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US-Listed Chinese Companies Q3 Earnings Begin Next Week: What to Expect

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In One Chart wrote a column · Nov 10 05:36
Since late September, Chinese assets have experienced a strong rally, particularly Hong Kong tech stocks and U.S.-listed Chinese companies, which were doing well. However, recently, these stocks have seen some pullbacks. As a result, this earnings season is crucial, as it will largely determine whether the current rebound can continue.
Kinger Lau, Chief China Equity Strategist at Goldman Sachs, also noted that China's economy will continue to improve in Q4 due to easing measures. This will benefit companies' revenue growth and profitability recovery in the year's remaining months. From an industry perspective, the Chinese Internet remains a key factor in the upward revision of earnings.
US-Listed Chinese Companies Q3 Earnings Begin Next Week: What to Expect
Starting with $Tencent (TCEHY.US)$, moomoo data shows its Q3 revenue is expected to reach $239.04 billion, up 12.87% year-over-year, with earnings per share at $0.68, an increase of 31.91% from last year.
Moreover, analysts expect the gaming business to continue its rapid growth, with the new major gamesDnF MobileandBrawl Stars doing well andachieving double-digit year-on-year growth. Total revenue from games for the third quarter is expected to reach $1.3 billion.
Both advertising and fintech businesses are also anticipated to perform well. Regarding key financial metrics, Morgan Stanley forecasts a 15% year-on-year increase in gross profit, with gross margin improving by 3.7 percentage points to reach 53.2%.
Next is $Alibaba (BABA.US)$. Analysts expect Alibaba's earnings to decline in the third quarter, with September GMV projected to grow in the mid-single digits. However, the company's performance outlook faces multiple growth factors.
JPMorgan stated that the company's revenue for Q2, the 2025 fiscal year, is expected to grow year-over-year, slightly below market consensus. However, growth will likely improve in Q3, with both GMV and core customer management revenue projected to increase year-over-year.
In addition, Citigroup has warned to monitor the strategies and promotions for the upcoming "Double Eleven" shopping festival, especially given the new macroeconomic policies. It's uncertain whether consumers will spend more during this period.
Barclays has raised Alibaba's target price to $137. It expects its revenue to grow by 7% and net income by 9% annually from 2024 to 2027.
$JD.com (JD.US)$ is benefiting from its trade-in program, with electronics revenue expected to grow by 3% year-over-year and September's GMV for electronics predicted to rise by over 10%. Its Q3 revenue is $371.01 billion, a 9.35% year-over-year increase, with the estimated earnings per share of $0.88, up 29.68% compared to last year.
The trade-in subsidy program is helping boost sales in the electronics category, with revenue expected to grow from last year. Several provinces have introduced trade-in subsidies, mainly for home appliances. JD.com, a major electronics seller, is benefiting from this, with September's GMV for electronics expected to increase compared to last year.
HSBC analysis points out that user growth continues to outpace GMV growth, with quarterly active buyers maintaining mid-single-digit growth in the short term, thanks to strong user engagement. However, the average selling price (ASP) has decreased by a single-digit percentage year over year.
Besides, JD Logistics' opening up to Taobao is expected to bring long-term incremental revenue to its logistics business. Still, the impact will take at least 1-2 quarters to become apparent. Investors need not worry about JD.com losing its logistics advantage, as its supply chain capabilities are difficult to replicate.
Companies such as NetEase, Tencent Music Entertainment, and Bilibili will also report their earnings.
Looking ahead, Luca Paolini, Chief Strategist at Pictet Asset Management, stated in the latest November report that, due to the positive impact of China's stimulus plan on the economy, more support is expected in the form of fiscal measures. He believes now is a good time to upgrade Chinese stocks from neutral to overweight.
"Although the recent rise in Chinese and emerging market stocks has made them less attractive, they are still considered one of the cheapest stock markets," Paolini added.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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