Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.</li>
<li>With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.</li>
<li>Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.</li>
</ul>


Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.
With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.
Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.


Baidu: Undervalued Cyclical Revenue Growth Acceleration and Margin Expansion Story

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.</li>
<li>Years of investments in original content production capabilities paid off and solidified IQ's leadership in China's long form video industry. </li>
<li>Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  </li>
</ul>


IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
Years of investments in original content production capabilities paid off and solidified IQ's leadership in China's long form video industry. 
Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  


IQIYI (IQ US): From Turnaround to High-Quality Growth

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

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>We expect online gaming has a better performance: 1) improved content supply and 2) strong user demand for social interactions in top games like Tencent’s HOK and NetEase’s Egg Party.</li>
<li>We suggest that eCommerce and advertising have relatively weak performances in January because offline consumption enjoyed faster rebound and attracted users away from online platforms.</li>
<li>We are more positive about Tencent in C1Q23, and we expect that major ads platforms like Kuaishou, Baidu, Bili, iQIYI, and Weibo will have the fastest YoY growth in C2Q23.</li>
</ul>


We expect online gaming has a better performance: 1) improved content supply and 2) strong user demand for social interactions in top games like Tencent’s HOK and NetEase’s Egg Party.
We suggest that eCommerce and advertising have relatively weak performances in January because offline consumption enjoyed faster rebound and attracted users away from online platforms.
We are more positive about Tencent in C1Q23, and we expect that major ads platforms like Kuaishou, Baidu, Bili, iQIYI, and Weibo will have the fastest YoY growth in C2Q23.


China Internet CNY Holiday Update: Gaming Performed Better than Ads and ECom

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.</li>
<li>ECM developments - <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a>, <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a> placements, <a href="https://www.smartkarma.com/entities/vinfast" target="_blank" data-smartkarma-citation="entities:36550:1" rel="noopener">VinFast (1905332D VN)</a> continues to pre-market a US$1bn IPO.</li>
<li>Event-Driven developments - China Internet (810 HK), <a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>, <a href="https://www.smartkarma.com/entities/kingston-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:3566:1" rel="noopener">Kingston Financial (1031 HK)</a>,  <a href="https://www.smartkarma.com/entities/united-fiber-system-ltd" target="_blank" data-smartkarma-citation="entities:20826:1" rel="noopener">Golden Energy &amp; Resources (GER SP)</a>, <a href="https://www.smartkarma.com/entities/olam-group" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam Group (OLG SP)</a>, <a href="https://www.smartkarma.com/entities/sabana-industrial-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:911:1" rel="noopener">Sabana Industrial REIT (SSREIT SP)</a>. </li>
</ul>


A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments - iQIYI Inc (IQ US), Bilibili Inc (BILI US) placements, VinFast (1905332D VN) continues to pre-market a US$1bn IPO.
Event-Driven developments - China Internet (810 HK), Shandong Fengxiang (9977 HK), Kingston Financial (1031 HK),  Golden Energy &amp; Resources (GER SP), Olam Group (OLG SP), Sabana Industrial REIT (SSREIT SP). 


Weekly Deals Digest (22 Dec) - Kingston, Fengxiang, Yashili, Golden Energy, Olam, SSREIT, Warrego

China

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)

Baidu: Undervalued Cyclical Revenue Growth Acceleration and Margin Expansion Story

In this insight, we analyse Baidu’s search query and digital advertising revenue market share trends, revenue growth outlook, margin expansion...

Wium Malan, CFA

IQIYI (IQ US): From Turnaround to High-Quality Growth

IQ's 4Q results mark end of turnaround and start of high-quality growth. We expect the company to generate RMB3.5 billion net profit for 2023. At...

Eric Chen

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

China Internet CNY Holiday Update: Gaming Performed Better than Ads and ECom

Our recent channel check indicates that online gaming has a better performance than online ads and eCommerce during the Chinese New Year holiday....

Blue Lotus Research Institute

Weekly Deals Digest (22 Dec) - Kingston, Fengxiang, Yashili, Golden Energy, Olam, SSREIT, Warrego

Last week, notable developments occurred in Event-Driven (Norwest, Origin, Warrego, CIIF, Fengxiang, Kingston, Yashili, Golden Energy, Olam,...

Arun George

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