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>On February 15, OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities. The evolution speed of AI inspired awe;</li>
<li>We estimate rival equivalent of SORA, delivered over cloud, will appear in 4-6 months of time but on-device version will take years.</li>
<li>We suggest 2C AI applications, especially video, will be the prime beneficiary</li>
</ul>


On February 15, OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities. The evolution speed of AI inspired awe;
We estimate rival equivalent of SORA, delivered over cloud, will appear in 4-6 months of time but on-device version will take years.
We suggest 2C AI applications, especially video, will be the prime beneficiary


[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

Thematic (Sector/Industry)

<ul>
<li>Gaming Sector Update/NTES US: NPPA Releases November Domestic and Imported Game Approvals(+)</li>
<li>3690 HK/Douyin:Douyin Local Life’s Double 11 Sales Increase by 53% YoY, Indicating Rising Consumer Spending in China, Bodes Well for Meituan.(+)</li>
<li>BABA US/PDD US/JD US: Taobao/Tmall launches “Go Bargain” feature (+/+/+)</li>
</ul>


Gaming Sector Update/NTES US: NPPA Releases November Domestic and Imported Game Approvals(+)
3690 HK/Douyin:Douyin Local Life’s Double 11 Sales Increase by 53% YoY, Indicating Rising Consumer Spending in China, Bodes Well for Meituan.(+)
BABA US/PDD US/JD US: Taobao/Tmall launches “Go Bargain” feature (+/+/+)


[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

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 announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.</li>
<li>We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and that number will change over the next 3 weeks depending on performance.</li>
</ul>


The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.

Meituan (3690 HK)'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.
We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of Meituan (3690 HK) and that number will change over the next 3 weeks depending on performance.


Meituan (3690 HK): Big Passive Selling in December

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

<ul>
<li>China announced game approval for the Jan batch. The number of games approved has increased compared to recent months.</li>
<li>The pace of China game approval appears to be accelerating, to the same level as pre-tightening.</li>
<li>Tencent gets one game approved but we don't see that the acceleration of game approval benefits big names proportionally.</li>
</ul>


China announced game approval for the Jan batch. The number of games approved has increased compared to recent months.
The pace of China game approval appears to be accelerating, to the same level as pre-tightening.
Tencent gets one game approved but we don't see that the acceleration of game approval benefits big names proportionally.


Tencent/Netease: Game Approval Accelerates, but Not for Big Names

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

<ul>
<li>US-Led tech chain may push for AI phone features, which itself is a great strategy to pull the tech industry out of doldrums. It will pressure Huawei, in our opinion;</li>
<li>We believe there are other stories unfolding in the AI era, including availability of AI killer apps, the rivalry between super apps and OS vendors, and the growing China/Ex-China chasm.</li>
<li>Our Top Pick is Tencent and Kuaishou. We maintain Xiaomi at SELL.</li>
</ul>


US-Led tech chain may push for AI phone features, which itself is a great strategy to pull the tech industry out of doldrums. It will pressure Huawei, in our opinion;
We believe there are other stories unfolding in the AI era, including availability of AI killer apps, the rivalry between super apps and OS vendors, and the growing China/Ex-China chasm.
Our Top Pick is Tencent and Kuaishou. We maintain Xiaomi at SELL.


[Blue Lotus Hardware Sector Update]: What Does AI Phone Bring to the Tech Competition?

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 (700 HK)

[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities.We...

Blue Lotus Research Institute

[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

Blue Lotus Research Institute

Meituan (3690 HK): Big Passive Selling in December

Meituan's recent underperformance will result in smaller passive selling than originally forecast. Passive trackers are now estimated to sell 27.4m...

Brian Freitas

Tencent/Netease: Game Approval Accelerates, but Not for Big Names

China's game approval process is picking up pace, with an increased number of games approved, but big names like Tencent are not benefiting...

Ke Yan, CFA, FRM

[Blue Lotus Hardware Sector Update]: What Does AI Phone Bring to the Tech Competition?

US-led tech chain may drive AI phone features, boosting the industry and pressuring Huawei. Other AI trends include killer apps, super app...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Blue Lotus Technology Sector Update]: LLM Advances Give China and US Both Opportunities

OpenAI, Google and Amazon launched respective AI advances in video LLM (SORA), long text (Gemini 1.5), and text-to-speech (BASE) abilities.We...

Blue Lotus Research Institute

[Blue Lotus Daily-TMT Update]:Gaming Sector Update/NTES US/3690 HK/Douyin/BABA US/PDD US/JD US/700HK

​China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

Blue Lotus Research Institute

Meituan (3690 HK): Big Passive Selling in December

Meituan's recent underperformance will result in smaller passive selling than originally forecast. Passive trackers are now estimated to sell 27.4m...

Brian Freitas

Tencent/Netease: Game Approval Accelerates, but Not for Big Names

​China's game approval process is picking up pace, with an increased number of games approved, but big names like Tencent are not benefiting...

Ke Yan, CFA, FRM

[Blue Lotus Hardware Sector Update]: What Does AI Phone Bring to the Tech Competition?

​US-led tech chain may drive AI phone features, boosting the industry and pressuring Huawei. Other AI trends include killer apps, super app...

Blue Lotus Research Institute

China's gaming sector sees growth in domestic and imported game approvals, Douyin's Double 11 sales surge indicates higher consumer spending, and...

China's game approval process is picking up pace, with an increased number of games approved, but big names like Tencent are not benefiting...

US-led tech chain may drive AI phone features, boosting the industry and pressuring Huawei. Other AI trends include killer apps, super app...