Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Equity Bottom-Up

<ul><li>Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges growing its gaming business, particularly in China’s domestic market.</li><li>During the three-month period, Hong Kong-listed Tencent generated 155.2 billion yuan ($21.9 billion) in revenue, up 7% from 2022, according to its earnings report released Wednesday. That missed the average estimate of 157.4 billion yuan by analysts surveyed by Bloomberg.</li><li>Quarterly net profit also fell short of expectations, down 75% year-on-year at 27 billion yuan, compared to average analysts’ predictions of 33.3 billion yuan.</li></ul>

Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges growing its gaming business, particularly in China’s domestic market.During the three-month period, Hong Kong-listed Tencent generated 155.2 billion yuan ($21.9 billion) in revenue, up 7% from 2022, according to its earnings report released Wednesday. That missed the average estimate of 157.4 billion yuan by analysts surveyed by Bloomberg.Quarterly net profit also fell short of expectations, down 75% year-on-year at 27 billion yuan, compared to average analysts’ predictions of 33.3 billion yuan.

Tencent Posts Weaker Quarterly Results Amid Gaming Challenges 

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.

<ul><li>Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of RMB156.1/157.4bn.</li><li>Non-IFRS net income was up by 44% YoY to RMB42.7bn in 4Q23, ahead of our/consensus estimate of RMB40.0/42.0bn, mainly due to solid GPM expansion (+7.3ppt YoY).</li><li>FY23 total revenue grew by 10% YoY to RMB609.0bn, and non-IFRS net income increased by 36% YoY to RMB157.7bn. </li></ul><p><em>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.</em></p>

Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of RMB156.1/157.4bn.Non-IFRS net income was up by 44% YoY to RMB42.7bn in 4Q23, ahead of our/consensus estimate of RMB40.0/42.0bn, mainly due to solid GPM expansion (+7.3ppt YoY).FY23 total revenue grew by 10% YoY to RMB609.0bn, and non-IFRS net income increased by 36% YoY to RMB157.7bn. 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) - Unleashing Business Model Advantages

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>In 4Q23, Tencent experienced a one-digit growth, but its margin improved significantly.</li>
<li>We believe Tencent’s social networks will stop shrinking after the company sold movie assets to China Literature.</li>
<li>We believe the stock will have an upside of 37.5% and a price target of HK$397 for year end 2024. Buy.</li>
</ul>


In 4Q23, Tencent experienced a one-digit growth, but its margin improved significantly.
We believe Tencent’s social networks will stop shrinking after the company sold movie assets to China Literature.
We believe the stock will have an upside of 37.5% and a price target of HK$397 for year end 2024. Buy.


Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside

Quantitative Equity Analyst, DMA

Charlotte van Tiddens, CFA

Quantitative Equity Analyst

Technology-First Company

DMA is a technology-first company that provides an end-to-end SaaS solution to institutional investors. DMA enables regulated entities like asset managers, wealth managers, investment managers and financial advisors to connect their front and back office, break silos and reduce headcount.

Event-Driven

<ul>
<li>Tencent is due to release FY23 results tomorrow morning after the HK close. The earnings call is scheduled for 14:00 SAST.</li>
<li>The market is expecting 1.8% QoQ revenue growth, 8.6% YoY. Strong QoQ revenue growth of 10% is expected for the advertising segment.</li>
<li>QoQ revenue growth for the gaming sector is expected to decline by 4.9%. Domestic gaming revenue is expected to fall by 7.6%, international gaming revenue expected to increase by 9.6%.</li>
</ul>


Tencent is due to release FY23 results tomorrow morning after the HK close. The earnings call is scheduled for 14:00 SAST.
The market is expecting 1.8% QoQ revenue growth, 8.6% YoY. Strong QoQ revenue growth of 10% is expected for the advertising segment.
QoQ revenue growth for the gaming sector is expected to decline by 4.9%. Domestic gaming revenue is expected to fall by 7.6%, international gaming revenue expected to increase by 9.6%.


Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.</li>
<li>Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.</li>
<li>The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row. </li>
</ul>


A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row. 


HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs

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 Posts Weaker Quarterly Results Amid Gaming Challenges

Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges...

Caixin Global

Tencent (700 HK) - Unleashing Business Model Advantages

Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of...

CMB International

Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside

Tencent experienced a one-digit growth, but its margin improved significantly in 4Q23. We believe Tencent’s social networks will stop shrinking...

Ming Lu

Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results

A look into what is priced ahead of Tencent's FY23 results release tomorrow after the HK close. Gross margins and cost cutting are likely going to...

DMA

HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs

HK SOUTHBOUND Connect saw big net buying again. This week over HK$21bn. SOUTHBOUND has net bought every single day since the end of CNY. Starting...

Travis Lundy

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