In today’s briefing:
- China Telcos: Send In The Clouds
- Kuaishou（1024.HK）4Q22 Preview: Competition and Restructure Are Pending Issues
- UBTech Robotics IPO Preview
- CStone Pharmaceuticals Placement (2616.HK) – There Is No Certainty that the Dilemma Will Reverse
China Telcos: Send In The Clouds
- The rapid adoption of cloud computing has led to China boasting the world’s second-largest cloud computing market.
- This migration to the cloud is in lock-step with global customer needs: scale, greater efficiency, and availability; together with a reduction in capex and infrastructure complexity.
- The big three PRC telcos are firmly in the mix, with each announcing 100%+ growth in revenue for their cloud businesses in 1H22. Expect that trend to continue.
Kuaishou（1024.HK）4Q22 Preview: Competition and Restructure Are Pending Issues
- We expect that Kuaishou’s 4Q22 top line and bottom line would be 0.2%/3.7% vs cons, as major business lines are recovering with stimuli of CNY promotion campaigns.
- However, we estimate that its 2023 top line/bottom line would miss cons. by (0.9%)/(14.2%) due to our concerns of increasing competition and internal restructuring.
- Maintain SELL rating but raise TP to HK$ 56 to reflect on-track recovering trend as the macro improves.
UBTech Robotics IPO Preview
- UBTech Robotics is trying to complete its IPO in Hong Kong in the coming weeks. UBTech Robotics is a leading artificial intelligence based robotics company headquartered in China.
- UBTech Robotics received very fat valuations in the past couple of years. Back in January 2021, it was reported that the company’s valuation reached as high as $7 billion.
- In China’s smart education robot based solution market, UBTech Robotics is the number one player.
CStone Pharmaceuticals Placement (2616.HK) – There Is No Certainty that the Dilemma Will Reverse
- The revenue brought by CStone’s differentiated layout of pipeline does not match the R&D investment. CStone needs to in-license more late-stage products, but the Company is not cash rich.
- CStone was incubated by WuXi Bio. Its business model is“VC+IP+CRO”. Cstone doesn’t have independent R&D capability. The increasingly low cost performance of in-licensed products has made the capital “reconsider” .
- Cstone doesn’t have the potential to be a biopharma as it licensed out the key/core candidates. Its future valuation growth would be “discounted”. Corporate governance/instability is also a concern.
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