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.

Equity Bottom-Up

<ul><li>TME will report its 2Q23 results on 15 August.</li><li>We expect 2Q23 total revenue to grow 4% YoY to RMB7.2bn (3% below consensus), mainly due to enhanced live streaming procedures started in late 2Q and its subsequent impact to TME’s social entertainment revenue.</li><li>But online music business continues to remain on track of progressive growth, driven by the robust subscription business and recovery of ads business. </li></ul>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.

TME will report its 2Q23 results on 15 August.We expect 2Q23 total revenue to grow 4% YoY to RMB7.2bn (3% below consensus), mainly due to enhanced live streaming procedures started in late 2Q and its subsequent impact to TME’s social entertainment revenue.But online music business continues to remain on track of progressive growth, driven by the robust subscription business and recovery of ads business. 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.

TME (TME US) – Solid Earnings Growth Despite Social Entertainment Business Adjustment

Thematic (Sector/Industry)

<ul><li>Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.</li><li>From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;</li><li>2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.com</li></ul>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.

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.comContent 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.

Internet - 1Q24 recap & our three stock-picking ideas

<ul><li>Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR of 10.7/9.8%.</li><li>The growth of total online retail sales GMV continued to outpace that of online physical goods GMV, which was likely due to the robust growth in online travel bookings during the CNY holiday.</li><li>Leading e-commerce platforms are prioritizing GMV and revenue growth over margin improvement in 2024, and guided to reinvest incremental operating profit generated to drive further business growth, which likely indicates more intensified industry competition. </li></ul>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.

Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR of 10.7/9.8%.The growth of total online retail sales GMV continued to outpace that of online physical goods GMV, which was likely due to the robust growth in online travel bookings during the CNY holiday.Leading e-commerce platforms are prioritizing GMV and revenue growth over margin improvement in 2024, and guided to reinvest incremental operating profit generated to drive further business growth, which likely indicates more intensified industry competition. 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.

Internet - 2M24 online retail sales recap

<ul><li>TME reported 1Q23 results on 16 May. Total revenue increased by 5% YoY to RMB7.0bn in 1Q23 and was in line with consensus/CMBI estimate.</li><li>Non-IFRS net income grew by 57% YoY to RMB1.4bn in 1Q23, beating consensus/CMBI estimate by 11/9%, mainly due to strong growth of core music business (+34% YoY) and effective expense control.</li><li>Music business delivered a record-high net addition of 5.9mn subscribers in 1Q23, with 11% YoY APPRU growth, which demonstrates TME’s successful execution of its quality growth strategy. </li></ul>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.

TME reported 1Q23 results on 16 May. Total revenue increased by 5% YoY to RMB7.0bn in 1Q23 and was in line with consensus/CMBI estimate.Non-IFRS net income grew by 57% YoY to RMB1.4bn in 1Q23, beating consensus/CMBI estimate by 11/9%, mainly due to strong growth of core music business (+34% YoY) and effective expense control.Music business delivered a record-high net addition of 5.9mn subscribers in 1Q23, with 11% YoY APPRU growth, which demonstrates TME’s successful execution of its quality growth strategy. 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.

TME (TME US) – Strong core music business supports 1Q23 earnings beat

<ul><li>TME announced its 4Q22 financial results on 21 March.</li><li>Total revenue declined 2% YoY to RMB7.4bn in 4Q22, inline with consensus and CMBI estimates.</li><li>2022 Full-year revenue declined 9% YoY, mainly due to soft social entertainment and ad businesses amid macro uncertainty. </li></ul>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.

TME announced its 4Q22 financial results on 21 March.Total revenue declined 2% YoY to RMB7.4bn in 4Q22, inline with consensus and CMBI estimates.2022 Full-year revenue declined 9% YoY, mainly due to soft social entertainment and ad businesses amid macro uncertainty. 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.

TME (TME US) – Expect a year of mild recovery in FY23

China

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

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Tencent Music (TME US)

Internet - 1Q24 recap & our three stock-picking ideas

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our...

CMB International

Internet - 2M24 online retail sales recap

Based on NBS data, 2M24 online retail sales GMV/online physical goods GMV reached RMB2.2tn/1.8tn, up 15.3/14.4% YoY, which implied a two-year CAGR...

CMB International

TME (TME US) – Strong core music business supports 1Q23 earnings beat

TME reported 1Q23 results on 16 May. Total revenue increased by 5% YoY to RMB7.0bn in 1Q23 and was in line with consensus/CMBI estimate.

CMB International

TME (TME US) – Expect a year of mild recovery in FY23

TME announced its 4Q22 financial results on 21 March. Total revenue declined 2% YoY to RMB7.4bn in 4Q22, inline with consensus and CMBI estimates.

CMB International

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