Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.</li>
<li>This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. </li>
<li>Minimal flows on the HSI rebalance to be effective on 9 September. </li>
</ul>


The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. 
Minimal flows on the HSI rebalance to be effective on 9 September. 


Hang Seng Index Sep24 Rebal - No Name Changes, Some Capping, 1% One-Way Flow - Total 0️⃣🍔

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

Equity Bottom-Up

<ul>
<li>Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;</li>
<li>Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;</li>
<li>We raise TP to HK$485 and keep Tencent as our TOP PICK.</li>
</ul>


Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;
Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;
We raise TP to HK$485 and keep Tencent as our TOP PICK.


[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come

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>2023 marked our eighth year covering Equity Capital Markets in Asia Pacific. In 2023, IPOs didn’t pick up much from the low base of 2022  while placements showed upward momentum.</li>
<li>We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115 placements.</li>
<li>For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.</li>
</ul>


2023 marked our eighth year covering Equity Capital Markets in Asia Pacific. In 2023, IPOs didn’t pick up much from the low base of 2022  while placements showed upward momentum.
We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115 placements.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.


Aequitas 2023 IPOs and Placements Performance Review - IPOs Forming a Low Base, Placements Pick Up

<ul>
<li>SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes. </li>
<li>Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.</li>
<li>Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)</li>
</ul>


SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes. 
Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.
Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)


HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On "Tiny" Overall Volume, ETFs Big

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 2Q24 results on 14 Aug: total revenue grew by 8% YoY to RMB161.1bn, in line with our/consensus estimate of RMB160.9/161.4bn; nonIFRS operating profit grew by 27% YoY to RMB58.4bn, largely in line with our estimate of RMB57.7bn; non-IFRS net income increased by 53% YoY to RMB57.3bn and was 17/18% ahead of our/consensus estimate, mainly due to the increase in share of profit of associates (+RMB6.6bn YoY).</li><li>Underpinned by strong growth in game gross receipt, we are upbeat on the revenue growth acceleration and earnings growth in 2H24.</li><li>E-commerce ecosystem development will support consumer internet revenue growth in mid-to-long term, while FBS revenue should bounce back as economic momentum recovers. </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 2Q24 results on 14 Aug: total revenue grew by 8% YoY to RMB161.1bn, in line with our/consensus estimate of RMB160.9/161.4bn; nonIFRS operating profit grew by 27% YoY to RMB58.4bn, largely in line with our estimate of RMB57.7bn; non-IFRS net income increased by 53% YoY to RMB57.3bn and was 17/18% ahead of our/consensus estimate, mainly due to the increase in share of profit of associates (+RMB6.6bn YoY).Underpinned by strong growth in game gross receipt, we are upbeat on the revenue growth acceleration and earnings growth in 2H24.E-commerce ecosystem development will support consumer internet revenue growth in mid-to-long term, while FBS revenue should bounce back as economic momentum recovers. 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) - Inline 2Q24 Results; Games Business to Drive Revenue Growth Acceleration in 2H24E

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)

Hang Seng Index Sep24 Rebal - No Name Changes, Some Capping, 1% One-Way Flow - Total 0️⃣🍔

The HSI committee promised changes to rebalance towards better sector representation and a move to 100 names. That was a couple years ago. Progress...

Travis Lundy

[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come

Tencent's Q2 revenue and profit met expectations, with weak fintech revenue offset by growth in advertising, gaming, and AI. Analysts raise target...

Blue Lotus Research Institute

Aequitas 2023 IPOs and Placements Performance Review - IPOs Forming a Low Base, Placements Pick Up

2023 was our eight year of covering Asia ECM. We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115...

Sumeet Singh

HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On "Tiny" Overall Volume, ETFs Big

SOUTHBOUND volumes this past week were very low overall, but there was decent net buying aided by BIG buying of ETFs and large caps and very little...

Travis Lundy

Tencent (700 HK) - Inline 2Q24 Results; Games Business to Drive Revenue Growth Acceleration in 2H24E

Tencent reported 2Q24 results on 14 Aug: total revenue grew by 8% YoY to RMB161.1bn, in line with our/consensus estimate of RMB160.9/161.4bn

CMB International

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Hang Seng Index Sep24 Rebal - No Name Changes, Some Capping, 1% One-Way Flow - Total 0️⃣🍔

The HSI committee promised changes to rebalance towards better sector representation and a move to 100 names. That was a couple years ago. Progress...

Travis Lundy

[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come

​Tencent's Q2 revenue and profit met expectations, with weak fintech revenue offset by growth in advertising, gaming, and AI. Analysts raise target...

Blue Lotus Research Institute

Aequitas 2023 IPOs and Placements Performance Review - IPOs Forming a Low Base, Placements Pick Up

2023 was our eight year of covering Asia ECM. We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115...

Sumeet Singh

HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On "Tiny" Overall Volume, ETFs Big

SOUTHBOUND volumes this past week were very low overall, but there was decent net buying aided by BIG buying of ETFs and large caps and very little...

Travis Lundy

Tencent (700 HK) - Inline 2Q24 Results; Games Business to Drive Revenue Growth Acceleration in 2H24E

Tencent reported 2Q24 results on 14 Aug: total revenue grew by 8% YoY to RMB161.1bn, in line with our/consensus estimate of RMB160.9/161.4bn

CMB International

Tencent's Q2 revenue and profit met expectations, with weak fintech revenue offset by growth in advertising, gaming, and AI. Analysts raise target...