In today’s briefing:
- Grab (GRAB US) – Moving Towards Steady State
- PCCW And HKT’s 2022 Results
- [Alibaba (BABA US) Target Price Change]: Cut TP for Intensified Competition in ECommerce
- Softbank (9984 JP): Focus on Vision Fund II (SVF2) And Masa’s Massive IOUs
- [Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase
- [NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts
- Meituan Gears Up for Hong Kong Expansion With Rider Recruitment
- Google Stock Could Be Losing Its Moat
- Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E
- Chinese Fintech Firm IceKredit Gears up for SEA Expansion
Grab (GRAB US) – Moving Towards Steady State
- Grab Holdings (GRAB US) 4Q2022 numbers late last week made encouraging reading with revenues exceeding expectations significantly despite slow GMV growth in the quarter, as it maintained regional category leadership.
- The company saw continued improvement in segment-adjusted EBITDA margins in 4Q2022 versus 3Q2022 for both mobility and deliveries, with the latter making significant progress towards steady-state margins.
- Grab‘s relatively high regional cost remains a drag but should stabilise here and outside this, it looks to be firmly on track to accelerate profitably.
PCCW And HKT’s 2022 Results
- PCCW Ltd (8 HK)‘s FY22 revenue, EBITDA, and profit increased by 2%, 6%, and 11% to HK$36.1bn, HK$12.4bn, and HK$834mn.
- HKT Ltd (6823 HK)‘s revenue, EBITDA, and profit increased by 0.5%, 3%, and 0.4% to HK$34.1bn, HK$13.1bn, and HK$4.7mn.
- The dividend pass-through is 100%. PCCW’s current discount to NAV is in line with its 52-week average.
[Alibaba (BABA US) Target Price Change]: Cut TP for Intensified Competition in ECommerce
- BABA reported F3Q23 (C4Q22) total revenue largely in line with our est. and cons. Non-GAAP net profit beat our est. and cons. by 5% and 13% YoY.
- Taobao will face pricing pressure against JD and PDD. We expect BABA to focus on user content, which leads to improvement in app time spent and advertising.
- We cut TP from US$130 to US$110 to reflect intensified competition in eCommerce. Maintain BUY rating due to recovery in CMR and international retail, and rebound in cloud business.
Softbank (9984 JP): Focus on Vision Fund II (SVF2) And Masa’s Massive IOUs
- Vision Fund II private companies accounted for 87% of the fund’s 3QFY22 fair value; versus investment cost, private companies’ downward valuation revisions have been more modest than the public companies
- Vision Fund II accounted for 22% of the group’s 3QFY22 equity value of holdings, so any further downward valuation revisions would hurt group NAV and add to Masa’s Softbank liabilities
- Softbank currently trades at a 42% discount to its stated NAV; we believe that the stated NAV is likely to be overstated, with private company valuations needing further scrutiny
[Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase
- Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%.
- We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&D investment in AI related technologies.
- Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.
[NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts
- NetEase’s 4Q22 revenue was in-line with cons., while its non-GAAP net income missed cons. by (8%) because of a one-off, non-renewal contract with Blizzard.
- We still see NetEase as a BUY because of <Eggy Party>’s overseas publishing and <Justice Mobile>, which we estimate will contribute about 1-2bn/3-4bn RMB for annual gross billing, respectively.
- We maintain BUY and TP US$ 87, which implies 16.0X PE in 2023.
Meituan Gears Up for Hong Kong Expansion With Rider Recruitment
- Chinese food delivery giant Meituan launched a recruitment campaign in Hong Kong signaling a push into the Asian financial hub dominated by foreign on-demand service leaders foodpanda and Deliveroo.
- Meituan is hiring delivery workers including motorcycle and bike riders as well as so-called foot soldiers who can dispatch orders by foot, a recruitment document showed.
- As an incentive, Meituan said new riders who complete a certain volume of orders will receive a bonus of HK$2,500 ($319).
Google Stock Could Be Losing Its Moat
- Microsoft is improving its search market share, according to analysts.
- The arrival of ChatGPT hammered Alphabet stock may be ahead as revenue effects sink in, says analyst.
- The company is also improving its market share and improving its search market share.
Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E
- The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.
- Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.
- Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.
Chinese Fintech Firm IceKredit Gears up for SEA Expansion
- IceKredit, a Chinese AI-focused credit risk and management company, plans to export its AI-powered products and solutions to financial institutions in Southeast Asia.
- Founded in 2015, IceKredit helps lenders to establish an automated end-to-end digital lending process – from application pre-screening to collections – by providing risk mitigation products and services.
- In the past two years, the firm has raised over US$58 million in series C funding, a large part of which will be used for its Southeast Asian expansion, the company says.
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