Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>In 3Q22, the game market size shrank in China and globally.</li>
<li>The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.</li>
<li>We believe the key impact for 2023 is the predictable license approval.</li>
</ul>


In 3Q22, the game market size shrank in China and globally.
The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.
We believe the key impact for 2023 is the predictable license approval.


Tencent (700 HK): Game Market Weak in 3Q22 and to Be Worse in 2023

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.

<div><div><div><div><ul><li>NetEase delivered sturdy revenue growth of 13.8% YoY in 1H22, driven by resilient performance of its legacy titles and the launch of several key titles in 2H21.</li><li>We forecast total revenue growth of 7.3/6.3% YoY in 2023/2024E, but the growth could be accelerated by several highly-anticipated titles in the pipeline and enhanced overseas games market expansion strategy.</li><li>Supported by its game business’ steady profit margin and cash flow generation capability, NetEase is well-positioned to invest for long-term quality growth, expanding into international markets, focusing on quality games development, and cultivating tenacious user community.</li></ul><p><em>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.</em></p></div></div></div></div>

NetEase delivered sturdy revenue growth of 13.8% YoY in 1H22, driven by resilient performance of its legacy titles and the launch of several key titles in 2H21.We forecast total revenue growth of 7.3/6.3% YoY in 2023/2024E, but the growth could be accelerated by several highly-anticipated titles in the pipeline and enhanced overseas games market expansion strategy.Supported by its game business’ steady profit margin and cash flow generation capability, NetEase is well-positioned to invest for long-term quality growth, expanding into international markets, focusing on quality games development, and cultivating tenacious user community.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.

NetEase Inc. (NTES US) – Sturdy Game and Content Developing Leader

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Chinese online game market size decreased by 19.1% YoY and 12.6% QoQ in 3Q22.</li>
<li>Tmall, Alibaba’s direct sales app, started a mini-program in Tencent’s WeChat.</li>
<li>State Post Bureau announced that it would revise the express delivery rules, especially for green packaging.</li>
</ul>


Chinese online game market size decreased by 19.1% YoY and 12.6% QoQ in 3Q22.
Tmall, Alibaba’s direct sales app, started a mini-program in Tencent’s WeChat.
State Post Bureau announced that it would revise the express delivery rules, especially for green packaging.


China Internet Weekly (24Oct2022): Tencent, Alibaba, Kuaishou, JD.com, NetEase, Zhihu

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Thematic (Sector/Industry)

<ul><li>Chinese video game companies led by Tencent and NetEase are turning to global business expansion in search of fresh revenue sources as domestic growth plateaus and regulatory scrutiny tightens. </li><li>They’re joining e-commerce platforms and online tutors as China’s internet businesses look beyond China for differing reasons.</li><li>While weakening consumption at home is driving e-commerce platforms, video game developers are pushing out their business boundaries and creating more jobs abroad chiefly out of concerns over tightening domestic regulations.</li></ul>

Chinese video game companies led by Tencent and NetEase are turning to global business expansion in search of fresh revenue sources as domestic growth plateaus and regulatory scrutiny tightens. They’re joining e-commerce platforms and online tutors as China’s internet businesses look beyond China for differing reasons.While weakening consumption at home is driving e-commerce platforms, video game developers are pushing out their business boundaries and creating more jobs abroad chiefly out of concerns over tightening domestic regulations.

Chinese Video Game Developers Take On the World

Cross Asset Strategy

<ul>
<li>
<p>Chinese video game developers take on the world</p>
</li>
<li>
<p>China’s graft watchdog says 4.6 million investigated for corruption since 2012</p>
</li>
<li>
<p>Chinese airlines to add international routes in wake of eased Covid rules</p>
</li>
</ul>



Chinese video game developers take on the world


China’s graft watchdog says 4.6 million investigated for corruption since 2012


Chinese airlines to add international routes in wake of eased Covid rules



CX Daily: Chinese Video Game Developers Take On the World

China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

Tencent (700 HK): Game Market Weak in 3Q22 and to Be Worse in 2023

In 3Q22, the game market size shrank in China and globally. The playing time limit severely impacted the domestic market. We believe the key impact...

Ming Lu

NetEase Inc. (NTES US) – Sturdy Game and Content Developing Leader

NetEase delivered sturdy revenue growth of 13.8% YoY in 1H22, driven by resilient performance of its legacy titles and the launch of several key...

CMB International

China Internet Weekly (24Oct2022): Tencent, Alibaba, Kuaishou, JD.com, NetEase, Zhihu

Chinese online game market size decreased by 19.1% YoY and 12.6% QoQ in 3Q22. Tmall started a mini-program in WeChat. State Post Bureau revised...

Ming Lu

Chinese Video Game Developers Take On the World

Chinese video game companies led by Tencent and NetEase are turning to global business expansion in search of fresh revenue sources

Caixin Global

CX Daily: Chinese Video Game Developers Take On the World

Chinese video game developers take on the world. China’s graft watchdog says 4.6 million investigated for corruption since 2012.

Caixin Global

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