Quantitative Equity Analyst, DMA

Charlotte van Tiddens, CFA

Quantitative Equity Analyst

Technology-First Company

DMA is a technology-first company that provides an end-to-end SaaS solution to institutional investors. DMA enables regulated entities like asset managers, wealth managers, investment managers and financial advisors to connect their front and back office, break silos and reduce headcount.

Event-Driven

<ul><li>Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SAST</li><li>In this note, we unpack what is priced and how Tencent has performed relative to constituents in the HSTECH index since our last update (29 April).</li><li>We also provide an update on how the discounts of Naspers and Prosus have traded.</li></ul>

Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SASTIn this note, we unpack what is priced and how Tencent has performed relative to constituents in the HSTECH index since our last update (29 April).We also provide an update on how the discounts of Naspers and Prosus have traded.

Tencent Q1 FY24 Results Due, a Look into What Is Priced

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.

Equity Bottom-Up

<ul>
<li>China announced game approval for the May batch. The number of games approved remained at a higher level than 2023.</li>
<li>The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.</li>
<li>None of the listed companies that we followed received approval for mobile games.</li>
</ul>


China announced game approval for the May batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
None of the listed companies that we followed received approval for mobile games.


Tencent/Netease: Major Names Get Zeroed in May, Smells of Common Prosperity?

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy 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

<ul>
<li>Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;</li>
<li>Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;</li>
<li>Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.</li>
</ul>


Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;
Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;
Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.


GAI-Related Numbers and Quotes from C1Q24 Earnings

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.</li>
<li>Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell. </li>
<li>No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.</li>
</ul>


SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.
Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell. 
No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.


HK Connect SOUTHBOUND Flows (To 17 May 2024); Banks, Banks, Banks, Tencent, and Big SOEs

<ul>
<li>The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;</li>
<li>Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;</li>
<li>We also notice that general media platforms with ample advertising inventories tend to perform better with AI's help, which is why ads of Tencent's advertising performed better than Baidu's.</li>
</ul>


The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;
Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;
We also notice that general media platforms with ample advertising inventories tend to perform better with AI's help, which is why ads of Tencent's advertising performed better than Baidu's.


A Few Generative AI Takeaways From C1Q24 Earnings

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

East Money Information Co., Ltd. operates online financial information platform.  The Company's products include internet advertising and financial data.

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

Hithink RoyalFlush Information Network Co Ltd provides online financial data, data analysis software, and other financial software system.

Hithink RoyalFlush Information Network (300033 CH)

People.cn Company Limited mainly engages in internet advertising, information services, mobile value-added and technical services. The Company's main products include original messages, government information services, public opinion research and consulting, mobile news, and ISP services.

Autohome Inc is an online destination for automobile consumers in China.  The Company delivers comprehensive, independent and interactive content to automobile buyers and owners.

Wangsu Science & Technology Co., Ltd. provides online business solutions in China. The Company also provides Content Delivery Network (CDN), and Internet Data Centers (IDC).

Shanghai Wangsu Science & Technology Co (300017 CH)

Beijing Sinnet Technology Company Limited provides customers with broadband access services, IDC and its value-added services, and other internet integrated services. The Company's core business are broadband access services, IDC and its value-added services.

GDS Holdings Limited operates as a holding company. The Company, through its subsidiaries, develops and operates data centers. GDS Holdings offers risk and security management, information technology planing, remote monitoring, cloud hosting, virtualization, disaster recovery, and remote data protection services.

INESA Intelligent Tech Inc. operates in the IT industry. The Company designs and manages cloud servers and big data applications for businesses. INESA Intelligent also manufactures electronic components.

eBay Inc. operates an online trading community.  The Company's service is used by buyers and sellers for the exchange of products and services such as coins, collectibles, computers, memorabilia, stamps and toys, as well as concert and sporting tickets.  eBay also offers, through a subsidiary, secure online payment services.

VeriSign Inc provides domain names and Internet security, enabling the world to connect online with reliability and confidence, anytime, anywhere. The Company ensures the security, stability and resiliency of key Internet infrastructure including the .com and .net top-level domains among others. VeriSign also offers intelligence-driven security services.

GoDaddy, Inc. provides a cloud-based web platform for small businesses, web design professionals and individuals. The Company's platform provides applications that help them connect to their customers, manage their businesses and get found online.

Naver Corp. provides Internet site with web portal services, such as search engine, online game and content development.  The Company also offers marketing service through text and banner advertisement.

CoStar Group Inc. provides building-specific information to the United States commercial real estate industry and related industries. The Company's database details office and industrial space. The database provides digitized photographs and floor plan images on individual commercial buildings in the company's markets.

Yandex NV operates an Internet website in Russia.  The Company's website offers an Internet search engine, news, shopping information, blogs, photographs and videos.  Yandex earns its revenues from online advertising.

SPS Commerce Inc provides on-demand supply chain management solutions through an online hosted software suite.  The Company uses pre-built integrations to eliminate on-premise software and support staff to shorten supply cycle times, optimize inventory levels and reduce costs.

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet; ranging from live and on-demand streaming video capabilities to conventional content on websites, to tools that help people transact business and reach out to new and existing customers.

NEXTDC Ltd. develops data centers. The Company develops and operates carrier and systems integrator neutral data centers in Australia. NEXTDC's customers will also be able to use the data centers as connectivity and content hubs.

AppFolio, Inc. provides cloud-based software solutions. The Company offers a cloud-based property management software that allows apartment and residential property managers to market, manage, and grow their business. AppFolio conducts business in the United States.

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)

Tencent Q1 FY24 Results Due, a Look into What Is Priced

Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SAST. In this note, we unpack what is priced and how...

DMA

Tencent/Netease: Major Names Get Zeroed in May, Smells of Common Prosperity?

China approves May batch of games at a higher rate than in 2023, but slower than March. We observed that there is no mobile game approval for...

Ke Yan, CFA, FRM

HK Connect SOUTHBOUND Flows (To 17 May 2024); Banks, Banks, Banks, Tencent, and Big SOEs

SOUTHBOUND's streak of weekly net inflows continues unabated. Some of the flows may be driven by Central Huijin buying banks, and some may be...

Travis Lundy

A Few Generative AI Takeaways From C1Q24 Earnings

C1Q24 generative AI has made explicit impact on listco earnings. We summarized the observed trends and found China has a great deal of potential to...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tencent Q1 FY24 Results Due, a Look into What Is Priced

Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SAST. In this note, we unpack what is priced and how...

DMA

Tencent/Netease: Major Names Get Zeroed in May, Smells of Common Prosperity?

​China approves May batch of games at a higher rate than in 2023, but slower than March. We observed that there is no mobile game approval for...

Ke Yan, CFA, FRM

GAI-Related Numbers and Quotes from C1Q24 Earnings

Generative AI (GAI) is already contributing revenues in content creation (game) and ad load optimization (advertising). But the bigger pay off must...

Blue Lotus Research Institute

HK Connect SOUTHBOUND Flows (To 17 May 2024); Banks, Banks, Banks, Tencent, and Big SOEs

SOUTHBOUND's streak of weekly net inflows continues unabated. Some of the flows may be driven by Central Huijin buying banks, and some may be...

Travis Lundy

A Few Generative AI Takeaways From C1Q24 Earnings

C1Q24 generative AI has made explicit impact on listco earnings. We summarized the observed trends and found China has a great deal of potential to...

Blue Lotus Research Institute

China approves May batch of games at a higher rate than in 2023, but slower than March. We observed that there is no mobile game approval for...