External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Tencent reported 3Q23 financial results on 15 Nov: total revenue grew 10% YoY to RMB154.6bn, inline with our/consensus estimate.</li><li>Non-IFRS net income grew by 39% YoY to RMB44.9bn in 3Q23, beating our/consensus estimate by 11/12%, mainly due to the solid GPM expansion across business lines.</li><li>3Q23 GPM expanded by 5.2ppt YoY to 49.5% (vs. consensus’ 47.5%) on the strong operating leverage and incremental revenue from higher-margin innovative businesses (i.e. Mini Games and Video Accounts etc). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent reported 3Q23 financial results on 15 Nov: total revenue grew 10% YoY to RMB154.6bn, inline with our/consensus estimate.Non-IFRS net income grew by 39% YoY to RMB44.9bn in 3Q23, beating our/consensus estimate by 11/12%, mainly due to the solid GPM expansion across business lines.3Q23 GPM expanded by 5.2ppt YoY to 49.5% (vs. consensus’ 47.5%) on the strong operating leverage and incremental revenue from higher-margin innovative businesses (i.e. Mini Games and Video Accounts etc). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent  (700 HK) – 3Q23 Earnings Beat on Strong Operating Leverage and Business Innovation

<ul><li>Tencent will report 3Q23 financial results on 15 Nov.</li><li>We expect 3Q23 total revenue/adjusted net income to grow by 10/26% YoY to RMB153.5/40.6bn (consensus estimates: RMB155.5/39.8bn). For 3Q23E, we forecast games/ads/fintech &amp; business services (FBS) revenue to grow by 7/23/12% YoY.</li><li>Supported by operating leverage improvement from its consumer internet business segments, Tencent is able to deliver solid earnings growth amid macro headwinds. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent will report 3Q23 financial results on 15 Nov.We expect 3Q23 total revenue/adjusted net income to grow by 10/26% YoY to RMB153.5/40.6bn (consensus estimates: RMB155.5/39.8bn). For 3Q23E, we forecast games/ads/fintech &amp; business services (FBS) revenue to grow by 7/23/12% YoY.Supported by operating leverage improvement from its consumer internet business segments, Tencent is able to deliver solid earnings growth amid macro headwinds. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent (700 HK) – Expect Steady 3Q23 Despite Macro Uncertainty

<ul><li>Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.</li><li>Non-IFRS net income increased by 33% YoY to RMB37.5bn in 2Q23, beating CMBI/consensus estimate by 7/13%, mainly due to 1) better-than-expected ad revenue growth (+34% YoY); and 2) FBS/ad business GPM expansion (+5.1/8.3ppt YoY).</li><li>Tencent’s investments in Video Account, international games and business services continue to bear fruit, reaccelerating higher margin business segments growth and unleashing operating leverage. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.Non-IFRS net income increased by 33% YoY to RMB37.5bn in 2Q23, beating CMBI/consensus estimate by 7/13%, mainly due to 1) better-than-expected ad revenue growth (+34% YoY); and 2) FBS/ad business GPM expansion (+5.1/8.3ppt YoY).Tencent’s investments in Video Account, international games and business services continue to bear fruit, reaccelerating higher margin business segments growth and unleashing operating leverage. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent  (700 HK) – Solid earnings growth on GPM expansion

Thematic (Sector/Industry)

<ul><li>Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.</li><li>From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;</li><li>2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.com</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.comContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Internet - 1Q24 recap & our three stock-picking ideas

<ul><li>Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR of 10.7/9.8%.</li><li>The growth of total online retail sales GMV continued to outpace that of online physical goods GMV, which was likely due to the robust growth in online travel bookings during the CNY holiday.</li><li>Leading e-commerce platforms are prioritizing GMV and revenue growth over margin improvement in 2024, and guided to reinvest incremental operating profit generated to drive further business growth, which likely indicates more intensified industry competition. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR of 10.7/9.8%.The growth of total online retail sales GMV continued to outpace that of online physical goods GMV, which was likely due to the robust growth in online travel bookings during the CNY holiday.Leading e-commerce platforms are prioritizing GMV and revenue growth over margin improvement in 2024, and guided to reinvest incremental operating profit generated to drive further business growth, which likely indicates more intensified industry competition. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Internet - 2M24 online retail sales recap

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

East Money Information Co., Ltd. operates online financial information platform.  The Company's products include internet advertising and financial data.

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

Hithink RoyalFlush Information Network Co Ltd provides online financial data, data analysis software, and other financial software system.

Hithink RoyalFlush Information Network (300033 CH)

People.cn Company Limited mainly engages in internet advertising, information services, mobile value-added and technical services. The Company's main products include original messages, government information services, public opinion research and consulting, mobile news, and ISP services.

Autohome Inc is an online destination for automobile consumers in China.  The Company delivers comprehensive, independent and interactive content to automobile buyers and owners.

Wangsu Science & Technology Co., Ltd. provides online business solutions in China. The Company also provides Content Delivery Network (CDN), and Internet Data Centers (IDC).

Shanghai Wangsu Science & Technology Co (300017 CH)

Beijing Sinnet Technology Company Limited provides customers with broadband access services, IDC and its value-added services, and other internet integrated services. The Company's core business are broadband access services, IDC and its value-added services.

GDS Holdings Limited operates as a holding company. The Company, through its subsidiaries, develops and operates data centers. GDS Holdings offers risk and security management, information technology planing, remote monitoring, cloud hosting, virtualization, disaster recovery, and remote data protection services.

INESA Intelligent Tech Inc. operates in the IT industry. The Company designs and manages cloud servers and big data applications for businesses. INESA Intelligent also manufactures electronic components.

eBay Inc. operates an online trading community.  The Company's service is used by buyers and sellers for the exchange of products and services such as coins, collectibles, computers, memorabilia, stamps and toys, as well as concert and sporting tickets.  eBay also offers, through a subsidiary, secure online payment services.

VeriSign Inc provides domain names and Internet security, enabling the world to connect online with reliability and confidence, anytime, anywhere. The Company ensures the security, stability and resiliency of key Internet infrastructure including the .com and .net top-level domains among others. VeriSign also offers intelligence-driven security services.

GoDaddy, Inc. provides a cloud-based web platform for small businesses, web design professionals and individuals. The Company's platform provides applications that help them connect to their customers, manage their businesses and get found online.

Naver Corp. provides Internet site with web portal services, such as search engine, online game and content development.  The Company also offers marketing service through text and banner advertisement.

CoStar Group Inc. provides building-specific information to the United States commercial real estate industry and related industries. The Company's database details office and industrial space. The database provides digitized photographs and floor plan images on individual commercial buildings in the company's markets.

Yandex NV operates an Internet website in Russia.  The Company's website offers an Internet search engine, news, shopping information, blogs, photographs and videos.  Yandex earns its revenues from online advertising.

SPS Commerce Inc provides on-demand supply chain management solutions through an online hosted software suite.  The Company uses pre-built integrations to eliminate on-premise software and support staff to shorten supply cycle times, optimize inventory levels and reduce costs.

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet; ranging from live and on-demand streaming video capabilities to conventional content on websites, to tools that help people transact business and reach out to new and existing customers.

NEXTDC Ltd. develops data centers. The Company develops and operates carrier and systems integrator neutral data centers in Australia. NEXTDC's customers will also be able to use the data centers as connectivity and content hubs.

AppFolio, Inc. provides cloud-based software solutions. The Company offers a cloud-based property management software that allows apartment and residential property managers to market, manage, and grow their business. AppFolio conducts business in the United States.

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent (700 HK)

Tencent (700 HK) – 3Q23 Earnings Beat on Strong Operating Leverage and Business Innovation

Tencent reported 3Q23 financial results on 15 Nov: total revenue grew 10% YoY to RMB154.6bn, inline with our/consensus estimate.

CMB International

Tencent (700 HK) – Expect Steady 3Q23 Despite Macro Uncertainty

Supported by operating leverage improvement from its consumer internet business segments, Tencent is able to deliver solid earnings growth amid...

CMB International

Tencent (700 HK) – Solid earnings growth on GPM expansion

Tencent announced 2Q23 results on 16 Aug: total revenue grew by 11% YoY to RMB149.2bn, in line with CMBI/consensus estimate.

CMB International

Internet - 1Q24 recap & our three stock-picking ideas

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our...

CMB International

Internet - 2M24 online retail sales recap

Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR...

CMB International

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