In today’s briefing:
- PCCW And HKT’s 2022 Results
- [Alibaba (BABA US) Target Price Change]: Cut TP for Intensified Competition in ECommerce
- Pinduoduo: Entering the Big League
- [Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase
- Lu DaoPei Medical Group Pre-IPO – Ramp up in Progress but Looks Promising
- Chinese Regulators Question Auto Supplier Over Next-Generation Battery Claims
- [NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts
- Meituan Gears Up for Hong Kong Expansion With Rider Recruitment
- Chinese Fintech Firm IceKredit Gears up for SEA Expansion
- Hang Seng CEI (HSCEI) – Is Q1 2023 a Correction that Mirrors the Correction of Q1 2009?
PCCW And HKT’s 2022 Results
- PCCW Ltd (8 HK)‘s FY22 revenue, EBITDA, and profit increased by 2%, 6%, and 11% to HK$36.1bn, HK$12.4bn, and HK$834mn.
- HKT Ltd (6823 HK)‘s revenue, EBITDA, and profit increased by 0.5%, 3%, and 0.4% to HK$34.1bn, HK$13.1bn, and HK$4.7mn.
- The dividend pass-through is 100%. PCCW’s current discount to NAV is in line with its 52-week average.
[Alibaba (BABA US) Target Price Change]: Cut TP for Intensified Competition in ECommerce
- BABA reported F3Q23 (C4Q22) total revenue largely in line with our est. and cons. Non-GAAP net profit beat our est. and cons. by 5% and 13% YoY.
- Taobao will face pricing pressure against JD and PDD. We expect BABA to focus on user content, which leads to improvement in app time spent and advertising.
- We cut TP from US$130 to US$110 to reflect intensified competition in eCommerce. Maintain BUY rating due to recovery in CMR and international retail, and rebound in cloud business.
Pinduoduo: Entering the Big League
- Investor interest in Pinduoduo (PDD US) has surged, hitting record-high levels of fund ownership this month.
- Over the period from the recent lows in March 2022 to today, Pinduoduo’s +20% increase in the percentage of funds invested was the highest across all stocks in China.
- New positions from JSS All China (+7.49%) and Tamaq China Champions (+4.99%) were complemented by increased weights from China Fund (+5.35%) and GAM China Evolution (+5.26%).
[Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase
- Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%.
- We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&D investment in AI related technologies.
- Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.
Lu DaoPei Medical Group Pre-IPO – Ramp up in Progress but Looks Promising
- Lu Daopei Medical Group (1816743D CH) is looking to raise around US$400m in its upcoming Hong Kong IPO.
- Lu DaoPei Medical Group (LDPM) is a hospital operator focusing on hematology healthcare services. As per F&S, it was the largest hematology healthcare services provider in China by 2021 revenue.
- LDPM has supported its growth through its flagship hospital. However, it is unclear whether the firm will be able to sustainably maintain profitability in the long term.
Chinese Regulators Question Auto Supplier Over Next-Generation Battery Claims
- China’s securities regulator is investigating auto component supplier Nanjing Aolian AE&EA Co. Ltd. (300585.SZ -3.76%) after its stock price fell more than 30% this week when questions arose about its expertise in a key solar panel technology.
- The China Securities Regulatory Commission (CSRC) has started scrutinizing the firm on suspicion of providing false information to the public about its new business, according to a note that Nanjing Aolian received Thursday night.
- The investigation added to doubts about the company’s expertise in perovskite batteries at a time when it is defending itself from a separate regulatory inquiry into whether it took advantage of market interest in the technology to inflate its stock price.
[NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts
- NetEase’s 4Q22 revenue was in-line with cons., while its non-GAAP net income missed cons. by (8%) because of a one-off, non-renewal contract with Blizzard.
- We still see NetEase as a BUY because of <Eggy Party>’s overseas publishing and <Justice Mobile>, which we estimate will contribute about 1-2bn/3-4bn RMB for annual gross billing, respectively.
- We maintain BUY and TP US$ 87, which implies 16.0X PE in 2023.
Meituan Gears Up for Hong Kong Expansion With Rider Recruitment
- Chinese food delivery giant Meituan launched a recruitment campaign in Hong Kong signaling a push into the Asian financial hub dominated by foreign on-demand service leaders foodpanda and Deliveroo.
- Meituan is hiring delivery workers including motorcycle and bike riders as well as so-called foot soldiers who can dispatch orders by foot, a recruitment document showed.
- As an incentive, Meituan said new riders who complete a certain volume of orders will receive a bonus of HK$2,500 ($319).
Chinese Fintech Firm IceKredit Gears up for SEA Expansion
- IceKredit, a Chinese AI-focused credit risk and management company, plans to export its AI-powered products and solutions to financial institutions in Southeast Asia.
- Founded in 2015, IceKredit helps lenders to establish an automated end-to-end digital lending process – from application pre-screening to collections – by providing risk mitigation products and services.
- In the past two years, the firm has raised over US$58 million in series C funding, a large part of which will be used for its Southeast Asian expansion, the company says.
Hang Seng CEI (HSCEI) – Is Q1 2023 a Correction that Mirrors the Correction of Q1 2009?
- 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.
- The HSCEI has produced 2 material failures below 5000 in the last 17 years, in October 2008 and October 2022. Aggressive bullish multi-month reversals followed in both cases.
- The 2008 upswing paused when a bearish monthly reversal pattern was delivered in January 2009, but only for 2 months. The bearish monthly reversal pattern in February 2023 appears similar.
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