In today’s briefing:
- Alibaba (9988 HK): “Department One” in Reorganization
- HKBN (1310 HK): China Mobile Is the Latest to Show Interest
- ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines
- [PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat
- PetroChina Co Ltd (857 HK) – 5.28 Target Achieved (+13%) In 8 Trading Days
- Anta Sports (2020 HK): Our View After Placement
- Nreal: AR/MR Technology Player Recognised for Affordable Glasses
- [NetEase (NTES US, BUY, US$106) TP Change]: Eggy Party Could Be Compared to Roblox
Alibaba (9988 HK): “Department One” in Reorganization
- Alibaba broke down Taobao Tmall Center, the most important department, into three departments.
- Industry Development Department One is actually “other businesses” after the reorganization.
- Following Department One will help investors to understand Alibaba’s financials.
HKBN (1310 HK): China Mobile Is the Latest to Show Interest
- Reuters reported that China Mobile (600941 CH) is exploring a potential buyout of HKBN Ltd (1310 HK). The shares surged 12.3% to HK$6.57, above I Squared’s rumoured HK$6.00 offer.
- To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme offer of around HK$8.50 would likely be required.
- PAG is also a rumoured bidder. The flurry of interest around HKBN suggests a good probability that one of the bidders will come through with a formal offer.
ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines
- ZJLD Group (ZJLD HK) is looking to raise between US$775m-US$933m (including the oversubscription option) in its IPO by selling 564.3m shares at a price range of HK$10.78-HK$12.98/share.
- ZJLD Group (ZJLD HK) will not get Fast Entry to any indices but should be added to the HSCI and Stock Connect in September.
- Peer performance has not been great this year and that could weigh on the ZJLD Group (ZJLD HK) listing.
[PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat
- We expect PDD to report 1Q23’s revenue and non-GAAP net income 6.1% and 23.8% ahead of consensus, respectively.
- PDD entered an adjustment period, reflected in lower S&M expenditure both overseas and domestically, which has led to declining PDD DAU and moderating growth of Temu’s GMV and losses.
- We raise our PDD’s 2023’s EPS estimate by 14%~ to reflect better-than-expected cost control. We maintain PDD’s BUY rating and US$ 95 TP, implying 21x 2023 P/E.
PetroChina Co Ltd (857 HK) – 5.28 Target Achieved (+13%) In 8 Trading Days
- 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.
- On 31 March 2023 we published a bullish recommendation in PetroChina Co Ltd (857 HK), targeting an initial 13% upswing from 4.68 to 5.28. Longer term scope identified to 6.50/6.80.
- Initial target at 5.28 (+13%) was achieved on 17 April 2023 (8 trading days). We continue to highlight strong evidence of LT bullish trend change targeting 6.50/6.80 (+40%) multi-quarter.
Anta Sports (2020 HK): Our View After Placement
- The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
- With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated.
- An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta’s 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth.
Nreal: AR/MR Technology Player Recognised for Affordable Glasses
- Founded in 2017 in Beijing, Nreal.ai (1690070D CH) is an Augmented Reality (AR)/ mixed reality (MR) technology company that develops and sells AR glasses.
- The company’s glasses have received wide recognition as they are designed to be lightweight, comfortable and affordable, making them more accessible to consumers.
- The company has raised more than USD240m in funding and as per the company, we could expect an IPO over the next 18-24 months.
[NetEase (NTES US, BUY, US$106) TP Change]: Eggy Party Could Be Compared to Roblox
- We estimate that NetEase’s 1Q23 revenue/non-GAAP net income is 1.4%/9.4% vs cons; and 2023’s is 7.5%/12.3% vs cons. We suggest that <Eggy Party> has a lot of similarities with <Roblox>.
- Four things the market may underestimate about NetEase: 1) the life cycle of <Eggy Party>; 2) <Eggy Party>’s overseas launch; 3)<Justice Mobile>; and 4) AIGC.
- We raise NetEase’s TP from US$ 99 to US$ 106, and this remains to be one of our top BUY ideas in China internet.
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