In today’s briefing:
- Sea Ltd: Facing an Uphill Battle for Sustainable Profits
- Appier (4180) | Another Positive Quarter
- Hua Hong Semi (1347.HK) Q1’23 Revenue US$630.8 Million, Flat QoQ, +6.1% YoY. Q2’23 Flat QoQ
- [SMIC (981 HK, BUY, TP HK$24) Earnings Review]: Localization Beginning to Bear Fruit
Sea Ltd: Facing an Uphill Battle for Sustainable Profits
- Sea (SE US) may achieve around $3.0 billion in 1Q23 revenue, in line with consensus, but is likely to miss the consensus OP estimate of $309 million by approximately 10%.
- Shopee’s profitability is at risk without sustained revenue growth. If the cost-cutting strategy persists, losses are expected by 3Q23 or possibly sooner with a strategy shift.
- Amid Free Fire’s decline and Shopee’s potential losses, the fintech business stands as the sole bright spot.
Appier (4180) | Another Positive Quarter
- Appier achieved 32% revenue growth and 50.1% gross margin in Q1 FY23, exceeding company expectations
- We expect the pace of growth to accelerate, driven by stronger momentum in Digital Content in Q2 and Q3
- We remain bullish following the recent pullback in the share price. Stock is attractive at 5x EV/Rev
Hua Hong Semi (1347.HK) Q1’23 Revenue US$630.8 Million, Flat QoQ, +6.1% YoY. Q2’23 Flat QoQ
- Q1’23 revenues of US$630.8 million, up 6.1% YoY and flat sequentially.
- Gross margin was 32.1%, up 5.2 points YoY but down 6.1 points sequentially.
- HH is playing a blinder through the downturn and likely beyond…
[SMIC (981 HK, BUY, TP HK$24) Earnings Review]: Localization Beginning to Bear Fruit
- SMIC reported C1Q23 top-line, GAAP EBIT and non-IFRS net profit 4.7%, 17% and 75% vs. our est., and 1.9%, (19.5%), and 25% vs. cons。
- We expect 1Q23 to be the bottom for SMIC, improving quarterly on the back (1) IC supply chain localization, and (2) domestic economic improvement.
- Despite high-inventory levels at most clients, SMIC continues to receive wafer orders for new IC products. We maintain BUY rating and HK$ 24 TP.
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