AI-related cloud revenue [2][11] Valuation - The SOTP-based target price of US$183.0 is derived from various segments, including US$69.2 for Baidu Core and US$32.2 for Baidu Cloud, reflecting a valuation adjustment in line with industry peers [12][13] - The valuation translates to 17/16x 2024E/2025E PE on a non-GAAP basis, or 11/10x if excluding net cash [12]

Investment Rating - The report maintains a "BUY" rating for ZTO Express with a target price of US$38.50, indicating an upside potential of 80% from the current price of US$21.39 [2][5]. Core Insights - ZTO Express has shifted its strategic focus to a profitable growth strategy in 1Q24, achieving a core net profit of RMB1.9 billion, which is a 23% year-over-year increase and represents 19% of the full-year forecast [2][3]. - The company aims for a parcel volume growth target of 15-18% for 2024, consistent with previous guidance, despite a higher industry growth forecast of 15-20% [2][3]. - ZTO's earnings growth is supported by a 10% year-over-year revenue increase, a 2.1 percentage point expansion in gross margin to 30.1%, and a significant increase in net finance income [3][5]. Financial Performance Summary - **1Q24 Results**: Core net profit increased by 23% YoY to RMB1.9 billion, while reported net income decreased by 15% YoY to RMB1.4 billion due to an impairment of RMB478 million [3][8]. - **Revenue Growth**: Total revenue for 1Q24 was RMB9.96 billion, reflecting a 10.9% increase YoY [8]. - **Parcel Volume**: Parcel volume grew by 14% YoY to 7.2 billion units, which is below the industry average growth of 25% [3][8]. - **Cost Management**: Unit cost decreased by 5% YoY to RMB0.94 per parcel, with transportation costs down by 7% YoY [3][8]. - **Earnings Forecast**: The earnings forecast remains unchanged, with adjusted net profit expected to reach RMB9.74 billion for FY24, reflecting an 11.4% growth YoY [5][17]. Key Financial Metrics - **Revenue Projections**: Revenue is projected to grow from RMB38.42 billion in FY23 to RMB43.87 billion in FY24, representing a 14.2% growth [5][17]. - **Earnings Per Share (EPS)**: Reported EPS is expected to be RMB11.67 for FY24, with a YoY growth of 11.4% [5][17]. - **Price-to-Earnings Ratio (P/E)**: The P/E ratio is projected to be 13.2x for FY24, which is in line with historical averages [5][17]. - **Dividend Yield**: The expected dividend yield for FY24 is 3.0% [5][17].

M N 16 May 2024 CMB International Global Markets | Equity Research | Company Update ZTO Express (2057 HK) 1Q24 core earnings beat estimates; Shifted to profitable growth strategy Target Price HK$303.00 ZTO Express (ZTO) shifted the strategic focus to profitable growth in 1Q24, Up/Downside 74.5% enabling it to deliver core net profit of RMB1.9bn (+23% YoY), representing 19% Current Price HK$173.60 of our full-year forecast (run rate in 1Q23: 17.6%), which is better than our expectation. Looking forward, ZTO ...

2024 年 5 月 16 日 美国经济 美国 4 月 CPI 环比超预期回落，同比增速重回缓慢下降趋势，因新车、二手 车、家具等耐用品价格跌幅扩大和酒店、机票等部分服务价格回落。能源通胀 延续回升。房租通胀小幅回落，但仍在高位，预计下半年可能迎来更明显的放 缓。4月通胀数据不足以令美联储在7月开始降息，美联储需要获得更多经济和 通胀降温的证据，但增加了 9 月开始降息的概率。通胀数据公布后，货币市场 预期 9 月美联储已降息概率从 65%升至 74%，2 年国债收益率最高下跌近 9.3 个基点至 4.73%，10 年国债收益率最高下跌近 11 个基点至 4.34%，美元指数 走弱，美股走强。我们预计随着货币政策紧缩效应持续释放，下半年经济和通 胀或更明显降温，我们维持美联储可能 9 月降息、全年降息 50 个基点的预测。 核心商品降幅扩大，但能源通胀继续反弹。4 月 CPI 环比增长 0.31%，低于 市场预期的 0.37%，同比增速从 3.5%降至 3.4%，重回缓慢降温趋势。食品 价格环比增速从 0.1%降至 0%，同比增速保持在 2.2%，继续向疫情前趋势 回归，其中外出就餐价格环比增速 0.3%依然 ...

| 一般 | 注: 2024 年 5 月 16 日 招银国际环球市场投资评级 重要披露 敬请参阅尾页之免责声明 请到彭博 (搜索代码: RESP CMBR )或 http://www.cmbi.com.hk 下载更多研究报告 招银国际环球市场 | 市场策略 | 招财日报 ` 宏观策略 美国总统拜登周二宣布对中国一系列商品追加关税。我们认为这些关税主要 具有象征性作用，其政治影响大于经济影响。在美国大选之年，两位候选人 竞相展现对中国更强硬的姿态。 这些关税无疑将恶化中美关系。中国决策层正努力恢复外商信心，并力求避 免让中国议题成为美国大选的中心，所以可能采取一些象征性反制措施，总 体或将比较温和。美国加征关税可能令部分投资者担心中美紧张局势升级， 关税对人民币和中国股市有一定负面影响，但市场之前可能对此已有预期。 | --- | --- | --- | --- | --- | --- | --- | |-------|----------------------------------------------------------------------------|-------|------------ ...

Investment Rating - The report maintains a "Buy" rating for Tencent with a target price of 480.0 HKD, up from the previous target of 445.0 HKD, indicating a potential upside of 25.7% from the current price of 381.80 HKD [3][8]. Core Insights - Tencent reported a 6% year-on-year increase in total revenue for Q1, reaching 159.5 billion RMB, aligning with expectations. Non-IFRS net income surged 54% year-on-year to 5.3 billion RMB, exceeding forecasts by 17% [3]. - The company's gross profit margin (GPM) expanded by 7.1 percentage points year-on-year, driven by high-margin revenue sources such as video accounts and mini-games. This trend is expected to continue throughout FY24 [3][4]. - The report anticipates a compound annual growth rate (CAGR) of 15% for non-IFRS net income from FY24 to FY26, with earnings forecasts raised by 6-8% [3][5]. Revenue Summary - Total revenue for Q1 was 159.5 billion RMB, with online advertising revenue increasing by 26% year-on-year to 26.5 billion RMB, driven by strong growth in WeChat advertising [4]. - Gaming revenue saw a slight decline of 1% year-on-year to 48.1 billion RMB, but domestic gaming revenue showed signs of recovery with a 3% increase in Q1 [3][4]. - Financial technology and business services (FBS) revenue grew by 7% year-on-year to 52.3 billion RMB, although this was below general expectations due to slower growth in fintech [5]. Profitability Metrics - The overall GPM for Q1 increased to 52.6%, with significant contributions from value-added services (VAS), advertising, and FBS segments [5]. - The report projects continued GPM expansion for the remainder of FY24, with non-IFRS net income expected to grow by 27% and 10% in FY24 and FY25, respectively [5]. Valuation Breakdown - The target price of 480.0 HKD is derived from a sum-of-the-parts (SOTP) analysis, which includes valuations for various business segments such as online gaming, social networking services, advertising, fintech, and cloud services [12][13]. - The valuation for the online gaming business is set at 182.0 HKD based on a 19x PE ratio, while the advertising business is valued at 85.6 HKD based on an 18x PE ratio [12][13].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of $124.90 per ADS [7][24] Core Views - The company's business adjustments show higher visibility in delivering results [7] - Management emphasizes investments to support core businesses, particularly in the T&T Group, which saw double-digit GMV growth [7] - The company's increased shareholder returns and potential primary listing in Hong Kong are expected to support valuation [7] - The cloud business's adjusted EBITA margin continues to expand, with management confident in returning to double-digit revenue growth [7] Financial Performance Valuation Metrics - P/E ratio is expected to decrease from 26.6x in 2022A to 9.4x in 2027E [1] - P/B ratio is projected to decline from 1.7x in 2022A to 0.9x in 2027E [1] - P/CFPS is forecasted to decrease from 18.6x in 2022A to 10.3x in 2027E [1] Growth Metrics - Revenue growth is expected to be 7.9% in 2025E, 8.4% in 2026E, and 6.6% in 2027E [3] - Net profit growth is projected at 56.3% in 2025E, followed by 10.0% in 2026E and 10.3% in 2027E [3] - Adjusted net profit growth is forecasted at -3.3% in 2025E, 9.4% in 2026E, and 9.3% in 2027E [3] Profitability Metrics - Gross margin is expected to remain stable around 37% from 2025E to 2027E [3] - Operating margin is projected to increase from 13.6% in 2025E to 14.7% in 2027E [3] - Adjusted net profit margin is forecasted to be 15.1% in 2025E, 15.2% in 2026E, and 15.6% in 2027E [3] Key Business Updates T&T Group - In Q4FY24, T&T Group's revenue was RMB 93.2 billion, up 3.7% YoY, with CMR revenue of RMB 63.6 billion, up 5.0% YoY [17] - Adjusted EBITA for the group was RMB 38.5 billion, down 1.4% YoY due to increased investments in user experience and technology infrastructure [17] AIDC - AIDC's revenue in Q4FY24 was RMB 27.4 billion, up 45.1% YoY, with international retail and wholesale revenues growing 56.4% and 10.8% respectively [17] - Adjusted EBITA loss widened to RMB 4.1 billion in Q4FY24 from RMB 2.2 billion in Q4FY23 due to increased investments in AliExpress Choice and Tredyol [17] Local Services Group - LSG's revenue in Q4FY24 was RMB 14.6 billion, up 18.5% YoY, driven by order growth in Ele.me and Amap [18] - Adjusted EBITA loss narrowed to RMB 3.2 billion in Q4FY24 from RMB 4.1 billion in Q4FY23, thanks to reduced losses in the "To-Home" business [18] Cainiao - Cainiao's revenue in Q4FY24 was RMB 24.6 billion, up 29.8% YoY, driven by increased cross-border fulfillment services [19] - Adjusted EBITA margin was -5.5% in Q4FY24, compared to -1.7% in Q4FY23, mainly due to retention incentives for employees following the IPO withdrawal [19] Valuation Breakdown - T&T Group is valued at $58.5 per ADS based on 7.0x FY25E EV/adjusted EBITA [26] - AIDC is valued at $11.3 per ADS based on 1.5x FY25E EV/Sales [26] - Local Services Group is valued at $5.7 per ADS based on 1.5x FY25E EV/Sales [26] - Cainiao is valued at $2.6 per ADS based on the latest valuation from Alibaba's minority stake buyback [26] - Cloud Intelligence Group is valued at $24.3 per ADS based on 3.9x FY25E EV/Sales [26] - Digital Media and Entertainment Group is valued at $1.3 per ADS based on 1.0x FY25E EV/Sales [26] - All Others are valued at $9.7 per ADS based on 1.0x FY25E EV/Sales [26] - Strategic investments are valued at $11.6 per ADS with a 30% holding discount [26]

CMB International Global Markets | Equity Research | Company Update PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk1 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE 2 Taobao and Tmall Group (38.5% of 4QFY24 revenue) In 4QFY24, revenue generated from Alibaba International Digital Commerce Group (AIDC) was RMB27.4bn, up 45.1% YoY, among which international commerce retail revenue was up ...

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M N 14 May 2024 CMB International Global Markets | Equity Research | Company Update Huya (HUYA US) Fundamentals to bottom out Target Price US$6.8 Huya’s 1Q24 results beat on margin, with topline/bottom line 1%/84% (Previous TP US$6.8) above consensus. Looking into 2Q24E, we expect revenue to achieve 5% Up/Downside 44.5% QoQ growth, in which livestreaming would bottom out and others revenue Current Price US$4.73 +25% OoQ. We are positive on Huya’s game-related business monetization and expect upside from mul ...