In today’s briefing:
- Pinduoduo (PDD) Short Review: Third-Party Retailers “Bombarded” Direct Sales
- China Internet Weekly (10Apr2023): Tencent, Douyin, Bilibili, Alibaba, Baidu, World Perfect
- Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- MTR (66 Hk): Now if You Missed the First Bounce
- China Comm Const (1800 HK): We See More Stories Coming
- Zomato (ZOMATO IN) | Houston, We Have A “Pincode” Problem
- [Alibaba (BABA US, BUY, TP US$109) Earnings Preview]: Recovery Is on the Way Amid Weakness in C1Q23
- China Shineway Pharmaceutical (2877.HK) – Strong Growth Momentum Is Expected to Continue in 2023
- Smartkarma Corporate Webinar | Vividthree: Monetising Content Through Multimedia
- Huawei’s 2022 Profit Plunges 69% Amid Sanctions and Heavy R&D Outlays
Pinduoduo (PDD) Short Review: Third-Party Retailers “Bombarded” Direct Sales
- PDD’s small retailers bought out products of direct sales and claimed full refund.
- The story happened to Alibaba more than ten years ago.
- It can be hard for PDD to enter the high quality market.
China Internet Weekly (10Apr2023): Tencent, Douyin, Bilibili, Alibaba, Baidu, World Perfect
- Tencent authorized video editing right to Douyin, one of its main competitors.
- Some of Bilibili’s video uploaders cannot survive the hard time.
- Both Alibaba and Baidu launched their ChatGPT-like apps, but Baidu’s app was .
Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- Seven & I Holdings (3382 JP) was down as much as 5% on Friday on weak FQ4 earnings as the company’s revenue and OP missed consensus by 1.9% and 2.6% respectively.
- Earnings likely peaked in FQ3 as fuel retail margin and merchandise sales trend reversed in FQ4.
- Given the reversal of fuel retail margin and merchandise sales trend and the negative impact of the exchange rate, the risk rewards appear favourable for a short trade.
MTR (66 Hk): Now if You Missed the First Bounce
- MTR Corp (66 HK) is the lagging stock in Hong Kong although it is a key beneficiary to more Chinese tourists that will arrive soon.
- HK Government has launched a few initiatives to invite tourists to visit Hong Kong that will boost higher ridership for the company.
- It is now trading at the level prior to COVID with the potential of higher earnings that will come from the ridership increase.
China Comm Const (1800 HK): We See More Stories Coming
- China Communications Construction (1800 HK) is expected to generate higher shareholder return through improvement in profitability/cash flow, spin-off, asset disposal and issuance of REITs.
- Operationally, backlog reached Rmb3.39trn at end-FY22, enough to cover 3.9x FY23F revenue. It expects revenue to grow at least 7% and new contract by no less than 9.8% in FY23.
- Employee incentive scheme has been adopted with targets including FY21-23 earnings CAGR of at least 8% and FY23 return on net assets of 7.7%. This aligns employee interests with shareholders’.
Zomato (ZOMATO IN) | Houston, We Have A “Pincode” Problem
- Phonepe Pvt Ltd (1732974D IN) ‘s new app, “Pincode”, is based on the ONDC platform and offers hyperlocal e-commerce.
- ONDC-Enabled Pincode could disrupt Zomato (ZOMATO IN) food delivery and grocery businesses.
- Loyal restaurants may choose to offer discounts via ONDC, putting pressure on Zomato (ZOMATO IN) and Swiggy (1255298D IN) to compete bringing back cash burn and discounting.
[Alibaba (BABA US, BUY, TP US$109) Earnings Preview]: Recovery Is on the Way Amid Weakness in C1Q23
- We expect BABA to report C1Q23 (F4Q23) top-line and non-IFRS net income (5.0%) and (5.9%) vs. consensus, respectively,
- Due to: 1) weak sales of Taobao, Tmall and 1P sales; 2) the on-going move of a key Cloud client;
- We maintain US$109 TP as: 1) Taobao and Tmall sales shows recovery trend; 2) near-term benefit of unveiling its LLM AI; and 3) benefit from the new business unit structure.
China Shineway Pharmaceutical (2877.HK) – Strong Growth Momentum Is Expected to Continue in 2023
- Shineway’s 2022 performance was outstanding.Its TCM formula granules business would seize more market share and maintain strong growth momentum, which would continue to be the main performance driver in 2023.
- Considering obvious policy preferences and lower price reduction of TCM in VBP, we recommend investors to leave a place for TCM company in portfolio, and Shineway deserves investors’ attention.
- Shineway is cash rich. Together with promising growth potential and solid financial performance, Shineway’s share price is expected to perform well, which could be a good trading target for investors.
Smartkarma Corporate Webinar | Vividthree: Monetising Content Through Multimedia
For our next Corporate Webinar, we are glad to welcome Vividthree’s CEO, Jonathan Zhang.
In the upcoming webinar, Jonathan will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.
The Corporate Webinar will be hosted on Tuesday, 18 April 2023, 17:00 SGT.
About Vividthree
Headquartered in Singapore with subsidiaries in Malaysia and China, Vividthree Holdings Ltd. specialises in Visual Effects (“VFX”), animation and Virtual Reality (“VR”) for content creation and services across the Digital Entertainment and Out-of-Home Entertainment sectors, as well as collaborations in Meetings, Incentives, Conferences, Exhibitions (“MICE”) projects.
Since its establishment in 2006, Vividthree has secured its position as Singapore’s leading 3D animation and VFX studio with its multi-award-winning track record. In 2017, the Company expanded into the immersive media space with virtual reality (VR) and augmented reality (AR) capabilities. The Vividthree brand of excellence can be found in many works, including Singapore’s box-office-breaking trilogy Ah Boys to Men, SG50 Future of Us Exhibition, NS50 Home Team parade and Train to Busan VR Tour show.
Vividthree has secured the exclusive rights to develop a VR tour show for Peninsula, the sequel to the 2016 Korean box office hit, Train to Busan, as well as acquired the intellectual property rights to the popular webcomic, Silent Horror.
Huawei’s 2022 Profit Plunges 69% Amid Sanctions and Heavy R&D Outlays
- Huawei Technologies Co. posted its lowest profit margin ever for 2022 but managed a slight revenue gain in the third year of U.S. sanctions that forced the Chinese electronics giant to diversify its business into new sectors from cloud computing to automobiles.
- The company reported net profit of 35.6 billion yuan ($5.18 billion) for 2022, a 69% decline from 2021, on revenue of 642.3 billion, up 0.9% from a year ago.
- Its profit margin fell to a record low of 5.5%.
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