Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>iQIYI, an innovative market-leading online entertainment service provider in China, delivered robust first-quarter 2024 results, achieving numerous record highs, such as non-GAAP operating income and its corresponding margin.</li><li>CEO, Mr. Yu Gong, shared that the expanding margin could be attributed to the high-quality growth of the company.</li><li>The Membership Services business continued its growth trajectory with monthly ARM observed an all-time high.</li></ul>

iQIYI, an innovative market-leading online entertainment service provider in China, delivered robust first-quarter 2024 results, achieving numerous record highs, such as non-GAAP operating income and its corresponding margin.CEO, Mr. Yu Gong, shared that the expanding margin could be attributed to the high-quality growth of the company.The Membership Services business continued its growth trajectory with monthly ARM observed an all-time high.

iQIYI Inc.: Initiation of Coverage - How Are They Leveraging Generative AI capabilities? - Major Drivers

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>1Q24 beat on margin again, with adj. NP at RMB844mn (91% above consensus) and top line 1% above consensus.</li><li>For 2Q24E, we expect IQ’s revenue -1% YoY (in which subs revenue -5% YoY while ads +7% YoY), with a rich content pipeline ahead (e.g. Fox Spirit Matchmaker &lt;狐妖小红 娘&gt;).</li><li>We forecast 2Q24E non-GAAP OP resilient at RMB800mn, and we are positive on mgmt’s FY24E OP target of RMB5bn. </li></ul>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.

1Q24 beat on margin again, with adj. NP at RMB844mn (91% above consensus) and top line 1% above consensus.For 2Q24E, we expect IQ’s revenue -1% YoY (in which subs revenue -5% YoY while ads +7% YoY), with a rich content pipeline ahead (e.g. Fox Spirit Matchmaker &lt;狐妖小红 娘&gt;).We forecast 2Q24E non-GAAP OP resilient at RMB800mn, and we are positive on mgmt’s FY24E OP target of RMB5bn. 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.

iQIYI (IQ US) - Margin surprise on higher efficiency

<ul><li>iQIYI (IQ) delivered better-than-feared 4Q23 results with inline topline and upbeat margin.</li><li>Looking into 1Q24E, we expect both revenue and earnings to see sequential growth, with solid ARM trend.</li><li>We keep confident on IQ’s previous FY24E OP target (at RMB5bn), with disciplined content cost and ARM expansion. </li></ul>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.

iQIYI (IQ) delivered better-than-feared 4Q23 results with inline topline and upbeat margin.Looking into 1Q24E, we expect both revenue and earnings to see sequential growth, with solid ARM trend.We keep confident on IQ’s previous FY24E OP target (at RMB5bn), with disciplined content cost and ARM expansion. 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.

IQIYI (IQ US) - Improving Profitability with Solid Guidance

<ul><li>We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs volatility).</li><li>We suggest looking beyond the high base for 1Q24E, and focusing on upcoming rich content in its 2024 pipeline, including San Ke Shu (南来北往), Fox Spirit Matchmaker (狐妖小红娘) and Gu Zhou (孤舟). ARM expansion should support its earnings growth and solid free cash flow in FY24E.</li><li>We are also positive on its margin improvement on higher ROI in content investments. </li></ul>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.

We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs volatility).We suggest looking beyond the high base for 1Q24E, and focusing on upcoming rich content in its 2024 pipeline, including San Ke Shu (南来北往), Fox Spirit Matchmaker (狐妖小红娘) and Gu Zhou (孤舟). ARM expansion should support its earnings growth and solid free cash flow in FY24E.We are also positive on its margin improvement on higher ROI in content investments. 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.

IQIYI (IQ US) – Margin Intact with Continued ARM Expansion

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

China

iDreamSky Technology Holdings Limited operates as a holding company. The Company, through its subsidiaries, designs, develops, and distributes video games for mobile, consoles, PC, and tablets, as well as offers live gaming services. iDreamSky Technology Holdings serves customers worldwide.

7Road Holdings Limited operates as an online game developer and operator. The Company develops, distributes, and licenses web and mobile games. 7Road Holdings publishes its games worldwide.

CMGE Technology Group Limited serves customers in China.

Meitu, Inc. offers mobile application software. The Company researches, produces, and markets image editing, live broadcasting, and other related social software. Meitu Inc also participate in mobile designing and retailing around the world.

Mobvista Inc. operates as a holding company. The Company, through its subsidiaries, offers technology platform that provides mobile advertising and mobile analytics services to the application developers. Mobvista serves clients worldwide.

JOYY Inc. operates a global social media platform. The Company offers platform which enables users to interact with each other in real time through online live media by creating, sharing, and enjoying a vast range of entertainment content and activities. JOYY serves customers in China.

Legend Holdings Corporation, through its subsidiaries, operates in information technology, real estate, financial services, agriculture and food, modern service, and chemical and energy materials sectors in China and internationally.

Beijing TRS Information Technology Company Limited develops and markets software and technology services for unstructured data management. The Company provides software products that are enterprise search, content management and text mining.

Jiangsu Hoperun Software Company Limited provides software outsourcing services for professional fields. The Company's main products include supply chain management software, intelligent terminal embedded software, and smart grid IT software outsourcing services.

Gravity Co. Ltd. develops and distributes online games in many countries across the world, especially in Japan, Taiwan, and Thailand.  The Company's principal product is Ragnarok Online.  Gravity also offers mobile games, participates in the production of a televised animation series, and license the merchandising of character-related products based on their online games.

DouYu International Holdings Limited operates as a holding company. The Company, through its subsidiaries, focuses on development of live game streaming. DouYu International Holdings serves customers in China.

MultiChoice Group operates as an entertainment company. The Company creates and secures the rights to content from all over the world. MultiChoice Group delivers content through direct to home, digital terrestrial television, and online video-entertainment services.

Eventbrite, Inc. operates as a platform as a service company. The Company offers a platform that allows users to provide online event planning services, as well as publishes, promotes, and sells tickets through social networks and e-mails. Evenbrite operates in the United States.

iHeartMedia, Inc. provides media entertainment services. The Company offers radio broadcasting, entertainment data distribution, and media advertising services. iHeartMedia serves customers worldwide.

Matrimony.com owns and operates matrimony websites. The company offers matrimony and matchmaking services through its matrimony websites and outlets. 

ReWorld operates a social networking Internet website built around sustainable development.  The website allows individuals, companies and associations to exchange information, conduct marketing, and recruit members.

mixi, Inc. operates community style website, mixi.  The Company sells advertising spaces on its website.  mixi also runs online recruiting services for IT related positions.

Net One Systems Co., Ltd. designs, installs, maintains and supports computer network systems.  The company also installs computer security related products and integrated audio visual data communication environment system by applying IP (Internet Protocol) technology.  Net One Systems builds virtualized data center environment as well.

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

iQIYI Inc.: Initiation of Coverage - How Are They Leveraging Generative AI capabilities? - Major Drivers

iQIYI, an innovative market-leading online entertainment service provider in China, delivered robust first-quarter 2024 results, achieving...

Baptista Research

iQIYI (IQ US) - Margin surprise on higher efficiency

For 2Q24E, we expect IQ’s revenue -1% YoY (in which subs revenue -5% YoY while ads +7% YoY), with a rich content pipeline ahead (e.g. Fox Spirit...

CMB International

IQIYI (IQ US) - Improving Profitability with Solid Guidance

iQIYI (IQ) delivered better-than-feared 4Q23 results with inline topline and upbeat margin. Looking into 1Q24E, we expect both revenue and earnings...

CMB International

IQIYI (IQ US) – Margin Intact with Continued ARM Expansion

We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs...

CMB International

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

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