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

Equity Bottom-Up

<ul>
<li>Tencent reported 4Q22 top line/ bottom line of 0.3%/(3.7%) vs cons. Online ads is stronger, while gaming and G&amp;A slightly missed our est. </li>
<li>We expect that ads will be the main driver, thanks to video accounts. Gaming will have better performance after more approved game codes.</li>
<li>We raise 2023 ads growth from 12% YoY to 15% YoY. Raise TP to HK$ 433. Maintain Tencent as one of the top picks in China Internet</li>
</ul>


Tencent reported 4Q22 top line/ bottom line of 0.3%/(3.7%) vs cons. Online ads is stronger, while gaming and G&amp;A slightly missed our est. 
We expect that ads will be the main driver, thanks to video accounts. Gaming will have better performance after more approved game codes.
We raise 2023 ads growth from 12% YoY to 15% YoY. Raise TP to HK$ 433. Maintain Tencent as one of the top picks in China Internet


[Tencent (700 HK) Target Price Change]: Recovery Aided by Strong Advertising & In Line Game

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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 Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a>, the online banking arm of <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a>, aims to raise up to around US$900m in its Japan listing in April 2023.</li>
<li>RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.</li>
<li>In our earlier notes, we have looked at the company’s past performance. In this note, we talk about the updates from its recent filings.</li>
</ul>



Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.
RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
In our earlier notes, we have looked at the company’s past performance. In this note, we talk about the updates from its recent filings.


Rakuten Bank IPO - Recent Filings Updates and Quick Thoughts on Valuation

Event-Driven

Zhejiang Leapmotor Technologie / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhejiang-leapmotor-technology" target="_blank" data-smartkarma-citation="entities:35968:1" rel="noopener">Leapmotor (9863 HK)</a> raised around US$800m in its Hong Kong IPO, after pricing at the low-end. The stock was listed on 29th Sep 2022, its six-month lockup will expire soon.</li>
<li>LM is a smart EV company based in China, founded in 2015.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO, after pricing at the low-end. The stock was listed on 29th Sep 2022, its six-month lockup will expire soon.
LM is a smart EV company based in China, founded in 2015.
In this note, we will talk about the lock-up dynamics and updates since our last note.


Leapmotor IPO Lock-Up - A Precursor to a Larger Release Later in the Year

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.

<ul><li>Tencent reported 4Q22 results on 22 March: total revenue grew by 1% YoY to RMB145bn, inline with consensus/CMBI estimates.</li><li>FY22 total revenue declined 1% YoY to RMB554.6bn. Non-IFRS net income grew by 19% YoY to RMB29.7bn in 4Q22, versus consensus/CMBI estimate of RMB30.8/30.2bn.</li><li>The earnings growth was mainly due to enhanced operating efficiency and lowbase effect. Full-year non-IFRS net income was down 7% YoY to RMB115.6bn in FY22. </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>

Tencent reported 4Q22 results on 22 March: total revenue grew by 1% YoY to RMB145bn, inline with consensus/CMBI estimates.FY22 total revenue declined 1% YoY to RMB554.6bn. Non-IFRS net income grew by 19% YoY to RMB29.7bn in 4Q22, versus consensus/CMBI estimate of RMB30.8/30.2bn.The earnings growth was mainly due to enhanced operating efficiency and lowbase effect. Full-year non-IFRS net income was down 7% YoY to RMB115.6bn in FY22. 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.

Tencent  (700 HK) – Steady ship and aim for sustainable growth

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> reported 4Q2022 results yesterday. Revenue increased 0.5% YoY to RMB145bn (vs consensus RMB)143.5bn while adjusted OP increased 30.1% YoY to RMB28.4bn (vs consensus RMB37.2bn).</li>
<li>Online advertising revenues saw a 14.8% YoY increase during 4Q2022 after 4-consecutive quarters of decline with January and February showing sustained recovery.</li>
<li>Though Domestic gaming revenues declined in 4Q2022, with new gaming licenses and international expansion, we expect gaming revenues to start growing from 1Q2023.</li>
</ul>



Tencent (700 HK) reported 4Q2022 results yesterday. Revenue increased 0.5% YoY to RMB145bn (vs consensus RMB)143.5bn while adjusted OP increased 30.1% YoY to RMB28.4bn (vs consensus RMB37.2bn).
Online advertising revenues saw a 14.8% YoY increase during 4Q2022 after 4-consecutive quarters of decline with January and February showing sustained recovery.
Though Domestic gaming revenues declined in 4Q2022, with new gaming licenses and international expansion, we expect gaming revenues to start growing from 1Q2023.


Tencent: Gradual Recovery in Earnings; Domestic Gaming to Resume Growth

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

[Tencent (700 HK) Target Price Change]: Recovery Aided by Strong Advertising & In Line Game

We expect that ads will be the main driver, thanks to video accounts. Gaming will have better performance after more approved game codes. We raise...

Blue Lotus Research Institute

Rakuten Bank IPO - Recent Filings Updates and Quick Thoughts on Valuation

Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.

Sumeet Singh

Leapmotor IPO Lock-Up - A Precursor to a Larger Release Later in the Year

Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO, after pricing at the low-end. The stock was listed on 29th Sep 2022, its six-month...

Sumeet Singh

Tencent (700 HK) – Steady ship and aim for sustainable growth

Tencent reported 4Q22 results on 22 March: total revenue grew by 1% YoY to RMB145bn, inline with consensus/CMBI estimates.

CMB International

Tencent: Gradual Recovery in Earnings; Domestic Gaming to Resume Growth

4Q2022 earnings show gradual improvement across its businesses. Online ad on a sustained recovery and new game titles should help domestic game biz...

Shifara Samsudeen, ACMA, CGMA

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