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>NTES: NetEase testing a new magic academy simulation game in Japan (+)</li>
<li>PDD: PDD officially launches 6.18 event, but there aren't many surprises (-)</li>
<li>NIO/LI: NIO announces pricing details of all-new ES6 (- / +)</li>
</ul>


NTES: NetEase testing a new magic academy simulation game in Japan (+)
PDD: PDD officially launches 6.18 event, but there aren't many surprises (-)
NIO/LI: NIO announces pricing details of all-new ES6 (- / +)


China TMT Update May 31 - NTES/PDD/NIO/LI-PDD Officially Launches 6.18 Event (-)

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The June rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI</a> and <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a> indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.</li>
<li>The largest inflows will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/zijin-mining-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:6358:1" rel="noopener">Zijin Mining (2899 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com (9961 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a>. </li>
<li>The largest outflows will be on <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>, <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <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>, <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> and <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>. </li>
</ul>


The June rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest inflows will be on Meituan (3690 HK), JD.com (9618 HK), Zijin Mining (2899 HK), Baidu (9888 HK), Trip.com (9961 HK) and JD Logistics (2618 HK). 
The largest outflows will be on HSBC Holdings (5 HK), Li Auto (2015 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and NetEase (9999 HK). 


HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)

Equity Bottom-Up

<ul>
<li>NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%. </li>
<li>&lt;Justice Mobile&gt; is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase's next potential hit title. </li>
<li>Maintain a BUY with TP unchanged, implying 18X PE in 2023.</li>
</ul>


NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%. 
&lt;Justice Mobile&gt; is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase's next potential hit title. 
Maintain a BUY with TP unchanged, implying 18X PE in 2023.


NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst

<ul>
<li>700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code approvals (+)</li>
<li>ZLAB：First generic version of Olaparib approved in China but impact on Nariparib should be small（/）</li>
<li>MNSO: Miniso opened its global flagship store in NY Times Square with 78k sales in first day</li>
</ul>


700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code approvals (+)
ZLAB：First generic version of Olaparib approved in China but impact on Nariparib should be small（/）
MNSO: Miniso opened its global flagship store in NY Times Square with 78k sales in first day


China TMT Update(May 24) - 700.HK/NTES/BILI/ZLAB/MNSO: Tencent, NetEase, Bilibili Receive Game Code

<ul>
<li>In the evening of May 20th, NetEase held an online conference where it announced release dates for games...</li>
<li>...that It has Previously Announced, and Unveiled New Titles that Will Be Launched in the Future.</li>
<li>Overall, June Will Be the Peak Month for Newly Launched Titles from NetEase, with One Big Game (Justice Mobile) And Two Smaller Games (Badlanders and Racing Mobile)</li>
</ul>


In the evening of May 20th, NetEase held an online conference where it announced release dates for games...
...that It has Previously Announced, and Unveiled New Titles that Will Be Launched in the Future.
Overall, June Will Be the Peak Month for Newly Launched Titles from NetEase, with One Big Game (Justice Mobile) And Two Smaller Games (Badlanders and Racing Mobile)


NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

China TMT Update May 31 - NTES/PDD/NIO/LI-PDD Officially Launches 6.18 Event (-)

NetEase testing a new magic academy simulation game in Japan (+)/NIO/LI: NIO announces pricing details of all-new ES6 (- / +)/ PDD: PDD officially...

Blue Lotus Research Institute

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)

The June rebalance of the Hang Seng family of indices will use todays closing prices for capping. The one-way trade across all stocks across the...

Brian Freitas

NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst

The upcoming key title, Justice Mobile , is set to launch by the end of June. We anticipate that investors may need to wait for some time after...

Blue Lotus Research Institute

China TMT Update(May 24) - 700.HK/NTES/BILI/ZLAB/MNSO: Tencent, NetEase, Bilibili Receive Game Code

700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code (+)；ZLAB：First generic version of Olaparib approved in China（/）；MNSO: Miniso...

Blue Lotus Research Institute

NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)

In the evening of May 20th, NetEase held an online conference where it announced release dates for games that it has previously announced, and...

Blue Lotus Research Institute

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