In this briefing:
- Meituan Dianping (美团点评): Thoughts Before Lock-Up Expiry
- Weibo (WB): Revenues Slowed Down Significantly in 4Q2018, Failed in Transition
- Global Manufacturing PMI Slump at Odds with Equity and Commodity Price Rebound
- Ctrip (CTRP): Overcame Two Difficulties in Q4, But Market Over-Reacted to “Global No. 1”
- Taiwan Investors Factor In China Recovery
1. Meituan Dianping (美团点评): Thoughts Before Lock-Up Expiry
Meituan Dianping, the largest O2O platform in China, was listed on September 20th last year and lock-up expiry will be on March 20th. The stock has returned -13% since listing.
- As it heads into lock-up expiry on March 20th, we will examine Meituan Dianping shareholder structure and potential shares up for sale.
- Meituan was included by MSCI recently and will be eligible for the Hong Kong Connect soon thanks to rule amendment.
- The company delivered a decent topline growth in 3Q2018 but its profit fell short of expectation. We highlight potentials from the food supply chain solution. We also discuss implication from MoBike acquisition.
- We review our SOTP valuation of Meituan and believe there is an upside.
Our previous coverage on Meituan Dianping
- Meituan Dianping IPO Preview: The China O2O Powerhouse
- Meituan Dianping IPO: Understand the Moat From 3 Company Milestones
- Meituan Dianping (美团点评) IPO: Thoughts on Valuation – The Market Structure and the Variables (Part 3)
- Meituan Dianping (美团点评) IPO: New Data, Mobike, Liquidity and Refined Valuation (Part 4)
- Meituan Dianping (美团点评) Post-IPO Lunch-Bite: Near Term Upside and The Liquidity Angle
2. Weibo (WB): Revenues Slowed Down Significantly in 4Q2018, Failed in Transition
- The advertising revenues slowed down significantly in 4Q2018.
- We believe the content transition from politics to entertainment was not as good as the management expected.
- We believe WB will not defeat Tencent’s WeChat.
- We believe the stock price has downside of 9%.
3. Global Manufacturing PMI Slump at Odds with Equity and Commodity Price Rebound
The slump in the global manufacturing PMIs that is broad-based in major economies and alarming in Japan, Korea and Taiwan, appears to reflect a disruption in global trade that may relate to US tariff policy. Services PMIs, on the other hand, are relatively stable and have recovered recently, and may help the global economy avoid a recession. India’s PMIs have been relatively strong and may account for solid Indian currency and equity market performance. The slump in the global manufacturing PMI is at odds with stronger global equities and commodity prices this year. The market appears to be building confidence that the US-China trade dispute will be resolved, and the Chinese stimulus and a patient Fed will combine to revive manufacturing PMIs is coming months.
4. Ctrip (CTRP): Overcame Two Difficulties in Q4, But Market Over-Reacted to “Global No. 1”
* The recovery in 4Q2018 shows that CTRP has already survived the new law and the new competitor in 2018.
* We believe EPS will grow 12% in 2019.
* However, we believe the market has already over-reacted to the news last November that CTRP became the largest online travel agency.
* We set a target price of USD23.80, which is 32% below the market price.
5. Taiwan Investors Factor In China Recovery
It is time to go increase exposure to Taiwanese equities, if you haven’t already. Like bourses around the region, Taiwan’s stock market has rebounded from its January low and is up over 10% in two months. Underpinning our and investor optimism are expectations that Taiwan stands to benefit disproportionately from the fiscal and monetary policy easing underway in China, that China and the US will get to some kind of trade deal and a positive reaction to TSMC’s 2019 dividend pay-out plan.
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