Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

KraneShares CSI China Internet ETF / Event-Driven

<ul>
<li>The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.</li>
<li>On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules. </li>
<li>Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?</li>
</ul>


The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.
On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules. 
Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?


New CSRC "Provisions" Take a Step Towards Meeting PCAOB Requirements

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.

Equity Bottom-Up

<ul><li>iQIYI (IQ) delivered solid 3Q23 results with in-line revenue and upbeat earnings.</li><li>Looking into 4Q23E, we forecast revenue +4% YoY, in which subs/ads +5%/0% YoY.</li><li>We are positive on its average revenue per membership (ARM) (+3% QoQ in 4Q23E) and expect newly-launched top dramas (e.g. Story of Kunning Palace 宁安如梦) to support subs stability. </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 solid 3Q23 results with in-line revenue and upbeat earnings.Looking into 4Q23E, we forecast revenue +4% YoY, in which subs/ads +5%/0% YoY.We are positive on its average revenue per membership (ARM) (+3% QoQ in 4Q23E) and expect newly-launched top dramas (e.g. Story of Kunning Palace 宁安如梦) to support subs stability. 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) – ARM Expansion to Unlock Subs LTV

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

<ul>
<li>IQ reported 2Q23 revenue and non-GAAP net income 0.2%/28.5% vs cons.</li>
<li>We cut our projections for 3Q23's membership services revenue, but increased estimations for online ads services revenue, and raised margin forecasts for 2023.  </li>
<li>We maintain our US$ 6.25 TP, implying 16.2X PE in 2023.</li>
</ul>


IQ reported 2Q23 revenue and non-GAAP net income 0.2%/28.5% vs cons.
We cut our projections for 3Q23's membership services revenue, but increased estimations for online ads services revenue, and raised margin forecasts for 2023.  
We maintain our US$ 6.25 TP, implying 16.2X PE in 2023.


[iQIYI, Lnc. (IQ US, BUY, TP US$6.25) Review]: Ads Revenue Will Continue to Have Fair Growth

<ul><li>Despite soft season and content delay, IQ still delivered solid 2Q23 results with in-line topline and upbeat margin.</li><li>Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive content would support long-term subs value.</li><li>We forecast 3Q23E rev +8% YoY (in which subs/ads +20%/37% YoY), with adj. OP at RMB815mn. </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.

Despite soft season and content delay, IQ still delivered solid 2Q23 results with in-line topline and upbeat margin.Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive content would support long-term subs value.We forecast 3Q23E rev +8% YoY (in which subs/ads +20%/37% YoY), with adj. OP at RMB815mn. 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) – Prioritizing on long-term subs value

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>IQiyi failed to give its share price a lift with  stronger-than-expected 2Q results except for slight miss in paying subscribers .</li>
<li>We believe that investors are expecting the end of its remarkable turnaround story and embracing a stable and moderate growth stage.</li>
<li>While iQiyi trades at ~10x our FY23 earnings, the cheap valuation by itself doesn’t stand out among China internet peers as a group. We would wait for better entry points.</li>
</ul>


IQiyi failed to give its share price a lift with  stronger-than-expected 2Q results except for slight miss in paying subscribers .
We believe that investors are expecting the end of its remarkable turnaround story and embracing a stable and moderate growth stage.
While iQiyi trades at ~10x our FY23 earnings, the cheap valuation by itself doesn’t stand out among China internet peers as a group. We would wait for better entry points.


IQIYI (IQ US): Embracing Moderate yet Stable Growth

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)

New CSRC "Provisions" Take a Step Towards Meeting PCAOB Requirements

CSRC has published new Provisions putting the onus of info management on companies, making it easier for the PCAOB to conduct on-site audits. It...

Travis Lundy

IQIYI (IQ US) – ARM Expansion to Unlock Subs LTV

iQIYI (IQ) delivered solid 3Q23 results with in-line revenue and upbeat earnings. Looking into 4Q23E, we forecast revenue +4% YoY, in which subs...

CMB International

[iQIYI, Lnc. (IQ US, BUY, TP US$6.25) Review]: Ads Revenue Will Continue to Have Fair Growth

We cut our projections for 3Q23's membership services revenue, but increased estimations for online ads services revenue, and raised margin...

Blue Lotus Research Institute

iQIYI (IQ US) – Prioritizing on long-term subs value

Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive...

CMB International

IQIYI (IQ US): Embracing Moderate yet Stable Growth

IQ reported stronger-than-expected 2Q results, yet investors are expecting the end of remarkable turnaround and embracing moderate growth.

Eric Chen

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