Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

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>NTES US: &lt;Hearthstone&gt; PC Preload Begins, Official Return on September 25 (+)</li>
<li>700 HK: Tencent's &lt;Peacekeeper Elite&gt; Tops iOS Grossing Chart After Major Gameplay Update.(+)</li>
<li>700 HK: Tencent's FPS Game &lt;Delta Force&gt; Pre-launch Character Creation Event Starts, Launch on September 26 (/)</li>
</ul>


NTES US: &lt;Hearthstone&gt; PC Preload Begins, Official Return on September 25 (+)
700 HK: Tencent's &lt;Peacekeeper Elite&gt; Tops iOS Grossing Chart After Major Gameplay Update.(+)
700 HK: Tencent's FPS Game &lt;Delta Force&gt; Pre-launch Character Creation Event Starts, Launch on September 26 (/)


[Blue Lotus Daily-TMT Update]:NTES US/700 HK/BABA US/JD US/AMZN US/PDD US/SHEIN/VIPS US/3690HK/IQ US

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>Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.</li>
<li>Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.</li>
<li>Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.</li>
</ul>


Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.
Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.
Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.


Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

<ul>
<li>Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;</li>
<li>Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;</li>
<li>Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.</li>
</ul>


Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;
Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;
Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.


GAI-Related Numbers and Quotes from C1Q24 Earnings

<ul>
<li>The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;</li>
<li>Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;</li>
<li>We also notice that general media platforms with ample advertising inventories tend to perform better with AI's help, which is why ads of Tencent's advertising performed better than Baidu's.</li>
</ul>


The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;
Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;
We also notice that general media platforms with ample advertising inventories tend to perform better with AI's help, which is why ads of Tencent's advertising performed better than Baidu's.


A Few Generative AI Takeaways From C1Q24 Earnings

<ul>
<li>On February 15, OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities. The evolution speed of AI inspired awe;</li>
<li>We estimate rival equivalent of SORA, delivered over cloud, will appear in 4-6 months of time but on-device version will take years.</li>
<li>We suggest 2C AI applications, especially video, will be the prime beneficiary</li>
</ul>


On February 15, OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities. The evolution speed of AI inspired awe;
We estimate rival equivalent of SORA, delivered over cloud, will appear in 4-6 months of time but on-device version will take years.
We suggest 2C AI applications, especially video, will be the prime beneficiary


[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

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)

[Blue Lotus Daily-TMT Update]:NTES US/700 HK/BABA US/JD US/AMZN US/PDD US/SHEIN/VIPS US/3690HK/IQ US

Preloading for PC has started, official return on Sept 25; tops iOS chart after update; pre-launch event begins, launch on Sept 26.

Blue Lotus Research Institute

Baidu: Priced to Fail

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

Wium Malan, CFA

A Few Generative AI Takeaways From C1Q24 Earnings

C1Q24 generative AI has made explicit impact on listco earnings. We summarized the observed trends and found China has a great deal of potential to...

Blue Lotus Research Institute

[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities.We...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Blue Lotus Daily-TMT Update]:NTES US/700 HK/BABA US/JD US/AMZN US/PDD US/SHEIN/VIPS US/3690HK/IQ US

​Preloading for PC has started, official return on Sept 25; tops iOS chart after update; pre-launch event begins, launch on Sept 26.

Blue Lotus Research Institute

Baidu: Priced to Fail

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

Wium Malan, CFA

GAI-Related Numbers and Quotes from C1Q24 Earnings

Generative AI (GAI) is already contributing revenues in content creation (game) and ad load optimization (advertising). But the bigger pay off must...

Blue Lotus Research Institute

A Few Generative AI Takeaways From C1Q24 Earnings

C1Q24 generative AI has made explicit impact on listco earnings. We summarized the observed trends and found China has a great deal of potential to...

Blue Lotus Research Institute

[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities.We...

Blue Lotus Research Institute

Preloading for PC has started, official return on Sept 25; tops iOS chart after update; pre-launch event begins, launch on Sept 26.