If a day’s a long time in politics, then spare a thought for what a session on a mainland China stock market can be if you’re a Chinese tech giant.

Or former tech giant. Or propsective re-giant.

Monday for example, was a good one for Chinese equities.

One might even suggest that Chinese markets actually rallied through the Monday session. The impetus had nothing to do with the tech giants though, it was the momentary hope of a permanent solution to China’s embattled property sector.

Top tier cities like Beijing and Shanghai relaxed mortgage rules in a bid to boost housing demand, the PBoC was backing its banks, encouraging lending. The stamp duty in stock trades was halved and the pitiable state of Country Garden, China’s biggest residential real estate developer by sales, has come to terms over the weekend with shareholders for an extension to onshore bond payments.

These regulatory tweaks might have nothing at all to do with the sprawling world of Chinese eCommerce, but the friendly giants like Alibaba (BABA) and JD.com (JD) were enjoying the proximity of confidence. Last month saw record foreign capital outflows across the Hong Kong bourse. So naturally the big tech names are finding themselves heirs to the macroeconomic slings and arrows of recent uncertainty.

But on Monday Alibaba and Baidu gained 3.5% in Hong Kong, while JD.com climbed 5%.

By Tuesday, disappointing PMI services data chased off those happy feelings as markets contracted.

According to HSBC, China’s tech stocks shared a massive 5% bleed in valuations between mid-June and the start of this month. After hope, then despair, followed by more hope and further despair the sector is just unable to find its feet in 2023.

And HSBC has pretty much had it with all that. The bank now believes that enough is enough with the uncertainty and the macro wobbles.

Instead HSBC is recommending that clients start studying the “micro” factors impacting individual stocks and give up entirely on the fickle broader macroeconomic environment.

The bank’s China equity team says it’s time to get back to the businesses business. The things that made them giants in the first place.

And more importantly, the positioning each has been jostling for since Beijing signaled that the crackdown on tech was done… the improved market share, the strategic outlook and the new revenue streams.

So, in a slightly contrary note late last week, HSBC named six Chinese internet stocks as “opportunities with good value.”

Analysts led by Charlene Liu encouraged clients to get to know these formerly familiar, now less recognisable personal acquaintances. Liu covers the Technology sector, focusing on stocks such as Bilibili, Alibaba, and Tencent Music Entertainment Group.

HSBC: Six Chinese Tech names to watch

Pinduoduo (PDD)

Online marketplace Pinduoduo is one of the bank’s top preferred names, with HSBC maintaining a Buy rating on PDD Holdings (PDD), with a price target of US$125.

PDD beat second-quarter revenue estimates last week, as the discount e-commerce platform Pinduoduo attracted more price-conscious customers and on rapid expansion of its international shopping site, Temu.

The company’s revenue was 52.28 billion yuan (US$7.17 billion)in the quarter ended June 30, compared with analysts’ average estimate of 43.68 billion yuan, according to Refinitiv.

Goldman Sachs also upgraded PDD from Neutral to Buy, targeting US$129, a right boost from the previous US$99.

Bernstein analysts followed suit, lifting the target price from US$105 to US$120.

PDD Holdings has an analyst consensus of Strong Buy, with a price target consensus of $115.06, implying a 23.43% upside from current levels. Also in on the positivity – Bank of America Securities. It reiterated a Buy rating on PDD stock with a US$112 price target.

“PDD has the most promising but undervalued top-line growth … as a market share gainer domestically and internationally,” according to BoAS.

HSBC’s target price gives Pinduoduo an upside of circa 25% upside – or about US$29.


Like Pinduoduo, Chinese e-shopping platform Meituan “delivered better-than-expected ad revenue growth in 2Q 2023,” according to HSBC, which gave Meituan an almost round 50% upside.

Meituan dropped some very strong sales numbers over Q2, leading revenue to rise 33% to 68 billion yuan ($9.3 billion), beating analysts’ expectations of 66.8 billion yuan, according to FactSet data.

The Chinese food delivery giant warned investors late last month to brace for a slowdown as China’s economic wobbles make inroads into its blue chip companies.

“For our food delivery, we expect [in] the third quarter…the volume will slow down, but still be more resilient than other consumption-related sectors,” CEO Wang Xing said.

Xing warned that Meituan has seen short-term headwinds, citing macroeconomic pressures and extreme weather conditions.

“The change of consumption power due to the current macro environment will impact demand for food delivery to a certain extent, especially for some price-sensitive consumers,” he added.

Meanwhile the tech-foodie giant has been struggling through the worst of its ongoing blue with ByteDance (TikTok Inc’s Mama) which spent the first six months of the year jostling headling into Meituan’s significant retail business by weaponizing for take-out Douyin (TikTok ala China)  which already boasts a powerful e-commerce engine, allowing ByteDance to eat into Meituan’s key profitable food-delivery empire.


Tencent, with a 35% upside according to HSBC, “delivered a strong beat in ad revenue”. Mini games, found within Tencent’s WeChat app, “are gradually becoming another important driver that was under appreciated by the market,” the bank added.

Tencent’s FY23 has been about burying the dead and turning it around. After posting Q1 revenue growth of 10.7%, Tencent last week beat expectations with a Q2 featuring revenue of $20.6 billion, up again 11.3%.

The tech conglomerate has been out front whenever Beijing’s come downtown looking for a tech giant to kick around during the last 24 months of regulatory shake downs. The share price has subsequently been an under performer with concerns lingering vis a vis Tencent’s investment case.

But – along with Alibaba Group – Tencent’s also been deploying its full arsenal in 2023, investing into AI and returning to the global gaming map.

In Q2 Tencent says its Value-Added Services segment posted revenue growth of 4% to about US$10.2 billion. This segment making up about half of all revenue comprises Tencent’s Social Networks (20% of revenues), its Domestic Games  (21% of revenues), and its International Games  (9% of revenues), all of which performed well.

The WeChat owner reported Monthly Active Users (MAU) of some 1.327 billion,  a 2% improvement on the same time last year.

Likewise, its Social Media segment saw year-on-year revenue growth of 2% to circa US$4.08 billion, as music subscriptions and mini-games found an audience.

Alibaba Group Holdings

Tencent, along with shopping giant Alibaba, are reaping the benefits of investing into large language models, HSBC notes.

In particular there’s life in BABA’s dashing new outlook. HSBC reckons the house that Jack built has an awesome 52% upside.

“BABA [Alibaba] has improving earnings outlook and enjoys valuation upside from restructuring exercises,” HSBC note.

On Tuesday, Reuters reported that the group’s fast-growing cloud division is weighing whether it should raise funds via a private round from Chinese state-owned enterprises – as the newly cleft business preps for its market debut on the Hang Seng.

“The tech giant is working with advisers on a potential fundraise by its Cloud Intelligence unit that could mop up about 10-20 billion yuan ($1.38-$2.75 billion),” HSBC suggested.


JD.com (NASDAQ: JD) posted its Q2 earnings report on August 16.

The Chinese eCommerce giant’s revenue rose 8% year-over-year to 287.9 billion yuan (US$39.7 billion) and exceeded analysts’ expectations by US$1.2 billion. Adjusted net income grew 32% to 8.6 billion yuan ($1.2 billion), or $0.74 per American depositary receipt (ADR), which also cleared the consensus forecast by $0.06.

JD generated 84% of its revenue from JD Retail, which houses its online marketplace and brick-and-mortar stores, in Q2. The growth of that business has been lumpy over the past year as it faced macro and competitive headwinds.

Those headline numbers looked healthy, but JD’s stock dipped after the report and remains down about 40% for the year.

HSBC says this is “an outstanding” opportunity.

HSBC gave JD.com a 47% upside and said “stringent cost control” helped it beat second-quarter estimates.

Kuaishou Technology

On August 23 Kuaishou, the main video streaming site competing with Douyin, reported its first quarterly net profit since listing more than two years ago, led by strength in advertising and eCommerce.

Q2 net profit was 1.5 billion yuan (US$208.5 million), compared with a net loss of 3.2 billion yuan a year ago.

Revenue jumped 28% to 27.7 billion yuan (US$3.9 billion), with online marketing services and live streaming contributing 52% and 36%, respectively.

“We are proud to have achieved another key profitability milestone in the second quarter of 2023, recording our first-ever group-level net profit since our listing,” beamed co-founder and CEO Cheng Yixiao on the day.

Morningstar’s Kai Wang expects that a live-streaming e-commerce business will provide another major revenue stream by 2025 and has two major catalysts.

The company guided that gross merchandise value is likely to double by 2025; it reached 900 billion yuan last year. In addition, Kuaishou’s monetisation rate is 1.3% as of Q1 2023 comparing favourably with Taobao Live and JD live-streaming.

Morningstar believes this implies a high upside where Kuaishou can easily generate revenue growth from multiple ends.

Kuaishou (Chopsticks), is a preferred stock for HSBC for its gains in advertising market share and mix of revenue streams, has a 39% upside, according to the bank.

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