In today’s briefing:
- Tencent(700.HK) 4Q22 Preview:Turning Points Are Emerging
- Taste Gourmet: Growth <6x PE with 10% Div Yield and China Reopening Boost
- Meidong: Capital Raise, There’s Never a Right Time
- Bajaj Finance: Key Q3FY23 Updates
- CSRC Sanction Is Likely Darkness Before Dawn
- Ant Group’s Lending Unit Gets Approval for $1.5 Billion Capital Boost
- Universal Vision Biotechnology (3218 TT): Not Suffering from Myopia; Clear Long-Term Growth Prospect
- Chinese Intel Alternative Makes Consumer Play With Retail Store
- ATEN: Shifting to a Second Half Event
Tencent(700.HK) 4Q22 Preview:Turning Points Are Emerging
- Our Tencent 4Q22’s rev. is in line, while non-IFRS net income would beat cons. by 5.2%. We estimate that top and bottom line will grow 13%/14% YoY in 2023.
- We suggest major business lines see turning points in 4Q22, supported by rebound of Peacekeeper Elite’s gross billings, approval of new game codes, monetization of Wechat Video Account, etc.
- Tencent is one of our top picks. Video Account, global game publishing, and margin beat are three major catalysts. Our TP HK$ 407 implies 26.1X PE in 2023.
Taste Gourmet: Growth <6x PE with 10% Div Yield and China Reopening Boost
- Taste Gourmet Group (8371 HK) is an excellent play on China/HK reopening with a 5.7x/4.2x FY23/24 PE and 10+% dividend yield, with 25% of the mkt cap in net cash.
- Reopening of China and HK borders after Jan 8th will provide a boost to the revenue and margins. The company will also resume its expansions in China (3 restaurants).
- Channel checks suggest a solid Q3 2023, with the company expanding to 38 restaurants in HK (34 in Q2 2023), with a surge in revenue likely due to seasonality.
Meidong: Capital Raise, There’s Never a Right Time
- China MeiDong Auto (1268 HK) raised 800mn HKD in a top placement (px~15 HKD/share), resulting in a ~4% dilution, citing an opportunistic raise for M&A.
- While the company asserts there is a well-defined pipeline, it was not very specific on the size and scope of its targets which was not taken well by the market.
- We continue to like the company, trading at a 15x/9x PE FY22e/23e, with a 5.2%/8.8% dividend yield (assuming an 80% payout ratio), with the optionality of M&A potential.
Bajaj Finance: Key Q3FY23 Updates
- Bajaj Finance Ltd (BAF IN) reported key performance metrics for Q3FY23. AUM growth came in weak with incremental AUM addition at just 12,500cr vs 14,700cr YoY.
- QoQ, the AUM growth looks decent at 5.5%+, however, given that the Q3FY23 was a festive season quarter, QoQ comparison is not as relevant.
- However, BAF did a good job on customer acquisition. It acquired 3.1mm new customers (highest ever quarterly increase) vs 2.56mm YoY, a growth of 21%+.
CSRC Sanction Is Likely Darkness Before Dawn
- CSRC’s rectification on FUTU to suspend new user registration from mainland China while allow service continuation to existing user is well expected. We believe the market over-reacted;
- FUTU caters to overseas Chinese and populations falling outside of major currency zones. This market supports a paying user growth of 12% and revenue growth of 19% CAGR to 2025.
- We maintain BUY and cut TP from US$58.5 to US$50 due to moderate decline in mainland China users.
Ant Group’s Lending Unit Gets Approval for $1.5 Billion Capital Boost
- Ant Group Co. Ltd.’s online lending subsidiary has been given the go-ahead from regulators to boost its registered capital by 10.5 billion yuan ($1.5 billion), marking a key step forward in the fintech giant’s government-driven, year-long revamp
- The approval was granted a month and a half after some of the unit’s shareholders disclosed the plan, underscoring the recent pledge by authorities to promote healthy development
- Ant Group, backed by billionaire Jack Ma’s e-commerce giant Alibaba Group Holding Ltd., has been conducting a rectification required by the government since a regulatory storm saw its planned blockbuster IPO suspended in November 2020
Universal Vision Biotechnology (3218 TT): Not Suffering from Myopia; Clear Long-Term Growth Prospect
- Universal Vision Biotechnology (3218 TT) recorded revenue growth of 34% YoY to TWD2.5B during nine month ended Sept’22, driven by increasing number of refractive and cataract surgeries performed in Taiwan.
- With 12M addressable patient population and just 0.16% penetration, refractive treatment market in Taiwan has favorable trend. With ~50% market share, the company is well-positioned to grab the opportunity.
- This year, the company has renovated two existing centers and added four new centers. UVB is targeting 50 Universal Eye Centers by 2025 from 28 now.
Chinese Intel Alternative Makes Consumer Play With Retail Store
- Loongson Technology Corp. Ltd., a Chinese chip architecture developer, took a major step into the consumer market by opening its first brick-and-mortar pop-up store
- Loongson is also exhibiting its development kits and solutions for printers, smart door locks, and treadmills in the store
- This is not the first time Loongson has attempted to enter the consumer market. The firm opened an online store on e-commerce platform JD.com in October 2021, selling laptops, desktops, and their components like motherboards and memory kits
ATEN: Shifting to a Second Half Event
- The recent wave of layoff related headlines along with companies putting greater scrutiny on cash outflows could result in ATEN experiencing slower than expected revenue growth in 2023
- When there are layoffs and changes to employees working more from the office it is likely to reduce the number of security devices purchased
- Our lowered revenue outlook comes with the expectation ATEN would be able to ramp revenue in the second half of the year
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
