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<Research>G Sachs: CN Tech Firms' Overall 2Q Profit Expected to Drop 10%, Dented by E-commerce/ Instant Retail Subsidy War; TENCENT (00700.HK) TP Elevated to $658
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Goldman Sachs released a research report predicting that the growth of AI and cloud businesses for Chinese tech companies will accelerate in 2Q25. However, due to competition in e-commerce and the instant retail subsidy war, the profits of e-commerce platforms are expected to decline significantly, while game and travel businesses will remain strong. The broker anticipated that the food delivery subsidy war will peak in the quarter ending September. Goldman Sachs estimated the overall profit of tech investment stocks to fall by 10% in 2Q25, marking the first YoY decline since 2Q22. Goldman Sachs also projected that, due to the impact from subsidy war, BABA-W (09988.HK) (BABA.US)'s EBITA will drop by 16% YoY, the EBIT of MEITUAN-W (03690.HK)/ JD-SW (09618.HK) (JD.US) EBIT will fall by 58%/ 70%, and PDD (PDD.US)'s adjusted EBIT will decrease by 38%. Moreover, driven by game, advertising and travel businesses, the broker forecasted TENCENT (00700.HK)'s adjusted EBIT to grow by 15%, while NTES-S (09999.HK) (NTES.US) and DiDi Global (DIDIY.US) to grow by 20% and 32%, respectively. Consequently, Goldman Sachs elevated its target price for TENCENT from $595 to $658, with rating at Buy. AASTOCKS Financial News Website: www.aastocks.com |
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