Research on Tech Companies

Evelyn Zhang

Thematic (Sector/Industry)

<ul>
<li>The competition between Alibaba and JD has been heating up after Alibaba abandoned its "exclusivity requirement”, JD sale GMV increased by 28.4% vs Alibaba only increased by 8.4% YoY.  </li>
<li>Live streaming has become a mainstream sales channel, Douyin and Kuaishou both achieved more than 200% sales increase YoY.  </li>
<li>Influencers and brands are fighting over price setting power. Many brands have opened their own official livestreaming channels this year.</li>
</ul>


The competition between Alibaba and JD has been heating up after Alibaba abandoned its "exclusivity requirement”, JD sale GMV increased by 28.4% vs Alibaba only increased by 8.4% YoY.  
Live streaming has become a mainstream sales channel, Douyin and Kuaishou both achieved more than 200% sales increase YoY.  
Influencers and brands are fighting over price setting power. Many brands have opened their own official livestreaming channels this year.


Equity Research in HK and Mainland China

Li Tang

<ul>
<li>The State Administration for Market Regulation (SAMR) published proposal to prevent large internet platforms from abusing market dominance and harming people’s interests in cities, counties, and grassroots areas.</li>
<li>The proposal urged to monitor cutthroat competition in community group purchases via stringent enforcement and supervision</li>
<li>The proposal formulate plans to restrict disordered capital expansion that can lead to monopolies.</li>
</ul>


The State Administration for Market Regulation (SAMR) published proposal to prevent large internet platforms from abusing market dominance and harming people’s interests in cities, counties, and grassroots areas.
The proposal urged to monitor cutthroat competition in community group purchases via stringent enforcement and supervision
The proposal formulate plans to restrict disordered capital expansion that can lead to monopolies.


China Addresses Issues with Community Group Purchase Platforms

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>
An NDR About Nothing: A competitor held a non-deal roadshow for Tencent Holdings (700.HK) [Tencent]. Management only addressed matters discussed at its challenged 3Q21 results; </li>
<li>
Elephant In The Room:Management continues to avoid any serious discussion of  mainland China’s broad restrictions on FinTech – which represents a growing 30.4% of revenue; and </li>
<li>
Stop The Spin Doctoring:No matter Tencent’s spin, a financial holding company represents significant downside risks as earnings will compress and capital requirements increase.</li>
</ul>



An NDR About Nothing: A competitor held a non-deal roadshow for Tencent Holdings (700.HK) [Tencent]. Management only addressed matters discussed at its challenged 3Q21 results; 

Elephant In The Room:Management continues to avoid any serious discussion of  mainland China’s broad restrictions on FinTech – which represents a growing 30.4% of revenue; and 

Stop The Spin Doctoring:No matter Tencent’s spin, a financial holding company represents significant downside risks as earnings will compress and capital requirements increase.


Tencent Holdings – Seinfeld-Ian Roadshow

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>Numerous media accounts have mentioned that Didi could relaunch its ride-hailing app in China by the end of 2021.</li>
<li>In terms of share price trend, it is starting to form an attractive double bottom pattern, with increasing prices on rising volume. </li>
<li>Our base case valuation of DiDi Global is a target price of $12 per share, which represents a 35% upside from current levels.</li>
</ul>


Numerous media accounts have mentioned that Didi could relaunch its ride-hailing app in China by the end of 2021.
In terms of share price trend, it is starting to form an attractive double bottom pattern, with increasing prices on rising volume. 
Our base case valuation of DiDi Global is a target price of $12 per share, which represents a 35% upside from current levels.


Didi Global - Higher Probability of Relaunching Ride Hailing App in China by the End of 2021

<ul>
<li>
Results Weaker: Tencent Holdings’ (700.HK) [Tencent] 3Q21 GAAP net income declined another CNY 5.2 bn (6.7%) on a linked quarter basis. </li>
<li>
Challenges: Results were challenged by a cost of revenue increase; operating expense increase; increased losses in associates; higher impairment charges; a higher tax rate and weaker online advertising; and    </li>
<li>
Elephant In Room: China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". Tencent is following Alibaba in its formation of a financial holding company. </li>
</ul>



Results Weaker: Tencent Holdings’ (700.HK) [Tencent] 3Q21 GAAP net income declined another CNY 5.2 bn (6.7%) on a linked quarter basis. 

Challenges: Results were challenged by a cost of revenue increase; operating expense increase; increased losses in associates; higher impairment charges; a higher tax rate and weaker online advertising; and    

Elephant In Room: China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". Tencent is following Alibaba in its formation of a financial holding company. 


China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

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PDD Holdings (PDD US)

A Quiet Single Day

Another year another Single's Day, but the pandemic has put a damper on this year's shopping bonanza. Faced with a shrinking pie, a new player is...

Evelyn Zhang

China Addresses Issues with Community Group Purchase Platforms

We think the statement shows the SAMR is investigating the community group purchase market, which could mean there will soon be standardised rules...

Li Tang

Tencent Holdings – Seinfeld-Ian Roadshow

TENCENT: Tencent addressed matters it had already discussed at its challenged 3Q21 results. Unfortunately there was no serious discussion of...

Thomas J. Monaco

Didi Global - Higher Probability of Relaunching Ride Hailing App in China by the End of 2021

There have been numerous media accounts in the past two days that have mentioned that DiDi Global (DIDI US) is likely to relaunch its ride-hailing...

Douglas Kim

Tencent Holdings – Increasing Risk

TENCENT: Tencent's 3Q21 GAAP net income declined 6.7% QOQ, and were challenged by increases in cost of revenue, operating expenses, losses in...

Thomas J. Monaco

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