In today’s briefing:
- [Alibaba (BABA US, BUY, TP US$120) Earnings Review]: Progress Made, Better Times Ahead
- Quiddity Leaderboard HSIII: ~US$160mn One-Way Flows in Dec 24; 3 ADDs/DELs in Mar 25 Likely
- Quiddity Leaderboard Hang Seng Biotech Dec 24: Positive Flows for Beigene and Innovent Biologics
- CM Hi-Tech (2115 HK): 12th December Shareholder Vote
- KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved
- [NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile
- Lucror Analytics – Morning Views Asia
- CiDi IPO Valuation Analysis: High Valuation Is Warranted Due To Unicorn Status/Hyper Growth Profile
- Pre-IPO Mokingran Jewellery Group (PHIP Updates) – Some Points Worth the Attention
- RERE: 3Q24 Earnings – Adjusted Operating Income Beat on Higher Revenues/Margins Investing for Growth
[Alibaba (BABA US, BUY, TP US$120) Earnings Review]: Progress Made, Better Times Ahead
- BABA reported CY3Q24 top line, adjusted EBITA and non-GAAP net profit (1.0%), (1.6%) and in-line vs. consensus.
- CMR improved amid monetization changes that narrowed the growth gap with GMV, but also eliminated some low-single profit sellers from its GMV.
- Cloud and overseas e-commerce revenue also saw good growth and improved profitability. All of BABA’s key businesses are sputtering to life while macro tailwinds are also favorable.
Quiddity Leaderboard HSIII: ~US$160mn One-Way Flows in Dec 24; 3 ADDs/DELs in Mar 25 Likely
- The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
- The indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.
- In this insight, we take a look at our updated flow estimates for December 2024. Separately, we have also presented our latest March 2025 index review predictions.
Quiddity Leaderboard Hang Seng Biotech Dec 24: Positive Flows for Beigene and Innovent Biologics
- The HS HK-Listed Biotech Index (“Hang Seng Biotech Index”) represents the 50 largest biotech companies listed in Hong Kong (HKEX).
- The official index changes and indicative weights for the December 2024 index rebal event will be announced on Friday 22nd November 2024.
- In this insight, we take a look at our updated flow expectations.
CM Hi-Tech (2115 HK): 12th December Shareholder Vote
- Back on the 14th October, cleanroom play CM Hi-Tech (2115 HK) announced a pre-conditional Offer by way of a Scheme from MayAir Technology (688376 CH) and CM Hi-Tech’s senior management.
- The pre-conditional long stop for NDRC, Mofcom and SAFE was 60 days, which appeared highly optimistic. I was wrong, and the pre-cons were secured in a legendary 18 days.
- The Scheme Doc is now out, with a Court Meeting to be held on the 12 December. Expected payment on the 15 January. The IFA says fair & reasonable.
KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved
- Both online marketing and “other revenues” grew strongly in 3Q24.
- Both the gross margin and the operating margin improved over the same period last year.
- We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.
[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile
- NetEase reported C3Q24 revenue, GAAP operating profit and GAAP net income in line, (3.6%) and (5.3%) vs. our estimates, and in line, (4.4%) and (5.0%) vs. consensus.
- Mobile game revenue decline is less a concern due to imminent pipeline launches, but PC game’s significantly beat is a positive surprise.
- We raised the TP to US$118 for the better outlook of new game launches.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Yinson Production, Xiaomi Corp, ReNew Energy
- In the US, October housing starts declined 3.1% m-o-m to an annualised 1.31 mn units (-1.5% e / -1.9% revised p), the slowest pace in three months as builders put off projects in the wake of hurricanes Helene and Milton.
- Meanwhile, October building permits (a proxy for future construction) eased 0.6% m-o-m to an annualised 1.42 mn units.
CiDi IPO Valuation Analysis: High Valuation Is Warranted Due To Unicorn Status/Hyper Growth Profile
- Changsha Intelligent Driving Institute, more commonly known as CiDi, filed for an IPO in Hong Kong. The company was valued at ~RMB9B in its last private funding round.
- CiDi was backed by HongShan Capital, Xinding Capital, Founder Hesheng Investment, Legend Holdings, Baidu Venture, and Lens Technology, among others.
- The terms of the IPO were not disclosed. CiDi is a category winner that is addressing a large TAM (~$10B by 2030) with room for hyper growth for years.
Pre-IPO Mokingran Jewellery Group (PHIP Updates) – Some Points Worth the Attention
- The skyrocketing gold prices have driven up the prices of gold jewelry, but actually dampen the enthusiasm of many people to buy gold jewelry, which will directly affect MOKINGRAN’s performance.
- MOKINGRAN’s prediction of gold price is incorrect. For an industry veteran, MOKINGRAN shouldn’t make such mistakes. The error in the judgment of important raw material trends is worth investors’ vigilance.
- We think that valuation of MOKINGRAN should be lower than that of Lao Feng Xiang (600612 CH)/Chow Tai Seng Jewellery (002867 CH)/Chow Tai Fook Jewellery (1929 HK) and industry average.
RERE: 3Q24 Earnings – Adjusted Operating Income Beat on Higher Revenues/Margins Investing for Growth
- Key 3Q24 takeaways include: 1) steady revenue growth reflecting government initiatives to promote consumer spending and trade-in activity, increasingly leveraging the company’s strategic partnership with JD.com, and rising brand awareness/visibility 2) we expect multi-category contribution to continue to build, as management leverages the company’s pricing and customer service competitive advantages to increasingly tap into massive/growing gold and luxury goods recycling markets 3) management remains focused on growing the number of new store openings over the next several years to meet rising demand trends and further expand the footprint and 4) senior officials seem intent on increasingly reinvesting in the business to accelerate customer acquisition growth, while remaining focused on managing expenses to support profitability.
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