In today’s briefing:
- Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
- Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones
- [Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
- Taiwan Semiconductor (TSMC): How Will They Deal With The Strained Production Capacity & Geopolitical Risks & Regulatory Pressures? – Major Drivers
- AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!
- [Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition
- [Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings
- Tech Supply Chain Tracker (27-Jul-2024): ST cuts 2024 outlook as demand slows.
- Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers
Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
- China announced game approval for the June 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. Of companies that we are monitoring, none got any approval.
- China’s CADPA published a semi-annual report pointing to flattish growth of gaming revenue in the first half.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
- China’s National Team was steadily buying ETF’s during and after the Third Plenum. Southbound Connect Flows continue to be positive during July.
- Smoore International Holdings (6969 HK) , Xinjiang Goldwind Science & Technology (2208 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) benefited from positive news sentiment this week.
- Chow Tai Fook Jewellery (1929 HK) and ASM Pacific Technology (522 HK) suffered on negative news, while Meituan (3690 HK) continued its pullback in concert with the retail food sector.
Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones
- Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
- An interesting comparison between China and India smart phone markets in 2Q 2024 – highlighting differences in market size and the dominance of leading players.
- Xiaomi Corp(1810 HK) made a strong come back in 2Q24 in terms of sales in both the markets. In China, it saw a 17% year-on-year increase, shipping 10 million units.
[Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
- We expect Meituan’s C2Q24 rev. and non-IFRS NI to be 0.7% and 12.3% higher than cons, driven by resilient catering demand and eased competition.
- We expect Meituan in-store OPM improve to 33%/35% in 2Q24/2H24 supported by increasing commission rate and cutting BD cost.
- We maintain the stock as BUY rating and raise TP by HK$4 to HK$160/share to factor in the better profitability.
Taiwan Semiconductor (TSMC): How Will They Deal With The Strained Production Capacity & Geopolitical Risks & Regulatory Pressures? – Major Drivers
- Taiwan Semiconductor Manufacturing Company’s (TSMC) second quarter 2024 results reveal a mixed picture of advances and challenges.
- The revenue for the quarter was notably strong, increasing by 13.6% sequentially in NT or 10.3% in U.S. dollars.
- This substantial growth was fueled by robust demand for the cutting-edge 3- and 5- nanometer technologies, although somewhat offset by smartphone seasonality.
AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!
- AST SpaceMobile has recently made headlines with a significant leap in its ambitious mission to build the world’s first space-based cellular broadband network.
- The company has announced the successful completion and upcoming shipment of its first five commercial satellites, marking a pivotal milestone that has already caused its stock to surge by nearly 25%.
- These satellites, known as Bluebirds, are set to provide unprecedented global connectivity directly to standard mobile devices, bridging the digital divide and offering broadband services in previously unreachable areas.
[Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition
- Due to weakening hiring demand from both manufacturing and service, we expect BZ’s cash billing to decline 5% QoQ in 2Q24, 9% below consensus.
- We believe BZ’s user matrices still growing and leading. The weakness is mainly attributable to the employer/hiring side;
- We cut TP by US$3 to US$19/ADS while keep the BUY rating.
[Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings
- BP expects lower realised refining margins and weak oil trading to hurt earnings, with a refining margin contraction to reduce earnings by USD 500-700 million.
- The company anticipates impairments ranging from USD 1-2 billion in Q2, including charges related to the ongoing review of its Gelsenkirchen refinery in Germany.
- BP projects its upstream production to remain broadly flat sequentially, with stable oil output and a slight decrease in gas and low-carbon energy production.
Tech Supply Chain Tracker (27-Jul-2024): ST cuts 2024 outlook as demand slows.
- ST reduces 2024 outlook amid industrial and automotive slowdown, impacting company’s future projections.
- VCs discuss Taiwan startups in AI industry, highlighting challenge of staying competitive in fast-evolving sector.
- Global regulators collaborate to address market dominance of AI giants, emphasizing need for fair competition and consumer protection.
Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers
- Netflix reported its financial performance for the second quarter, highlighting key metrics that provide insights into its current standing and future direction.
- The company reported earnings per share of $4.88, exceeding Wall Street’s expectation of $4.74.
- Revenue for the quarter stood at $9.56 billion, slightly above the anticipated $9.53 billion.
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