In today’s briefing:
- Quiddity Primer for HSCEI Rebalance Events
- Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows
- China Internet Weekly (16Jan2023): Alibaba, Tencent, JD.com, ByteDance
- EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios
- Money Forward (3994) | Corporate ARR +55% YoY
- Tencent Reach for Sell Zone
- Kuaishou (1024 HK): Expanding Market, Will See Higher Growth and Profit
- AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money
- Taiwan Tech Weekly: UMC Vs. TSMC Results’ Vastly Different Performance, Japan Cautious on China Bans
- Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization
Quiddity Primer for HSCEI Rebalance Events
- The Hang Seng China Enterprises Index (HSCEI INDEX) is one of the most widely discussed indices in the Hang Seng Indices family.
- The HSCEI serves as a benchmark to reflect the overall performance of “Mainland” Securities listed in Hong Kong.
- In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.
Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows
- Alibaba (ADR) (BABA US), along with several other Chinese tech names have rallied more than 100% over the past 2.5 months with the Chinese government indicating regulatory crackdowns are over.
- However, we think this could just be a temporary respite for tech names as there’s a lot more to be done in terms of a data security and privacy standpoint.
- Nevertheless, Alibaba Group (9988 HK) is still quite expensive, given that government interventions have pretty much curtailed Alibaba’s avenues for growth in the domestic market.
China Internet Weekly (16Jan2023): Alibaba, Tencent, JD.com, ByteDance
- The Chinese government may possibly buy minor shares in Alibaba and Tencent.
- JD.com’s long-term competitor, Dangdang, opened a bookstore in JD.com’s app.
- In 2022, both Tencent Video Account’s active user base and time on site reached 80% of We Chat.
EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios
- BABA US is up 85% from October lows and continues to trade well in 2023 up 32% in January
- Stock has benefitted from not only improved economic sentiment but also an end to the 2-year crack down on the Internet Sector
- We suggest using call ratios to increase upside leverage prior to earnings release
Money Forward (3994) | Corporate ARR +55% YoY
- Money Forward Q4 sales rose +42% YoY to Y6.2bn driven by corporate ARR (+55% YoY)
- Full year revenue guidance for FY11/23 is in line with consensus
- We still see over 20% upside in the stock if the company hits the top end of revenue guidance
Tencent Reach for Sell Zone
- Tencent faces formidable resistance at 385 that may not be seen for a while. 385 is where old lows and old highs coincide.
- RSI is extended (ST sell and bounce). Buy volumes are descent but have been drifting since late 2022.
- 385 a good zone to sell cash positions or short to challenge pivot supports outlined. 320 is an intermediate level to hold to keep things glued together.
Kuaishou (1024 HK): Expanding Market, Will See Higher Growth and Profit
- Short video continued to accumulate active users in China and the company’s light-version grew the most rapidly.
- We believe the revenue growth rate will rise from 2Q23 and the company will have positive operating profit from 2024.
- We set the price target at HK$103, which is 44% over the market price.
AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money
- Qingdao Ainnovation Technology Group (2121 HK) was listed on 27th Jan 2022, with its one-year lockup expiring on 27th January 2023.
- Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.
- Coming up for one-year lockup expiry are the pre-IPO shareholders. Bulk of them are in the money as some have invested as early as 2018.
Taiwan Tech Weekly: UMC Vs. TSMC Results’ Vastly Different Performance, Japan Cautious on China Bans
- UMC vs. TSMC results review comparison: Vastly different tones of results shows the large gap in industry performance for the most advanced chips products vs. the lesser advanced.
- Japan gives mixed signals about rapidly joining U.S. chip restrictions vs. China.
- TSMC and UMC were some of the most net-bought stocks in Taiwan by foreigners last week.
Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization
- Q4 revenue growth of 43% was driven by growth in sales to corporates (+54%) on new user growth, customer mix, and upside from cross-selling
- EBITDA erosion improved from the peak losses of Q3 and whilst it has not issued full-year FY23 guidance, it says it expects steady improvements as the year goes on
- This was a good quarter but we expect that is largely reflected in the share price after a 61% run over the last six months
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