Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;</li>
<li>Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. </li>
<li>We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.</li>
</ul>


Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;
Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. 
We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.


[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

<ul>
<li>Microsoft's China AI teams relocate due to US rules, focusing on Wi-Fi 7 development for improved connectivity and performance.</li>
<li>Amazon's stake in Alchip suggests potential synergy in AI tech and expanded market reach, while Kymco launches eco-friendly e-scooter.</li>
<li>Tencent Cloud partners with BRI and Hi Cloud Indo for banking innovation, while Veolia opens first regeneration plant in China for sustainable water treatment. Tron Future secures funding for counter-drone tech.</li>
</ul>


Microsoft's China AI teams relocate due to US rules, focusing on Wi-Fi 7 development for improved connectivity and performance.
Amazon's stake in Alchip suggests potential synergy in AI tech and expanded market reach, while Kymco launches eco-friendly e-scooter.
Tencent Cloud partners with BRI and Hi Cloud Indo for banking innovation, while Veolia opens first regeneration plant in China for sustainable water treatment. Tron Future secures funding for counter-drone tech.


Tech Supply Chain Tracker (17-May-2024): Microsoft China AI teams may relocate due to US restrictions.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.</li>
<li>Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.</li>
<li>Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). </li>
</ul>


A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.
Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.
Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). 


HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> reported 1Q2024 results today. Both revenues and OP grew 6.3% and 30.0% YoY respectively and beat consensus estimates.</li>
<li>Though domestic games revenues declined YoY, there were signs of recovery in Tencent’s gaming business. Online advertising saw strong growth despite 1Q being a seasonally weak quarter for Tencent.</li>
<li>Tencent’s investments in high-margin products have helped boost the company’s margins across all business segments.</li>
</ul>



Tencent (700 HK) reported 1Q2024 results today. Both revenues and OP grew 6.3% and 30.0% YoY respectively and beat consensus estimates.
Though domestic games revenues declined YoY, there were signs of recovery in Tencent’s gaming business. Online advertising saw strong growth despite 1Q being a seasonally weak quarter for Tencent.
Tencent’s investments in high-margin products have helped boost the company’s margins across all business segments.


Tencent: Online Advertising and High-Margin Businesses Support Earnings

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved.</li>
<li>The growth rate of online advertising is high than our estimate, but the growth rate of FinTech is lower than our estimate.</li>
<li>We believe there is still an upside of 9% and the price target will be HK$415 for the end of 2024.</li>
</ul>


The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved.
The growth rate of online advertising is high than our estimate, but the growth rate of FinTech is lower than our estimate.
We believe there is still an upside of 9% and the price target will be HK$415 for the end of 2024.


Tencent (700 HK): 1Q24, Highest Margin in Seven Years

China

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, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.

Blue Lotus Research Institute

Tech Supply Chain Tracker (17-May-2024): Microsoft China AI teams may relocate due to US restrictions.

Microsoft AI teams relocating, Wi-Fi 7 advancements, Amazon's stake in Alchip, Kymco e-scooter launch, Tencent Cloud partnership, Veolia's...

Tech Supply Chain Tracker

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

SOUTHBOUND flows were positive on the week but most of the net buying was in the big two ETFs. The trend of buying low PER high div SOEs continues....

Travis Lundy

Tencent: Online Advertising and High-Margin Businesses Support Earnings

Tencent's 1Q earnings beat consensus. Though online games declined there were signs of recovery. Online ad saw strong growth despite 1Q being...

Shifara Samsudeen, ACMA, CGMA

Tencent (700 HK): 1Q24, Highest Margin in Seven Years

The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved. The growth rate of online advertising...

Ming Lu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

​Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.

Blue Lotus Research Institute

Tech Supply Chain Tracker (17-May-2024): Microsoft China AI teams may relocate due to US restrictions.

Microsoft AI teams relocating, Wi-Fi 7 advancements, Amazon's stake in Alchip, Kymco e-scooter launch, Tencent Cloud partnership, Veolia's...

Tech Supply Chain Tracker

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

SOUTHBOUND flows were positive on the week but most of the net buying was in the big two ETFs. The trend of buying low PER high div SOEs continues....

Travis Lundy

Tencent: Online Advertising and High-Margin Businesses Support Earnings

Tencent's 1Q earnings beat consensus. Though online games declined there were signs of recovery. Online ad saw strong growth despite 1Q being...

Shifara Samsudeen, ACMA, CGMA

Tencent (700 HK): 1Q24, Highest Margin in Seven Years

The operating margin in 1Q24 reached the highest since 2Q16, as the gross margins of all businesses improved. The growth rate of online advertising...

Ming Lu

Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.