Daily Brief China: Tencent, Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, KE Holdings , MGM China Holdings, Country Garden Holdings Co, Hang Seng Index and more

• We expect that Tencent’s C3Q23’s revenue/non-IFRS operating profit/IFRS net income to be 2.3%/3.3%/4.2% above consensus.
• We raised estimates of Tencent’s international game growth to 12% YoY to reflect the success. We also expect Tencent’s advertising business to benefit from e-commerce advertisers’ competition.
• We raised the Target Price to HK$425, which implies 22.4X PE in 2024.

• Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F.
• SMIC took into consideration geopolitical instability and allowed equipment vendors to submit orders in advance. 
• Currently, only a few manufacturers are stockpiling smartphones in response to this wave. The overall industry remains relatively stable.

• Revenues of US$568.5 million, down 10% sequentially and down 9.7% YoY, at the bottom of the previously guided range.
• Net loss of $25.8 million compared to a profit of $7.8 million in the previous quarter and $65.5 million in the year ago period.
• With current quarter gross margins in the 2-5% range, HHGrace has flipped from best in class in H123 to the worst in class now.

• KE Holdings’ (Beike) C3Q23 revenue was 7.7%/11.6% higher than our est./cons., non-GAAP net income beat our est./cons. by 35%/119%. Existing home sales and non-transaction biz drove the bottom line beat.
• We expect Beike C4Q23 to grow 20% YoY, 33% in existing home and 5% in new home, supported by gradual recovery of home transaction and Beike’s market share gain;
• We reiterate BUY rating and raised TP by US$0.5 to US$24.5/ADS, also taking into account of progress in home renovation and rental management.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Softbank Group
2. Sunny Optical Technology Group
3. Seazen (Formerly Future Land)
4. Melco Resorts & Entertainment
5. Yanlord Land

and more…

• Reuters reported on 8-November that China’s State Council has asked the Guangdong local government to arrange the rescue of Country Garden Holding.
• Ping An’s spokesperson said the company had not been approached by the government.
• There is also no guarantee on when bondholders will get paid back and how much the recovery value will be.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces