Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Nikkei reports that a high ranking CCP official has suggested that the platforms possessing personal data should return around 20-30% of the revenue generated to the common prosperity cause. </li>
<li>We expect big tech to lose competitiveness as the government takes control of the use of personal data. Meanwhile the Chinese economic slowdown is a double blow to big tech. </li>
<li>If remaining investors lose faith and exit, big tech can trade at around 1.0-1.5x price to book in the next few years.</li>
</ul>


Nikkei reports that a high ranking CCP official has suggested that the platforms possessing personal data should return around 20-30% of the revenue generated to the common prosperity cause. 
We expect big tech to lose competitiveness as the government takes control of the use of personal data. Meanwhile the Chinese economic slowdown is a double blow to big tech. 
If remaining investors lose faith and exit, big tech can trade at around 1.0-1.5x price to book in the next few years.


<a href="https://www.smartkarma.com/entities/gome-retail-holdings-ltd" target="_blank" data-smartkarma-citation="entities:170:1" rel="noopener">Gome Electrical Appliances (493 HK)</a> is one of China’s largest electronic retailers with a Gross Merchandise Value (GMV) of CNY 113 billion. Due to the competition from e-commerce platforms, Gome endured a tough time during the last four years with revenue declining at an annual compound rate of 12.9%. The company’s operating losses peaked at CNY 3.8 billion in 2020.Nevertheless, the future looks bright for Gome Retail as they have managed to transform the traditional brick and mortar retail business to an omni-channel model. In addition, the shift in government policy to eradicate unfair competition and encourage domestic consumption, especially in lower-tier cities could accelerate Gome’s omni-channel revival.

Gome Electrical Appliances (493 HK) is one of China’s largest electronic retailers with a Gross Merchandise Value (GMV) of CNY 113 billion. Due to the competition from e-commerce platforms, Gome endured a tough time during the last four years with revenue declining at an annual compound rate of 12.9%. The company’s operating losses peaked at CNY 3.8 billion in 2020.Nevertheless, the future looks bright for Gome Retail as they have managed to transform the traditional brick and mortar retail business to an omni-channel model. In addition, the shift in government policy to eradicate unfair competition and encourage domestic consumption, especially in lower-tier cities could accelerate Gome’s omni-channel revival.

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

<a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>'s 2Q21 results may not seem inspirational, but a closer look under the hood reveals a solid business that is continuing to improve.  Considering the regulatory overhang and the near-term losses from the new community group buying business offsetting the overall profit growth, poor investor sentiment may continue for the Chinese e-commerce stocks including JD.  However, I remain constructive on JD's fundamentals, and I believe JD is a good rebound candidate when the overhang is lifted.      What I saw under the hood: <ul>
<li>Solid top-line growth of 26%. </li>
<li>Historic quarterly active user additions.</li>
<li>Rising appeal from lower-tier market users.</li>
<li>Higher engagement from existing users. </li>
<li>Acceleration of order volume growth.</li>
<li>Healthy core JD retail operating profit  </li>
</ul>

JD.com Inc (ADR) (JD US)'s 2Q21 results may not seem inspirational, but a closer look under the hood reveals a solid business that is continuing to improve.  Considering the regulatory overhang and the near-term losses from the new community group buying business offsetting the overall profit growth, poor investor sentiment may continue for the Chinese e-commerce stocks including JD.  However, I remain constructive on JD's fundamentals, and I believe JD is a good rebound candidate when the overhang is lifted.      What I saw under the hood: 
Solid top-line growth of 26%. 
Historic quarterly active user additions.
Rising appeal from lower-tier market users.
Higher engagement from existing users. 
Acceleration of order volume growth.
Healthy core JD retail operating profit  


JD.com (JD US): Solid Growth Flying Under the Radar

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Kuaishou Technology / Forensic Accounting

<a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> is a video creation and streaming mobile application that has a huge userbase in Mainland China.  For the 3 months ended 31 March 2021, its Monthly Active Users (MAU), Daily Active Users (DAU) and Average Daily Time Spent per User totalled 520 million, 295 million and 99.3 minutes respectively, mainly derived from Mainland China. 
While its valuation has retreated to more reasonable levels in recent months, there are still considerable uncertainties about its revenue and profitability prospects, particularly in the wake of tightening regulations in Mainland China and execution difficulties in overseas expansion.
Further, Kuaishou's catchup story to Bytedance is not playing out as expected due to user growth underperformance and average user time spent peaking in Q1 2021.  We discuss some of the underlying issues in the following sections and highlight key factors to watch in its upcoming Q2 2021 results release (expected on 23 August 2021).

Kuaishou Technology (1024 HK) is a video creation and streaming mobile application that has a huge userbase in Mainland China.  For the 3 months ended 31 March 2021, its Monthly Active Users (MAU), Daily Active Users (DAU) and Average Daily Time Spent per User totalled 520 million, 295 million and 99.3 minutes respectively, mainly derived from Mainland China. 
While its valuation has retreated to more reasonable levels in recent months, there are still considerable uncertainties about its revenue and profitability prospects, particularly in the wake of tightening regulations in Mainland China and execution difficulties in overseas expansion.
Further, Kuaishou's catchup story to Bytedance is not playing out as expected due to user growth underperformance and average user time spent peaking in Q1 2021.  We discuss some of the underlying issues in the following sections and highlight key factors to watch in its upcoming Q2 2021 results release (expected on 23 August 2021). 

Kuaishou - Q2 2021 Preview Through a Forensic Lens

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

Thematic (Sector/Industry)

<ul>
<li>700 HK: Tencent's &lt;Civilization Mobile&gt; Officially Launches, Ranks Second on iOS Download Chart.（+）</li>
<li>JD US/PDD US/BABA US : JD to launch new monthly promo event “Super 18” (/)</li>
<li>PDD US: PDD announces new requirements for some merchants (+)</li>
</ul>


700 HK: Tencent's &lt;Civilization Mobile&gt; Officially Launches, Ranks Second on iOS Download Chart.（+）
JD US/PDD US/BABA US : JD to launch new monthly promo event “Super 18” (/)
PDD US: PDD announces new requirements for some merchants (+)


[Blue Lotus Daily-TMT Update]:700HK/JD US/PDD US/BABA US/NTES US/SE US/TCOM US/ATAT US/3690HK/BABAUS

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)

China Considering a Data Tax on Big Tech

Investors are starting to rethink their investments in the Chinese tech space and the idea that investors should avoid Chinese tech stocks amidst...

Oshadhi Kumarasiri

Gome Retail: Time to Shop

At 1.96x price to book, Gome does not look especially cheap considering it’s current liquidity levels. However, we believe the worst has passed for...

Oshadhi Kumarasiri

JD.com (JD US): Solid Growth Flying Under the Radar

JD's results may not seem inspirational, but a closer look under the hood reveals a business growing faster than market expectations. I believe JD...

Mitchell Kim

Kuaishou - Q2 2021 Preview Through a Forensic Lens

Kuaishou's revenue and profitability prospects remain uncertain, particularly in the wake of stricter regulations and overseas expansion hurdles....

Jason Yap, CFA

[Blue Lotus Daily-TMT Update]:700HK/JD US/PDD US/BABA US/NTES US/SE US/TCOM US/ATAT US/3690HK/BABAUS

Tencent's <civilization mobile> ranks second on iOS download chart, JD US to launch "Super 18" promo event, PDD US announces new requirements for...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Considering a Data Tax on Big Tech

Investors are starting to rethink their investments in the Chinese tech space and the idea that investors should avoid Chinese tech stocks amidst...

Oshadhi Kumarasiri

Gome Retail: Time to Shop

At 1.96x price to book, Gome does not look especially cheap considering it’s current liquidity levels. However, we believe the worst has passed for...

Oshadhi Kumarasiri

JD.com (JD US): Solid Growth Flying Under the Radar

JD's results may not seem inspirational, but a closer look under the hood reveals a business growing faster than market expectations. I believe JD...

Mitchell Kim

Kuaishou - Q2 2021 Preview Through a Forensic Lens

Kuaishou's revenue and profitability prospects remain uncertain, particularly in the wake of stricter regulations and overseas expansion hurdles....

Jason Yap, CFA

[Blue Lotus Daily-TMT Update]:700HK/JD US/PDD US/BABA US/NTES US/SE US/TCOM US/ATAT US/3690HK/BABAUS

​Tencent's <civilization mobile> ranks second on iOS download chart, JD US to launch "Super 18" promo event, PDD US announces new requirements for...

Blue Lotus Research Institute

Tencent's <civilization mobile> ranks second on iOS download chart, JD US to launch "Super 18" promo event, PDD US announces new requirements for...