In today’s briefing:
- Alibaba (BABA US): Buy Ahead of March Quarter Results This Thursday
- Tencent Holdings Ltd (700 HK) – Critical Weekly Close Awaits – 302/330 Buy Zone Achieved in May
- JD Industrials Pre-IPO: Pure Platform for Third Parties and Strong Support from Related Parties
- ImmuneOnco (宜明昂科) Pre-IPO: Clinical Numbers Are yet to Be Convincing
- [Hua Hong (1347 HK) Earnings Review]: Capacity Ramp and High LIBOR Impact Profitability
- Tencent Announced Game Pipeline in Annual Conference “Spark 2023”, and Our Estimations
- Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – The Significance Behind Cannot Be Ignored
Alibaba (BABA US): Buy Ahead of March Quarter Results This Thursday
- We believe BABA’s upcoming 4QFY23 results will surprise the market to the upside by a wide margin in terms of recovery in bottomline, catalyzing trading opportunity for short-term investors.
- We also expect that the results will usher in a period of sustained re-rating for the stock due to China’s continued yet slow consumption recovery and Alibaba’s well-executed restructuring plan.
- Geo-Political risks will not go away, but have been very much reflected in current pricing in our view. Buy ahead of results on Thursday.
Tencent Holdings Ltd (700 HK) – Critical Weekly Close Awaits – 302/330 Buy Zone Achieved in May
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- Our multi-quarter outlook for Tencent Holdings Ltd (700 HK) remains extremely bullish with a multi-quarter target towards 451.95. In April we identified the 302/330 range as a potential buy zone.
- The recent low of 323.20 has preceded an impulsive bullish daily confirmation. This week we await a bullish weekly close (above 343.99) to confirm a renewed MT uptrend bias.
JD Industrials Pre-IPO: Pure Platform for Third Parties and Strong Support from Related Parties
- JD Industrials is a pure trading platform for third party wholesalers.
- The company avoids the competition with its clients and the risk of overdue account receivable.
- JD Industrials has brand support from JD.com and logistics support form JD Logistics.
ImmuneOnco (宜明昂科) Pre-IPO: Clinical Numbers Are yet to Be Convincing
- ImmuneOnco, a China-based clinical-stage biotechnology company, plans to raise up to US$ 100m via a Hong Kong listing.
- In this note, we examine the company’s core product, namelyIMM01, a CD47 target fusion protein. We also look at the company’s management and pre-IPO investors.
- We think its clinical data is not yet convincing and we are not so keen on the company.
[Hua Hong (1347 HK) Earnings Review]: Capacity Ramp and High LIBOR Impact Profitability
- Hua Hong reported C1Q23 top-line, IFRS EBIT, and non-IFRS net income in-line, (15.3%), and 13.3% vs. our est., and in-line, (3.4%), and 34.9% vs. cons., respectively.
- Hua Hong reported 1Q23 utilization rate of 103%, higher than peers, which we believe is due to (1) large EV and new energy exposure, and (2) 8” price cuts.
- Despite near-term margin deterioration, we maintain Hua Hong’s BUY and HK$ 35 TP due to auto IC exposure and localization, implying 11x FY24 PE.
Tencent Announced Game Pipeline in Annual Conference “Spark 2023”, and Our Estimations
- On May 15th, Tencent holds its annual game conference “Spark 2023” and releases its latest game pipeline, including updates of 15 launched games and 20 new games.
- Considering Tencent’s large size, only a game that has the potential to exceed RMB 10 bn in annual gross billing could be considered as a positive sign.
- Yet, we don’t find any game title that could reach over RMB 10bn annualized gross billing in the game pipeline.
Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – The Significance Behind Cannot Be Ignored
- Different from other TCM companies, Pientzehuang is based on the investment logic of consumer goods, which breaks away from the price constraints of drug market. Meanwhile, Pientzehuang has formed a “monopoly”.
- As a well-known trademark/time-honored brand in China, and representing the quintessence of Chinese culture, Pientzehuang would be supported by national policies,and is consistent with China’s efforts to expand domestic demand/consumption.
- Although Pientzehuang’s performance was disappointing last year, its strategic height and significance are obviously different from other TCM. We think that this is crucial to the investment value of Pientzehuang.
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