HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Tongcheng Travel Holdings  / Equity Bottom-Up

<ul>
<li>The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> is a key beneficiary.</li>
<li>In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. </li>
<li>Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> can be reversed.</li>
</ul>


The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. Tongcheng Travel Holdings (780 HK) is a key beneficiary.
In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. 
Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against Trip.com (TCOM US) can be reversed.


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>Improved transparency from management is an important positive. Additional disclosures were included on entity IRR in the results presentation (attached, not previously disclosed). </li>
<li>Profitability target for the consolidated ecommerce businesses moved forward to H2 FY24 from H1 FY25. Significant narrowing of trading losses in H1 FY24 to $36m from $256m in H1 FY23.</li>
<li>As management 'commit to highlight value where and when possible', we think an IPO could very well be on the horizon.</li>
</ul>


Improved transparency from management is an important positive. Additional disclosures were included on entity IRR in the results presentation (attached, not previously disclosed). 
Profitability target for the consolidated ecommerce businesses moved forward to H2 FY24 from H1 FY25. Significant narrowing of trading losses in H1 FY24 to $36m from $256m in H1 FY23.
As management 'commit to highlight value where and when possible', we think an IPO could very well be on the horizon.


Naspers (NPN SJ), Prosus (PRX NA) H1 FY24 Results, Key Takeaways

<ul>
<li>In yesterday’s trading session, Naspers and Prosus followed the market lower leading up to and after the US CPI print (headline worse than expected, core inline). </li>
<li>Naspers and Prosus closed 1.4% and 1.9% lower, reducing Naspers’ discount to Prosus’ market value to its narrowest level since Prosus listed. The discount closed at 10.4% (currently 10.9%).</li>
<li>Naspers has outperformed Prosus by 2.2% during the last 3 trading days. </li>
</ul>


In yesterday’s trading session, Naspers and Prosus followed the market lower leading up to and after the US CPI print (headline worse than expected, core inline). 
Naspers and Prosus closed 1.4% and 1.9% lower, reducing Naspers’ discount to Prosus’ market value to its narrowest level since Prosus listed. The discount closed at 10.4% (currently 10.9%).
Naspers has outperformed Prosus by 2.2% during the last 3 trading days. 


Naspers: Discount to Prosus Market Value Reaches Narrowest Level Since Prosus Listing

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Down 66% from its 2021 IPO price, <a href="https://www.smartkarma.com/entities/full-truck-alliance" target="_blank" data-smartkarma-citation="entities:33429:1" rel="noopener">Full Truck Alliance (YMM US)</a> has been a loser for investors, though we would argue its underlying performance on fundamentals has been mixed</li>
<li>We believe FTA's narrow focus on expanding its lead in China's spot, inter-city FTL trucking market blinds management to the broader role it must pursue to ensure long-term growth</li>
<li>FTA should aggressively funnel users into its Transaction Commission segment and invest in building a Transportation Management Software offering to attract and retain customers</li>
</ul>


Down 66% from its 2021 IPO price, Full Truck Alliance (YMM US) has been a loser for investors, though we would argue its underlying performance on fundamentals has been mixed
We believe FTA's narrow focus on expanding its lead in China's spot, inter-city FTL trucking market blinds management to the broader role it must pursue to ensure long-term growth
FTA should aggressively funnel users into its Transaction Commission segment and invest in building a Transportation Management Software offering to attract and retain customers


Full Truck Alliance: Currently Less Than 'Full Loaded', but Issues Are Fully Fixable

Thematic (Sector/Industry)

<ul>
<li>On Monday evening in the US, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> reported Q422 results that beat low expectations, but shares in the US traded down about 3% in Tuesday's session</li>
<li>As for guidance, management offered few specifics but noted a sharp improvement in booking activity early in 2023, but also highlighted an outbound capacity bottleneck at the airlines</li>
<li>Just as Covid's negative impacts papered over the secular challenges facing Trip.com, the dramatic near-term recovery in travel activity also obscures longstanding threats</li>
</ul>


On Monday evening in the US, Trip.com (TCOM US) reported Q422 results that beat low expectations, but shares in the US traded down about 3% in Tuesday's session
As for guidance, management offered few specifics but noted a sharp improvement in booking activity early in 2023, but also highlighted an outbound capacity bottleneck at the airlines
Just as Covid's negative impacts papered over the secular challenges facing Trip.com, the dramatic near-term recovery in travel activity also obscures longstanding threats


Trip.com Q4/2022 Results: Back to Reality?

China

Trip.com Group Ltd. provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services.

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Trip.com (TCOM US)

Tongcheng Travel (780 HK): We Are Back

CNY travel rush is expected to boost air passenger volume by 9.8% vs. 2019, benefiting Tongcheng. Its focus on lower-tier cities and strong EPS...

Osbert Tang, CFA

Naspers (NPN SJ), Prosus (PRX NA) H1 FY24 Results, Key Takeaways

Management intend to make PayU India a listable business by the second half of next year. Insight includes important takeaways from the results...

DMA

Naspers: Discount to Prosus Market Value Reaches Narrowest Level Since Prosus Listing

Recap on how the Naspers and Prosus discounts traded last week. Naspers’ discount to Prosus’ market value reached an all time low. Could see...

DMA

Full Truck Alliance: Currently Less Than 'Full Loaded', but Issues Are Fully Fixable

FTA's shares are down 66% vs their IPO price, but underlying performance has been mixed. To ensure long-term growth, FTA should follow our two-part...

Tracking Traffic

Trip.com Q4/2022 Results: Back to Reality?

As China emerges from Covid, old challenges remain for Trip.com. After posting solid Q422 results and pointing to signs of a strong recovery, these...

Daniel Hellberg

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