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

<ul>
<li>Kuaishou reported 1Q23 top-line 4% vs. our est., and non-IFRS net profit of RMB 42mn vs. our est. of RMB (688mn); </li>
<li>We raise 2023 live-streaming/ads/ecommerce revenue growth from 12%/ 17%/26% YoY to 18%/20%/43% YoY, and non-IFRS net income from RMB 860mn to RMB 3.89bn due to a series of monetization methods; </li>
<li>We maintain SELL due to the competitive pressure of Douyin and WeChat Video Account, reflected by decelerated user growth and time spent.  </li>
</ul>


Kuaishou reported 1Q23 top-line 4% vs. our est., and non-IFRS net profit of RMB 42mn vs. our est. of RMB (688mn); 
We raise 2023 live-streaming/ads/ecommerce revenue growth from 12%/ 17%/26% YoY to 18%/20%/43% YoY, and non-IFRS net income from RMB 860mn to RMB 3.89bn due to a series of monetization methods; 
We maintain SELL due to the competitive pressure of Douyin and WeChat Video Account, reflected by decelerated user growth and time spent.  


[Kuaishou (1024 HK) Target Price Change]: Solid Monetization Amid Decelerated User Growth

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Kuaishou delivered another eye-catching results, with upbeat topline (+20% YoY, 3% above consensus) and first-time group breakeven.</li><li>We are more bullish on its 2Q23E momentum (forecasting rev +25% YoY), supported by: 1) resilient livestreaming to continue; 2) ads acceleration with external ads resuming growth; and 3) ecommerce share gain with higher take rate (GMV/rev +30%/50% YoY).</li><li>After recent price corrections for weak market sentiment, we suggest to buy on dips, for its stronger LS &amp; ecommerce and better margin outlook. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Kuaishou delivered another eye-catching results, with upbeat topline (+20% YoY, 3% above consensus) and first-time group breakeven.We are more bullish on its 2Q23E momentum (forecasting rev +25% YoY), supported by: 1) resilient livestreaming to continue; 2) ads acceleration with external ads resuming growth; and 3) ecommerce share gain with higher take rate (GMV/rev +30%/50% YoY).After recent price corrections for weak market sentiment, we suggest to buy on dips, for its stronger LS &amp; ecommerce and better margin outlook. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kuaishou (1024 HK) – More Bullish on 2Q23E Momentum

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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>China just announced game approval for May batch. The number of games approved is in-line with the pace of approval in recent month.</li>
<li>Pace of China game approval stays flattish, at a much slower pace than pre-tightening.</li>
<li>Both Tencent and Netease received approval for one game. We saw a pattern of approval rotation for the duo.</li>
</ul>


China just announced game approval for May batch. The number of games approved is in-line with the pace of approval in recent month.
Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
Both Tencent and Netease received approval for one game. We saw a pattern of approval rotation for the duo.


Tencent/Netease: Game Approval Rotation in May

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<ul>
<li>The revenue growth rates of all business lines accelerated in 1Q23.</li>
<li>Operating losses shrank to RMB1.3 bn in 1Q23, less than RMB3 bn in two previous quarters.</li>
<li>We believe the stock has an upside of 66% for the yearend 2023.</li>
</ul>


The revenue growth rates of all business lines accelerated in 1Q23.
Operating losses shrank to RMB1.3 bn in 1Q23, less than RMB3 bn in two previous quarters.
We believe the stock has an upside of 66% for the yearend 2023.


Kuaishou (1024 HK): 1Q23, All Business Lines Accelerated

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.

<ul>
<li>
<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> ’s 1Q2023 earnings were above consensus estimates with the company reporting positive adj. EBITDA and adj. net profit during the quarter.</li>
<li>Operating profit margin of the domestic business further improved while the company managed to significantly reduce operating losses of the overseas business during the quarter.</li>
<li>Kuaishou also announced a small share buyback worth of HK$4bn which further affirms the company’s improving fundamentals and should help attract investors.</li>
</ul>



Kuaishou Technology (1024 HK) ’s 1Q2023 earnings were above consensus estimates with the company reporting positive adj. EBITDA and adj. net profit during the quarter.
Operating profit margin of the domestic business further improved while the company managed to significantly reduce operating losses of the overseas business during the quarter.
Kuaishou also announced a small share buyback worth of HK$4bn which further affirms the company’s improving fundamentals and should help attract investors.


Kuaishou 1Q2023: Upbeat Quarter with a Small Share Buyback

China

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

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Kuaishou Technology (1024 HK)

[Kuaishou (1024 HK) Target Price Change]: Solid Monetization Amid Decelerated User Growth

We raise 2023 live-streaming/ads/ecommerce revenue growth from 12%/ 17%/26% YoY to 18%/20%/43% YoY; We maintain SELL due to the competitive...

Blue Lotus Research Institute

Kuaishou (1024 HK) – More Bullish on 2Q23E Momentum

Kuaishou delivered another eye-catching results, with upbeat topline (+20% YoY, 3% above consensus) and first-time group breakeven.

CMB International

Tencent/Netease: Game Approval Rotation in May

We analyzed the game approval for May. Both Tencent and Netease received approval for one game. We see pattern of approval rotation between key...

Ke Yan, CFA, FRM

Kuaishou (1024 HK): 1Q23, All Business Lines Accelerated

The revenue growth rates of all business lines accelerated in 1Q23. Operating losses shrank. We believe the stock has an upside of 66% for the...

Ming Lu

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[Kuaishou (1024 HK) Target Price Change]: Solid Monetization Amid Decelerated User Growth

We raise 2023 live-streaming/ads/ecommerce revenue growth from 12%/ 17%/26% YoY to 18%/20%/43% YoY; We maintain SELL due to the competitive...

Blue Lotus Research Institute

Kuaishou (1024 HK) – More Bullish on 2Q23E Momentum

Kuaishou delivered another eye-catching results, with upbeat topline (+20% YoY, 3% above consensus) and first-time group breakeven.

CMB International

Tencent/Netease: Game Approval Rotation in May

We analyzed the game approval for May. Both Tencent and Netease received approval for one game. We see pattern of approval rotation between key...

Ke Yan, CFA, FRM

Kuaishou (1024 HK): 1Q23, All Business Lines Accelerated

The revenue growth rates of all business lines accelerated in 1Q23. Operating losses shrank. We believe the stock has an upside of 66% for the...

Ming Lu

Kuaishou 1Q2023: Upbeat Quarter with a Small Share Buyback

IQ2023 earnings beat consensus with adj. EBITDA and an adj. net profit for the quarter. Domestic biz's OPM further improved and overseas losses...

Shifara Samsudeen, ACMA, CGMA