Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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>Revenue decreased by 1.6% YoY in 3Q22, less than a decrease of 3.1% YoY in 2Q22.</li>
<li>A governmental media gave positive comment to game industry for first time.</li>
<li>We believe the stock has an upside of 52% for year end 2023.</li>
</ul>


Revenue decreased by 1.6% YoY in 3Q22, less than a decrease of 3.1% YoY in 2Q22.
A governmental media gave positive comment to game industry for first time.
We believe the stock has an upside of 52% for year end 2023.


Tencent (700 HK): Rev Down by 1.6% in 3Q22, But Game Sees Positive Comment from Gov for First Time

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In mid-August at mid-day, a Reuters <a href="https://www.reuters.com/markets/deals/exclusive-tencent-plans-divest-24-bln-meituan-stake-sources-2022-08-16/" target="_blank" rel="noopener">article</a> suggested <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> would seek to divest its $24bn stake in <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> this year. The stock fell 9% that afternoon.</li>
<li>The general underlying suggestion was that regulators wanted them to sell. Other articles suggested later both aspects were "untrue" </li>
<li>With Q3 earnings, Tencent today <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/1116/2022111600357.pdf" target="_blank" rel="noopener">announced</a> a Jan23 distribution (Mar23 settlement) of 958,121,562 Meituan shares (1 for every 10 Tencent shares held). There are significant flow and index implications.</li>
</ul>


In mid-August at mid-day, a Reuters article suggested Tencent (700 HK) would seek to divest its $24bn stake in Meituan (3690 HK) this year. The stock fell 9% that afternoon.
The general underlying suggestion was that regulators wanted them to sell. Other articles suggested later both aspects were "untrue" 
With Q3 earnings, Tencent today announced a Jan23 distribution (Mar23 settlement) of 958,121,562 Meituan shares (1 for every 10 Tencent shares held). There are significant flow and index implications.


Tencent Distribution of Meituan Shares Official - Impact and Index Implications

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-music-entertainment" target="_blank" data-smartkarma-citation="entities:27255:1" rel="noopener">Tencent Music (TME US)</a>  reported 3Q2022 results yesterday. Revenue declined 5.6% YoY to RMB7.4bn (vs consensus RMB7.0bn) while adjusted OP for the quarter increased 14.0% YoY to RMB765m.</li>
<li>Revenue from social entertainment services decreased 20% YoY which was partially helped offset by 18.8% YoY increase in online music services revenues.</li>
<li>GPM and OPM improved due to huge spending cuts on content, revenue sharing and S&amp;M and we are yet to see if TME can sustain this without compromising user growth.</li>
</ul>



Tencent Music (TME US)  reported 3Q2022 results yesterday. Revenue declined 5.6% YoY to RMB7.4bn (vs consensus RMB7.0bn) while adjusted OP for the quarter increased 14.0% YoY to RMB765m.
Revenue from social entertainment services decreased 20% YoY which was partially helped offset by 18.8% YoY increase in online music services revenues.
GPM and OPM improved due to huge spending cuts on content, revenue sharing and S&amp;M and we are yet to see if TME can sustain this without compromising user growth.


TME: Online Music Biz Resumes Growth but Social Entertainment Further Drops

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

<ul>
<li>In Nov 2021, Sapphire Foods Limited (SFL), one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO. </li>
<li>The lock-up on its shareholders will expire soon, with a number of PE funds on its register</li>
<li>In this note, we will talk about the upcoming lockup expiry.</li>
</ul>


In Nov 2021, Sapphire Foods Limited (SFL), one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO. 
The lock-up on its shareholders will expire soon, with a number of PE funds on its register
In this note, we will talk about the upcoming lockup expiry.


Sapphire Foods IPO - Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry

<ul>
<li>NetEase and Activision Blizzard will possibly terminate their cooperation next January.</li>
<li>Singles’ Day sales were not very successful for e-commerce apps such as Alibaba and JD.com.</li>
<li>IQiyi announced a revenue share rule to short TV series producers, including cost per mille and membership fee.</li>
</ul>


NetEase and Activision Blizzard will possibly terminate their cooperation next January.
Singles’ Day sales were not very successful for e-commerce apps such as Alibaba and JD.com.
IQiyi announced a revenue share rule to short TV series producers, including cost per mille and membership fee.


China Internet Weekly (14Nov2022): NetEase, Activision Blizzard, Alibaba, Tencent, IQiyi, Suning.com

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)

Tencent (700 HK): Rev Down by 1.6% in 3Q22, But Game Sees Positive Comment from Gov for First Time

Revenue decreased by 1.6% YoY in 3Q22. The governmental media gave positive comment to game industry for first time. We believe the stock has an...

Ming Lu

Tencent Distribution of Meituan Shares Official - Impact and Index Implications

Tencent will distribute 90% of its holdings in Meituan in an in-specie distribution, which goes ex- on 5 January and gets settled 24 March 2023....

Travis Lundy

Sapphire Foods IPO - Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry

In Nov 2021, Sapphire Foods Limited, one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO. In this...

Sumeet Singh

China Internet Weekly (14Nov2022): NetEase, Activision Blizzard, Alibaba, Tencent, IQiyi, Suning.com

NetEase and Activision Blizzard will possibly terminate their cooperation next January. Singles’ Day sales are not successful. iQiyi announced...

Ming Lu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tencent (700 HK): Rev Down by 1.6% in 3Q22, But Game Sees Positive Comment from Gov for First Time

Revenue decreased by 1.6% YoY in 3Q22. The governmental media gave positive comment to game industry for first time. We believe the stock has an...

Ming Lu

Tencent Distribution of Meituan Shares Official - Impact and Index Implications

Tencent will distribute 90% of its holdings in Meituan in an in-specie distribution, which goes ex- on 5 January and gets settled 24 March 2023....

Travis Lundy

TME: Online Music Biz Resumes Growth but Social Entertainment Further Drops

TME's earnings beat estimates and price went up 29% which seems unwarranted. Social ent. biz has further declined and margin improvement driven by...

Shifara Samsudeen, ACMA, CGMA

Sapphire Foods IPO - Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry

In Nov 2021, Sapphire Foods Limited, one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO. In this...

Sumeet Singh

China Internet Weekly (14Nov2022): NetEase, Activision Blizzard, Alibaba, Tencent, IQiyi, Suning.com

NetEase and Activision Blizzard will possibly terminate their cooperation next January. Singles’ Day sales are not successful. iQiyi announced...

Ming Lu