Daily Brief Equity Bottom-Up: JD.com: Three Key Controversies and more

• Despite a recovery in Chinese retail sales, JD.com’s revenue growth slow-down has accelerated, losing market share to disruptive online competitors amidst ramped-up pricing pressure.
• Margin progression remains on track as JD.com refocuses on its core operations, optimizing its product mix and sales channels to improve operating efficiency.
• JD.com trades on only a 4.1x Dec-23f PE multiple when excluding its net cash balance sheet and associates at book value.

• Intel’s CFO boosted the current quarter outlook to the higher end of the guided range of $12 billion +/- $500 million
• Intel’s share price was up 4.8% in overnight trading, presumably a result of the forecast boost
• While Intel’s CFO thinks Intel is set to ride an AI wave, we think it will be more like riding a ripple across a rising tide that lifts all boats. 

• Despite the enormous demand for Black Pink concerts and the expected launch of the new girl-group band BabyMonster, we believe shares of Yg Entertainment (122870 KS) have overextended this year.
• Black Pink remains a fan-favorite group and their contribution to sales and profits are likely to peak this year. Valuations for YG Entertainment is also unattractive.
• Although BabyMonster is likely to become popular, the higher probability scenario is for them to fall below expectations. We do not believe BabyMonster could become the next Black Pink. 

For our next Corporate Webinar, we are glad to welcome BHG Retail’s CEO, Chan Iz-Lynn.

In the upcoming webinar, Iz-Lynn will share a short company presentation after which, she will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Tuesday, 06 June 2023, 17:00 SGT/HKT.

About BHG Retail REIT

Listed on Singapore Exchange Securities Trading Limited, BHG Retail REIT has a diversified portfolio of six retail properties strategically located in major cities in China, namely Beijing, Chengdu, Hefei, Xining and Dalian. BHG Retail REIT’s asset portfolio consists of community focused retail properties situated in high population density areas frequented by growing middle class professionals and families. Designed as lifestyle destinations, each multi-tenanted mall features a compelling mix of shopping, dining, education and entertainment establishments.

• BILI’s revenue grew by zero YoY in 1Q22, but operating losses shrank significantly.
• The company reduced the subsidies to video uploaders, so that uploaders have been leaving the app.
• We believe the stock has an upside of 13% for yearend 2023. Downgrade to Hold.

• Tenancy sharing growth is supported by 5G where Cellnex is well positioned to benefit from its leading market position within the European 5G ecosystem.
• New CEO starting on June 4th. Target: to deliver on organic growth, reach investment grade, improve free cash flow generation
• Remains a takeover target. Trades on a discount to peers

• Bilibili Inc (BILI US) ’s 1Q2023 top line growth remained flat (+0.3%) while cost control measures helped reduce losses. This marks the lowest quarterly revenue growth for the company since 2017.
• Mobile games revenue further decreased while Value Added Services (VAS) revenue growth dropped to 5.1% during the quarter, lowest ever for the segment.
• There was no disclosure on paying user numbers and we do not expect any significant recovery in top line growth over the next 2-3 quarters.

• Sawai Group Holdings (4887 JP) reported muted FY23 result, with all parameters missing guidance. Miss was due to the lower-than-expected performance in Japan, which contributed 82% of revenue.
• Sawai’s U.S. business revenue increased 22% YoY to ¥36.6B, beating guidance of ¥32.2B. The U.S. business is now back to profitability by reporting higher-than-expected operating profit of ¥930M.
• Sawai guided for 8% revenue growth in FY24. Core operating income is projected to decline due to the soaring raw material and energy prices and an increase in upfront costs.

• Most of the red flags that I have outlined before are now being taken care of, but I remain cautious for the time being.
• The market continues to react negatively to what was in my view a very good quarter, says Salesforce’s chief executive.
• A lot has changed since I first covered Salesforce (NYSE:CRM), back in December of 2020.

• Datadog had a good Q1 as they exceeded analyst expectations on all fronts, with revenue of $482 million, a 33% YoY increase, and added approximately 1,400 net new customers.
• The company observed growth from existing customers and continued to see customers optimizing their cloud spend.
• In addition, Datadog made significant advancements in its product offerings, introducing new security capabilities such as Application Vulnerability Management and enhancing its Cloud Security Management product.