In today’s briefing:
- Kuaishou (1024 HK): 2Q22, Many Encouraging Points Behind “Slowdown”, 48% Upside
- Don’t Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind
- Kuaishou: Profitability to Improve Further with Monetisation of Overseas Business
- Amazon.com Inc: Expansion In India
- Apple Inc.: Expected Product Launches & Other Drivers
- Display Industry Doom and Gloom? Management Call with ChipMOS
- Meta Platforms Inc.: Metaverse Progress & Other Drivers
- ServiceNow Inc: The Hitch Works Acquisition
- Micron Technology: Increased Investments In Memory Manufacturing & Other Drivers
- Ridi: A Leading Webtoon & E-Book Service Unicorn in Korea Backed by GIC
Kuaishou (1024 HK): 2Q22, Many Encouraging Points Behind “Slowdown”, 48% Upside
- In 2Q22, the company’s adverting revenue increased by 11% YoY, while the market size shrank by 8% YoY.
- The company raised both of its user base and Time Spent per Daily Active User.
- The company’s operating margin continued to shrink due to the layoff at the beginning of this year.
Don’t Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind
- After a substantial rally, the S&P500 was unable to break above its 200-day MA and market indexes have violated steep 5-week uptrends; we view this pullback as a critical test.
- This is where we see if prior breakout levels/important moving averages hold and market indexes make a higher low, or if this was nothing more than a bear market rally.
- Barring a Fed pivot, and with Treasury yields and the DXY inflecting higher (and potentially commodities, too), it increases the odds for a deeper pullback in the broad market indexes.
Kuaishou: Profitability to Improve Further with Monetisation of Overseas Business
- Kuaishou Technology (1024 HK) reported 2Q2022 results today. Revenue grew 13.4% YoY to RMB21.7bn (vs consensus RMB20.7bn) while reported operating losses dropped to RMB3.1bn (vs consensus RMB4.6bn).
- Though top line growth of online marketing services has been declining, the company managed to report growth while peers have been facing decrease in revenues.
- Kuaishou’s domestic biz has turned profitable at the OPM line while there has been significant decrease in Op. losses from the overseas segment.
Amazon.com Inc: Expansion In India
- Amazon.com delivered a mixed result surpassing Wall Street expectations in terms of revenues but missed out on earnings.
- Net sales exceeded in the quarter, and the revenue growth accelerated to more than 40%.
- The company made solid progress in reducing several cost pressures that faced the fulfillment network productivity, inflationary costs, worldwide stores business, and fixed cost deleverage.
Apple Inc.: Expected Product Launches & Other Drivers
- Despite supply shortages, significant currency headwinds, and the adverse geopolitical impact on Apple’s business in Russia, the company reported an outstanding quarter with revenue of $83 billion, surpassing Wall Street expectations and also delivering an earnings beat.
- The company reached an all-time high in the number of active devices it has installed.
- Apple unleashed a surge of innovation that included the entirely revamped MacBook Air and a new 13-inch MacBook Pro.
Display Industry Doom and Gloom? Management Call with ChipMOS
- With the street relatively bearish on the stock and the display market overall, we had a call with ChipMOS management to learn if they can prove bears wrong.
- We identify seven supportive factors that can help the company defy industry weakness.
- Valuation has priced in a lot of negativity, we see downside support at 1x PBV and the stock appears inexpensive. Dual-listings are trading near parity.
Meta Platforms Inc.: Metaverse Progress & Other Drivers
- Meta Platforms had a disappointing result where it failed to meet Wall Street expectations in terms of both, revenues as well as earnings.
- In Q2, while the average price per ad dropped by 14%, the overall number of ad impressions served across all of their services climbed by 15%.
- In general, Facebook engagement trends have been greater than expected, and robust real growth is still driving engagement on both Facebook and Instagram.
ServiceNow Inc: The Hitch Works Acquisition
- ServiceNow has had a particularly good performance throughout 2022 and its recent Q2 results were quite robust.
- In Q2, ITSM participated in 12 of the top 20 deals, with 7 of those sales totaling more than $1 million.
- Nine of the top 20 sales totaled over $1 million, and ITOM was involved in 13 of those deals.
Micron Technology: Increased Investments In Memory Manufacturing & Other Drivers
- Micron Technology is in the process of transitioning to more sophisticated nodes and is also investing heavily in memory manufacturing.
- The management is striving to control capital expenditures, manage funds utilization, especially for some of its legacy nodes, and focus on cost-effective nodes to see how it can optimize them and the manufacturing footprint area.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
Ridi: A Leading Webtoon & E-Book Service Unicorn in Korea Backed by GIC
- Founded in 2008, Ridi is a leading webcomic, digital novels, and e-book provider in Korea.
- In March 2022, Ridi raised $99.4 million in a funding led by GIC at a valuation of $1.3 billion.
- The webtoon market surged to more than $840 million in Korea in 2020, up from about $45 million in 2010, representing a CAGR of 34% in this period.
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