Daily Brief Equity Bottom-Up: Tencent/Netease: Major Names Get Zeroed in May and more

• China announced game approval for the May batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
• None of the listed companies that we followed received approval for mobile games.

• Cisarua Mountain Dairy booked a strong set of 1Q2024 results, with sequential quarterly growth in revenues and more so profits as margins recovered driven by both dairy and consumer foods. 
• The company ramped up its advertising, promotion, and marketing spending as it launched new products in the more affordable segments including new flavours for stick yoghurts and affordable consumer foods.
• Cimory remains optimistic for 2024 for a more pronounced recovery in dairy as it pushes out products into general trade and takes more shelf space in modern trade driving growth.

• Chinese outbound travel demand continued its gradual recovery in April 
• Moderating domestic demand? It’s not new, and outbound matters more 
• On a pullback to below US$50, we would again BUY Trip.com’s ADRs

• Nvidia switches to FOPLP for AI server chips to alleviate CoWoS capacity strain, improving efficiency and performance.
• Taiwanese banks embrace GenAI despite challenges, as revealed by a McKinsey survey highlighting growing adoption in the industry.
• European carmakers forge partnerships across continents to compete in the affordable electric vehicle market, focusing on collaboration and innovation.

• Boss Energy, an Australian uranium producer, saw a significant drop in stock price following the sale of shares by three directors.
• The directors sold a substantial amount of their stock, representing 83%, 63%, and 63% of their ordinary shareholdings respectively.
• The high volume of trading on the stock on the day of the sale has raised concerns about the timing and implications of the director’s actions during a critical phase of the company’s life cycle.

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• We hosted a conference call recently with ChipMOS management; the company continues to view 1Q24 as having been the bottom for the memory and display markets.
• Memory customers are increasing utilization further. Since ChipMOS does not significantly serve the HBM DRAM market, this indicates that previously softer non-HBM memory segments are now showing improvement.
• Display industry increasing utilization on expectation for 2H24 large display demand strength driven by sporting events such as the Paris Olympics. ChipMOS remains well below March highs, rate as Outperform.

• Ally remains confident in their ability to navigate challenges with a focus on pricing and underwriting discipline
• Ally’s strong capital position and strategic focus on digital banking position them well to benefit from potential economic recovery and rising interest rates
• Author believes Ally’s stock has significant long-term growth potential and could triple in value, with limited downside risk in the short term

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• Tong Yang Industry is now seeing record profit in FY23 and this appears to be in place to continue during FY24
• The automobile and motorcycle parts manufacturing company is seeing strong growth in the US market
• Electric vehicle parts R&D is well underway and this should support continued growth in coming years

• Part of our housing finance checks, we have been visiting Aavas Financiers Ltd (AAVAS IN)  branches for over two years now.
• While the situation was grim early on post the management change and increased competitive intensity, the current channel inputs are encouraging.
• Key areas that warrant attention are growth trajectory, yields, and tech upgrade. 

• RaaS Research Group has published an update report on diversified financials company Bell Financial Group (ASX:BFG) following the company’s presentation at the Bell Potter Emerging Leaders’ Conference yesterday.
• An April YTD trading update provided at the conference points to revenue growth of 23% and Profit After Tax (PAT) growth of 135%, an acceleration on Q1 CY24 Profit Before Tax (PBT) growth rates provided at the AGM, with all divisions profitable.
• This compares to a RaaS H1 CY24 PAT growth estimate of 90%, placing the group on track to achieve our H1 estimates.