In today’s briefing:
- Alibaba Cloud – On Path to Fetch Zero Dollar Valuation
- Meituan (3690 HK): 2Q22, Reduced Loss, But Unnecessarily Reclassifies Revenue
- China Internet Weekly (29Aug2022): Tencent, JD, JD Health, KE, Dada, Kanzhun
- Meituan: Earnings Beat Estimates but Sudden Change in Segmental Disclosure Is Dubious
- Pinduoduo (PDD): 2Q22, Viewpoint Opposite to Marvelous Performance
- US Inflation Reduction Act: Bifurcated Impact on Korean Chaebols (Hyundai, LG, Hanwha, SK & Samsung)
- Berli Jucker (BJC TB) – Well-Packaged Recovery Proxy
- Investree Completes Acquisition of Amar Bank, Increases Stake to 18.4 Per Cent
- Duolingo. User Growth And Cash Flow Metrics Remain Robust. Management Raised FY22 Guidance
- IPAR: Primetime of the Year Begins
Alibaba Cloud – On Path to Fetch Zero Dollar Valuation
- State-Owned-Entities (SOEs) in Tianjin are set to complete the migration of their data from private sector operators like Alibaba Group (9988 HK) to a state-backed cloud by 30th Sept 2022.
- This has already started to tip the balance of power in Chinese cloud computing in favour of politically favoured cloud operators like China Telecom.
- We think the impact of nationalising the cloud could escalate to Alibaba Cloud’s overseas markets as most of its customers overseas are Chinese companies with a global presence.
Meituan (3690 HK): 2Q22, Reduced Loss, But Unnecessarily Reclassifies Revenue
- The revenue growth rate decelerated, but operating loss shrank in 2Q22.
- We believe the the revenue reclassification is unnecessary and suspicious.
- We set a downside of 19% and a price target of HK$148.
China Internet Weekly (29Aug2022): Tencent, JD, JD Health, KE, Dada, Kanzhun
- Tencent invested in Samsung Insurance China Co. Ltd. and is the second largest shareholder.
- JD Health’s revenue increased by 48% YoY, but the stock plunged.
- KE revenue shrank by 45% YoY due to the weak property market.
Meituan: Earnings Beat Estimates but Sudden Change in Segmental Disclosure Is Dubious
- Meituan (3690 HK) reported 2Q2022 results on Friday. Revenue grew 16.4% YoY to RMB50.9bn (vs consensus RMB49.2bn) while operating losses dropped to 1.0% of revenue to RMB493m (vs consensus RMB3.3bn).
- The company has changed its segmental reporting to a new reporting structure; Core Local Commerce, New Initiatives and Unallocated items.
- Disclosures on key operating matrices such as GTV and no. of hotel room nights have not been provided and difficult to assess the performance of core businesses.
Pinduoduo (PDD): 2Q22, Viewpoint Opposite to Marvelous Performance
- In 2Q22, revenue growth rate accelerated and the operating profit achieved record high.
- However, we believe PDD does not fully explain its exclusive advantages over competitors.
- We set a downside of 19% and a price target of US$47 for year end 2023.
US Inflation Reduction Act: Bifurcated Impact on Korean Chaebols (Hyundai, LG, Hanwha, SK & Samsung)
- The US Inflation Reduction Act (IRA) is likely to have a bifurcated impact on key Korean companies including Hanwha Solutions (009830 KS) and Hyundai Motor (005380 KS).
- IRA is likely to have a positive impact on Hanwha Solutions, CS Wind, LG Energy Solution, and Samsung SDI and negative impact on Hyundai Motor Group.
- The impact of the IRA could last for a few more trading days although it is difficult to tell exactly how long the bifurcated impact by the IRA will last.
Berli Jucker (BJC TB) – Well-Packaged Recovery Proxy
- Berli Jucker (BJC TB) 2Q2022 results saw continue momentum to sales from the recovery in Thailand and Vietnam with some impacy from higher raw material costs on margins.
- It packaging supply chain saw a strong recovery from both glass bottling and aluminium cans with the latter seeing the biggest rebound. Retail under BigC also saw strong growth.
- Berli Jucker remains a top proxy for the recovery in domestic consumption in both Thailand and Vietnam through its packaging plus for the retail recovery in Thailand through BigC.
Investree Completes Acquisition of Amar Bank, Increases Stake to 18.4 Per Cent
This acquisition confirmed Investree as a minority stakeholder in the bank, while Tolaram Group remained a majority stakeholder
- Fintech startup Investree today announced that it had completed the acquisition of local bank Amar Bank, increasing its stake from 10.9 per cent of all issued and fully paid shares in June to 18.4 per cent.
- Investree and Amar Bank said that by utilising its “solid ecosystem”, they will build a digital bank for MSMEs, who is described by the companies as “the backbone of the country’s economy”, and utilise existing products by the two companies to support MSMEs.
Duolingo. User Growth And Cash Flow Metrics Remain Robust. Management Raised FY22 Guidance
- Duolingo (DUOL US) reported solid 2QFY22 results and hosted annual Duocon 2022 event in August. Management raised full-year revenue guidance, but the stock remained range bound.
- We model total revenues growing +45% y/y to $365M in FY22 and +42% y/y to $517M in FY23, up vs. our prior estimates and projections.
- 2QFY22 results beat all key estimates, driven by accelerating user growth and strength across the entire business. Duolingo (DUOL US) remains our top mid-cap pick in the EdTech industry.
IPAR: Primetime of the Year Begins
- IPAR has taken over the Donna Karan and DKNY brands setting the stage for further growth with larger brand licenses in its portfolio
- IPAR reported second quarter sales of $244.7 million, which was in line with IPAR’s preannouncement
- The Euro declining in value versus the US Dollar dented European sales growth figures, but sales managed to increase by double-digits over last year
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