Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<p>Amidst the regulatory scrutiny and other medium-term uncertainties resulting from the shift in government policy, the International Commerce Retail business segment of <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> has become an ever so important component of Alibaba’s portfolio of businesses.</p><p>The segment includes several highly popular e-commerce platforms like Lazada, Daraz, AliExpress and trendyol with a total of 265m annual active consumers.</p>

Amidst the regulatory scrutiny and other medium-term uncertainties resulting from the shift in government policy, the International Commerce Retail business segment of Alibaba Group (9988 HK) has become an ever so important component of Alibaba’s portfolio of businesses.The segment includes several highly popular e-commerce platforms like Lazada, Daraz, AliExpress and trendyol with a total of 265m annual active consumers.

International Commerce Retail: Lazada & AliExpress Are Losing Their Battles with Shopee

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.

<p>Following a period of exceptionally strong performance, driven by the stay-at-home culture during the onset of the COVID-19 pandemic in 2020, the Chinese online games market is again experiencing significant headwinds, not only from very tough comps but from a resurgence in regulatory pressure. Although this forms part of wider scrutiny on various facets of the Chinese tech industry (including online education, payment platforms, ridesharing, etc.) recent regulatory efforts have included a further tightening of regulation limiting youth gamers’ online access which has also now led to a delay in new games approvals. </p><p>This is very similar to what we saw in 2018 when, after an exceptionally strong 2017 revenue growth period, the Chinese government stepped up regulatory scrutiny specifically targeting youth gamers which ultimately led to a suspension of new games approvals from March 2018 until December 2018. </p><p>Given the material impact that recent regulatory approvals should have on revenue generation for <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 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>, in this insight, I analyse the potential for negative revenue growth surprises, and further sell-side earnings downgrades, by comparing the current situation to that faced in 2018.</p>

Following a period of exceptionally strong performance, driven by the stay-at-home culture during the onset of the COVID-19 pandemic in 2020, the Chinese online games market is again experiencing significant headwinds, not only from very tough comps but from a resurgence in regulatory pressure. Although this forms part of wider scrutiny on various facets of the Chinese tech industry (including online education, payment platforms, ridesharing, etc.) recent regulatory efforts have included a further tightening of regulation limiting youth gamers’ online access which has also now led to a delay in new games approvals. This is very similar to what we saw in 2018 when, after an exceptionally strong 2017 revenue growth period, the Chinese government stepped up regulatory scrutiny specifically targeting youth gamers which ultimately led to a suspension of new games approvals from March 2018 until December 2018. Given the material impact that recent regulatory approvals should have on revenue generation for Tencent (700 HK) and NetEase (9999 HK), in this insight, I analyse the potential for negative revenue growth surprises, and further sell-side earnings downgrades, by comparing the current situation to that faced in 2018.

NetEase, Tencent: Risk of Negative Games Revenue Surprises Skewed to Tencent, Rather than NetEase

Thematic (Sector/Industry)

<p>This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. </p><p><strong><em>Companies mentioned this week:</em></strong></p><p><a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> </p>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:Kakao Corp (035720 KS), Naver Corp (035420 KS), Tencent (700 HK), NetEase (9999 HK), NIO Inc (NIO US) 

Global Emerging Markets Weekly: 10 September 2021

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p>For our next webinar, we have the pleasure of welcoming Insight Provider <a href="https://www.smartkarma.com/profiles/evelyn-zhang-9bc04495-920c-480f-b9e9-1c086391bea6" target="_blank" data-smartkarma-citation="accounts:21235" rel="noopener">Evelyn Zhang</a>, who will examine the impact of recent policy decisions on the future of China's tech companies.</p><div><div><h3>The webinar will be hosted on Wednesday, 15 September 2021, 17:00 SGT/HKT.</h3></div></div><div><div>
<div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=85993480041" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>
<p>Evelyn Zhang has over a decade of experience at firms like Morgan Stanley, Bank of America Merrill Lynch, Agricultural Bank of China, and Lenovo. Her expertise includes research and investment into tech companies of all stages. She has a particular focus on emerging technologies, but is experienced in asset management, private equity, strategic investment, investment banking, equity research, and corporate finance.</p>
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For our next webinar, we have the pleasure of welcoming Insight Provider Evelyn Zhang, who will examine the impact of recent policy decisions on the future of China's tech companies.The webinar will be hosted on Wednesday, 15 September 2021, 17:00 SGT/HKT.
Register for the Webinar here
Evelyn Zhang has over a decade of experience at firms like Morgan Stanley, Bank of America Merrill Lynch, Agricultural Bank of China, and Lenovo. Her expertise includes research and investment into tech companies of all stages. She has a particular focus on emerging technologies, but is experienced in asset management, private equity, strategic investment, investment banking, equity research, and corporate finance.


Smartkarma Webinar | Law and Order: What the New Data Security Laws Mean for China's Tech Sector

Shifara Samsudeen, ACMA, CGMA

Event-Driven

<p>The government of China announced last week a set of rules aimed at the country’s gaming sector in order to reduce the long-term impact of gaming on the country’s younger population (those under 18 years of age). Those new rules on limiting the mobile gaming time, we think was taken lightly by the market, however, regulators continue to ramp up regulation and tighten their grip on the mobile gaming sector. Executives from <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> , <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>  and other mobile gaming companies were called in for a meeting on Wednesday and were instructed to end their “Solitary focus of pursuing profit” in order to prevent minors from getting addicted to games. This no doubt will require gaming companies to change their game rules and designs that induce addiction and at the same time, changes to operating models that will severely impact revenue and margins of games.</p><p>As China tackles to bring down gaming addiction among minor users, SCMP reports that the Chinese regulators will temporarily freeze approvals for new online games.</p>

The government of China announced last week a set of rules aimed at the country’s gaming sector in order to reduce the long-term impact of gaming on the country’s younger population (those under 18 years of age). Those new rules on limiting the mobile gaming time, we think was taken lightly by the market, however, regulators continue to ramp up regulation and tighten their grip on the mobile gaming sector. Executives from Tencent (700 HK) , NetEase (9999 HK)  and other mobile gaming companies were called in for a meeting on Wednesday and were instructed to end their “Solitary focus of pursuing profit” in order to prevent minors from getting addicted to games. This no doubt will require gaming companies to change their game rules and designs that induce addiction and at the same time, changes to operating models that will severely impact revenue and margins of games.As China tackles to bring down gaming addiction among minor users, SCMP reports that the Chinese regulators will temporarily freeze approvals for new online games.

Tencent: Temporary Freeze of New Game Approvals to Further Impact Slowing Games Business

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)

International Commerce Retail: Lazada & AliExpress Are Losing Their Battles with Shopee

Even though it seems a bit extreme, we think it is difficult to completely rule out the possibility that Alibaba’s valuation multiples can re-rate...

Oshadhi Kumarasiri

NetEase, Tencent: Risk of Negative Games Revenue Surprises Skewed to Tencent, Rather than NetEase

In this insight, I analyse the potential for negative revenue growth surprises, and further earnings downgrades, for NetEase and Tencent, by...

Wium Malan, CFA

Global Emerging Markets Weekly: 10 September 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Smartkarma Webinar | Law and Order: What the New Data Security Laws Mean for China's Tech Sector

On 15 September, 5pm SGT, join our webinar featuring Insight Provider Evelyn Zhang, who will examine the impact of recent policy decisions on the...

Smartkarma Research

Tencent: Temporary Freeze of New Game Approvals to Further Impact Slowing Games Business

The new video game approval freeze in China in 2018 severely impacted Tencent’s online games revenues where it declined YoY for three consecutive...

Shifara Samsudeen, ACMA, CGMA

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