China/Asia TMT

Shawn Yang

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

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants, </li>
<li>(2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP, </li>
<li>Due to 1) merchants return to Taobao/Tmall;  2) independent listing of groups; and 3) improved incentive structure after the organizational change.</li>
</ul>


We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants, 
(2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP, 
Due to 1) merchants return to Taobao/Tmall;  2) independent listing of groups; and 3) improved incentive structure after the organizational change.


[Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base

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>Meituan's food delivery has taken 20% of the Hong Kong market share in its first month’s operations.</li>
<li>The authorities suggests that they will not further restrict financial apps such as AliPay of Ant Group.</li>
<li>Tencent's WeChat Pay charged a money transfer commission, but it exempted university campus the next day.</li>
</ul>


Meituan's food delivery has taken 20% of the Hong Kong market share in its first month’s operations.
The authorities suggests that they will not further restrict financial apps such as AliPay of Ant Group.
Tencent's WeChat Pay charged a money transfer commission, but it exempted university campus the next day.


China Internet Weekly (10Jul2023): Meituan, Alibaba, Ant Group, Tencent

Thematic (Sector/Industry)

<ul>
<li>BABA: Ant Group fine to be announced, but listing unlikely until 2024 (+)</li>
<li>LKNCY: COTTI Coffee downgrade its promotion campaign, and Coffee price war is gradually easing (+)</li>
<li>BEKE: Beike is exploiting new opportunity in home decoration business, and Beike Group Decoration delivered its first batch of projects in Tianjin</li>
</ul>


BABA: Ant Group fine to be announced, but listing unlikely until 2024 (+)
LKNCY: COTTI Coffee downgrade its promotion campaign, and Coffee price war is gradually easing (+)
BEKE: Beike is exploiting new opportunity in home decoration business, and Beike Group Decoration delivered its first batch of projects in Tianjin


China TMT Update Jul.10-Baba/LKNCY/BEKE-Ant Group Fine/COTTI Downgrade Promotion/Home Decoration Biz

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.

<ul>
<li>China's regulators on Friday imposed <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.</li>
<li>The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.</li>
<li>However, the media excitement was short-lived as <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a>'s share price quickly resumed a downward trend after rising by around 22%.</li>
</ul>


China's regulators on Friday imposed Ant Financial Services Group (6688 HK) with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.
The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.
However, the media excitement was short-lived as Alibaba Group Holding (9988 HK)'s share price quickly resumed a downward trend after rising by around 22%.


Ant Group's $6.0bn Buyback Move Casts Doubt on IPO Prospects

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Event-Driven

<ul>
<li>Three shareholders of <a href="https://www.smartkarma.com/entities/socionext-inc" target="_blank" data-smartkarma-citation="entities:36351:1" rel="noopener">Socionext (6526 JP)</a> aim to raise around US$1.4bn via selling all of their shares in Socionext.</li>
<li>We have covered the background of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/socionext-placement-a-us-1-8bn-cleanup-will-have-to-give-up-some-of-its-6x-listing-gains" target="_blank" data-smartkarma-citation="insights:106206" rel="noopener">Socionext Placement - A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains</a>.</li>
<li>In this note, we talk about the updates and look at the performance of some of the past Japan deals.</li>
</ul>


Three shareholders of Socionext (6526 JP) aim to raise around US$1.4bn via selling all of their shares in Socionext.
We have covered the background of the deal in our earlier note, Socionext Placement - A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains.
In this note, we talk about the updates and look at the performance of some of the past Japan deals.


Socionext Placement - Valuation More Reasonable but past Secondary Offerings Have a Mixed Record

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba Group Holding (BABA US)

[Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base

We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus, respectively. We raise TP to US$ 116 TP, due to...

Blue Lotus Research Institute

China Internet Weekly (10Jul2023): Meituan, Alibaba, Ant Group, Tencent

Meituan’s food delivery has taken 20% of the Hong Kong market share. The authorities suggests that they will not further restrict financial apps.

Ming Lu

China TMT Update Jul.10-Baba/LKNCY/BEKE-Ant Group Fine/COTTI Downgrade Promotion/Home Decoration Biz

BABA: Ant Group fine to be announced (+);LKNCY: COTTI Coffee downgrade its promotion campaign (+);BEKE: Beike is exploiting new opportunity in home...

Blue Lotus Research Institute

Ant Group's $6.0bn Buyback Move Casts Doubt on IPO Prospects

Ant Group unveiled a share buyback program worth $6 billion. This buyback values the company at $78.54bn, which is considerably lower than the...

Oshadhi Kumarasiri

Socionext Placement - Valuation More Reasonable but past Secondary Offerings Have a Mixed Record

Three shareholders of Socionext (6526 JP) aim to raise around US$1.4bn via selling all of their shares in Socionext. In this note, we look at the...

Sumeet Singh

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