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.

Event-Driven

<ul>
<li>Reuters and several other news media outlets reported that <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> is planning to sell its stake in <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a> .</li>
<li>Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.</li>
<li>IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.</li>
</ul>


Reuters and several other news media outlets reported that Baidu (BIDU US) is planning to sell its stake in iQIYI Inc (IQ US) .
Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.
IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.


Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>Chinese digital advertising revenue growth has slowed down considerably over the past 4 quarters and Baidu has continued to consistently lose market share to the broader industry.</li>
<li>Non-Marketing revenue has led the growth for Baidu over the past 2 years and now contributes roughly 26% to Baidu Core (excludes iQiyi) revenue.</li>
<li>On a PE basis, Baidu is trading at only a slight discount to global giant, Alphabet, which testifies to the negative impact on earnings expectations from Baidu’s growth engines.</li>
</ul>


Chinese digital advertising revenue growth has slowed down considerably over the past 4 quarters and Baidu has continued to consistently lose market share to the broader industry.
Non-Marketing revenue has led the growth for Baidu over the past 2 years and now contributes roughly 26% to Baidu Core (excludes iQiyi) revenue.
On a PE basis, Baidu is trading at only a slight discount to global giant, Alphabet, which testifies to the negative impact on earnings expectations from Baidu’s growth engines.


Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?

<ul>
<li>Bilibili reported 1Q2022 results yesterday. Revenue grew 29.6% YoY to RMB5.1bn (vs consensus RMB5.04bn) while operating losses as a % of revenue increased to 39.4% from 26.4% in 1Q2021.</li>
<li>Monthly Paying Users (MPUs) reached 27.2m vs 20.5m in 1Q2021, however, blended ARPU declined to RMB41.8 from RMB43.4 a year ago suggesting that user growth comes at lower pricing.</li>
<li>Bilibili’s ADS’ closed 15% lower at the end of yesterday’s trading as widening losses and softer guidance for 2Q2022 disappointed the market.</li>
</ul>


Bilibili reported 1Q2022 results yesterday. Revenue grew 29.6% YoY to RMB5.1bn (vs consensus RMB5.04bn) while operating losses as a % of revenue increased to 39.4% from 26.4% in 1Q2021.
Monthly Paying Users (MPUs) reached 27.2m vs 20.5m in 1Q2021, however, blended ARPU declined to RMB41.8 from RMB43.4 a year ago suggesting that user growth comes at lower pricing.
Bilibili’s ADS’ closed 15% lower at the end of yesterday’s trading as widening losses and softer guidance for 2Q2022 disappointed the market.


Bilibili 1Q2022: Widening Losses and There Is Further Downside

<ul>
<li>IQiyi reported 1Q2022 results last week. Revenue fell 8.7% YoY to RMB 7.3bn (vs consensus RMB 7.22bn) and reported an OP of RMB 93.4m (vs consensus loss of RMB 297m).</li>
<li>Growth in ARM helped offset decline in the number of subscribers for membership revenue. However, online advertising and content distribution both declined due to lack of content and macroeconomic weaknesses.  </li>
<li>IQiyi’s shares have gained 11.2% since its earnings announcement as the company reported an OPM for the first time.</li>
</ul>


IQiyi reported 1Q2022 results last week. Revenue fell 8.7% YoY to RMB 7.3bn (vs consensus RMB 7.22bn) and reported an OP of RMB 93.4m (vs consensus loss of RMB 297m).
Growth in ARM helped offset decline in the number of subscribers for membership revenue. However, online advertising and content distribution both declined due to lack of content and macroeconomic weaknesses.  
IQiyi’s shares have gained 11.2% since its earnings announcement as the company reported an OPM for the first time.


IQiyi – Generates Profits for the First Time; Can It Maintain Its Profitability?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Zhihu Technology / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhihu-technology-ltd" target="_blank" data-smartkarma-citation="entities:32185:1" rel="noopener">Zhihu Technology (ZH US)</a> has launched an HKEx dual-primary listing to raise $150-200 million. Zhihu will not receive any of the net proceeds as it is offering from selling shareholders.</li>
<li>Zhihu shares are down 73% from the IPO price of $9.50 per ADS (March 2021) largely due to the tech sell-off and regulatory uncertainty on ADR listings.  </li>
<li>While a loss-making Chinese tech name is not everybody's cup of tea in the current environment, Zhihu has delivered resilient performance and the valuation is undemanding. </li>
</ul>



Zhihu Technology (ZH US) has launched an HKEx dual-primary listing to raise $150-200 million. Zhihu will not receive any of the net proceeds as it is offering from selling shareholders.
Zhihu shares are down 73% from the IPO price of $9.50 per ADS (March 2021) largely due to the tech sell-off and regulatory uncertainty on ADR listings.  
While a loss-making Chinese tech name is not everybody's cup of tea in the current environment, Zhihu has delivered resilient performance and the valuation is undemanding. 


Zhihu Dual-Primary Listing: A Question of Judgment

China

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

Baidu to Sell Its Stake in IQiyi

Reuters reported that Baidu is planning to sell its stake in iQiyi. Baidu has valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78%...

Shifara Samsudeen, ACMA, CGMA

Bilibili 1Q2022: Widening Losses and There Is Further Downside

Though 1Q2022 revenues beat consensus, operating losses further widened to 39.4% of revenues. MPUs increased but at the cost of lower ARPU and the...

Shifara Samsudeen, ACMA, CGMA

IQiyi – Generates Profits for the First Time; Can It Maintain Its Profitability?

Though iQiyi's revenues declined YoY in 1Q2022 due to weaknesses in online ad and content distrbn, the company managed to report operating profits...

Shifara Samsudeen, ACMA, CGMA

Zhihu Dual-Primary Listing: A Question of Judgment

Zhihu has launched an HKEx dual-primary listing to raise $150-200m. While a loss-making Chinese tech name is not enticing, Zhihu has delivered...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Baidu to Sell Its Stake in IQiyi

Reuters reported that Baidu is planning to sell its stake in iQiyi. Baidu has valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78%...

Shifara Samsudeen, ACMA, CGMA

Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?

In this insight, we look at the Chinese digital ad market, Baidu’s market share loss, and analyse whether AI Cloud and Intelligent Driving could...

Wium Malan, CFA

Bilibili 1Q2022: Widening Losses and There Is Further Downside

Though 1Q2022 revenues beat consensus, operating losses further widened to 39.4% of revenues. MPUs increased but at the cost of lower ARPU and the...

Shifara Samsudeen, ACMA, CGMA

IQiyi – Generates Profits for the First Time; Can It Maintain Its Profitability?

Though iQiyi's revenues declined YoY in 1Q2022 due to weaknesses in online ad and content distrbn, the company managed to report operating profits...

Shifara Samsudeen, ACMA, CGMA

Zhihu Dual-Primary Listing: A Question of Judgment

Zhihu has launched an HKEx dual-primary listing to raise $150-200m. While a loss-making Chinese tech name is not enticing, Zhihu has delivered...

Arun George