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

Thematic (Sector/Industry)

<ul>
<li>Baba: Baba management holds a call with investors to explain recent movements. </li>
<li>700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）</li>
<li>ATAT：Accor formed alliance with Douyin to further explore independent growth (+)</li>
</ul>


Baba: Baba management holds a call with investors to explain recent movements. 
700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）
ATAT：Accor formed alliance with Douyin to further explore independent growth (+)


China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

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>
<a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>'s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.</li>
<li>Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.</li>
<li>Therefore, we would be looking to short <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a> yet again once this initial excitement settles.</li>
</ul>



Alibaba Group (9988 HK)'s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.
Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.
Therefore, we would be looking to short Alibaba (ADR) (BABA US) yet again once this initial excitement settles.


Alibaba’s Sum of the Parts Valuation:  Why the Initial Excitement May Be Overblown

<ul>
<li>In FY24, we expect BABA to moderately increase spending to defend its market share and user time spent through new user centric strategies.  </li>
<li>Strategies include 1) increasing share of video in Taobao’s information flow , and 2) introducing low-price features in Taobao. As a result, we cut BABA’s FY24 EPS by 5.0%.</li>
<li>However, due to 1) long-term growth, and 2) the more independent operation of its six business units in the future, we have raised BABA’s TP to US$ 109.</li>
</ul>


In FY24, we expect BABA to moderately increase spending to defend its market share and user time spent through new user centric strategies.  
Strategies include 1) increasing share of video in Taobao’s information flow , and 2) introducing low-price features in Taobao. As a result, we cut BABA’s FY24 EPS by 5.0%.
However, due to 1) long-term growth, and 2) the more independent operation of its six business units in the future, we have raised BABA’s TP to US$ 109.


[Alibaba (BABA US) Target Price Change]: Raise TP Amid Necessary Spendings in FY24

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>The HSCEI 2023 dividend futures have dropped over the last week as results have trickled in and some of the larger dividend payers have cut their final dividends.</li>
<li>Over 50% of the DIPS are confirmed now and that number will increase significantly over the next couple of days as the remaining companies announce their final dividends.</li>
<li>From our estimates, just over 80% of the DIPS will be confirmed by tomorrow though over 66% of the total DIPS will have CNYHKD risk attached to it.</li>
</ul>


The HSCEI 2023 dividend futures have dropped over the last week as results have trickled in and some of the larger dividend payers have cut their final dividends.
Over 50% of the DIPS are confirmed now and that number will increase significantly over the next couple of days as the remaining companies announce their final dividends.
From our estimates, just over 80% of the DIPS will be confirmed by tomorrow though over 66% of the total DIPS will have CNYHKD risk attached to it.


HSCEI Dividend Futures: Nearing the Pointy End of Results Season

<ul>
<li>Yesterday, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a> announced its intention to divide its business into six distinct units, each with its own CEO and independent board of directors.</li>
<li>Tying this with Jack Ma’s rare public appearance in China since the beginning of the tech crackdown, people are speculating that the tech crackdown is over.</li>
<li>However, if you look at this news more objectively, this split indicates nothing but the tightening of the regulatory framework.</li>
</ul>


Yesterday, Alibaba (ADR) (BABA US) announced its intention to divide its business into six distinct units, each with its own CEO and independent board of directors.
Tying this with Jack Ma’s rare public appearance in China since the beginning of the tech crackdown, people are speculating that the tech crackdown is over.
However, if you look at this news more objectively, this split indicates nothing but the tightening of the regulatory framework.


Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure

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)

China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

700HK/1024HK/BILI/BIDU：Wechat Open Class is held; ATAT：Accor formed alliance with Douyin to further explore independent growth in China ; key...

Blue Lotus Research Institute

Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown

our analysis shows that NAV is only 12% higher than the current valuation, indicating that the notion of a significantly higher sum of parts value...

Oshadhi Kumarasiri

[Alibaba (BABA US) Target Price Change]: Raise TP Amid Necessary Spendings in FY24

Due to 1) new measures ensuring long-term growth, and 2) the more independent operation of its six business units in the future, we have raised...

Blue Lotus Research Institute

HSCEI Dividend Futures: Nearing the Pointy End of Results Season

Over half of 2023 DIPS are now confirmed & will rise to 80% by close tomorrow. There is FX risk attached to most dividends. The 2023/24 steepener...

Brian Freitas

Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure

Alibaba splits into six separate units, leading to speculation about the end of the tech crackdown, but a more objective analysis suggests it's a...

Oshadhi Kumarasiri

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