In today’s briefing:
- Quiddity Leaderboard HSIII: ~US$160mn One-Way Flows in Dec 24; 3 ADDs/DELs in Mar 25 Likely
- Nvidia: Maybe a Few Short-Term Concerns but Blackwell Looks like a Step Function Upwards
- KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved
- Qualcomm Investor Day: Based on Management Forecasts, Best Case 13% Operating Profit Cagr to FY29
- 2025 High Conviction: Freee KK – Becoming Free From Losses; Significant Upside
- [NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile
- Lucror Analytics – Morning Views Asia
- Dynatrace Inc.: How Strategic Investments Are Securing Its Competitive Edge & Future Revenues – Major Drivers
- EPAM Systems Inc.: An Analysis Of Its Global Expansion & Diverse Delivery Locations & Other Major Drivers
- Datadog Inc.: Sales Capacity & Strategic Market Penetration Driving Our ‘Outperform’ Rating! – Major Drivers
Quiddity Leaderboard HSIII: ~US$160mn One-Way Flows in Dec 24; 3 ADDs/DELs in Mar 25 Likely
- The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
- The indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.
- In this insight, we take a look at our updated flow estimates for December 2024. Separately, we have also presented our latest March 2025 index review predictions.
Nvidia: Maybe a Few Short-Term Concerns but Blackwell Looks like a Step Function Upwards
- 3Q25 (Oct-25) 5% above Consensus, Hopper growing incl H200, no Blackwell revenue. 4Q25 (Jan-25) guidance inline with Consensus but Nvidia has beat guidance for 8 quarters.
- Jan-25: Blackwell revenue “several billion dollars”. Supply keeps to increase but supply constraints. GM will moderate to low-70% during Blackwell ramp due but will stabilize at mid-70%.
- The stock is not expensive, trading at its average multiples since 2019: 51x trailing EPS, 34x forward EPS. These multiples are high in an absolute sense, but average for NVDA.
KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved
- Both online marketing and “other revenues” grew strongly in 3Q24.
- Both the gross margin and the operating margin improved over the same period last year.
- We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.
Qualcomm Investor Day: Based on Management Forecasts, Best Case 13% Operating Profit Cagr to FY29
- QCOM estimates ~5% Android revenues growth Cagr to FY29, Automotive 22%, IoT 21%. If QCOM keeps Apple business, revenue Cagr will be 9% to FY29. If QCOM loses it: 6%.
- Mngt forecasts high Opex control, target at 22% of revenue, which looks aggressive. Opex reached 31% in FY23-24 . At 22% Opex, Operating Profit would grow ~13% Cagr to FY29.
- Android growth looks low, Opex control demanding. As such, we could conclude that 10% Operating Profit Cagr is more likely than 13%. Even with lower growth, the stock is cheap.
2025 High Conviction: Freee KK – Becoming Free From Losses; Significant Upside
- Freee KK (4478 JP) offers cloud-based online accounting and HR/Payroll software to small and medium businesses (SMBs) in Japan. The company operates a subscription-based revenue model.
- Freee reported its first-ever profits recently and we expect continued improvement in freee’s profitability driven by its strong business model vs MF whose business model has started to breakdown.
- Freee’s current valuation multiples are cheap and there is significant upside to the current share price, hence we recommend making an entry.
[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile
- NetEase reported C3Q24 revenue, GAAP operating profit and GAAP net income in line, (3.6%) and (5.3%) vs. our estimates, and in line, (4.4%) and (5.0%) vs. consensus.
- Mobile game revenue decline is less a concern due to imminent pipeline launches, but PC game’s significantly beat is a positive surprise.
- We raised the TP to US$118 for the better outlook of new game launches.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Yinson Production, Xiaomi Corp, ReNew Energy
- In the US, October housing starts declined 3.1% m-o-m to an annualised 1.31 mn units (-1.5% e / -1.9% revised p), the slowest pace in three months as builders put off projects in the wake of hurricanes Helene and Milton.
- Meanwhile, October building permits (a proxy for future construction) eased 0.6% m-o-m to an annualised 1.42 mn units.
Dynatrace Inc.: How Strategic Investments Are Securing Its Competitive Edge & Future Revenues – Major Drivers
- Dynatrace reported a strong performance in its second quarter of fiscal 2025, showcasing solid financial results and effective execution of its strategic initiatives.
- The company posted an annual recurring revenue (ARR) increase of 19% year-over-year to $1.62 billion, propelled by robust expansion bookings, especially in Europe, and an improvement in booking seasonality related to a switch to 6-month sales compensation cycles.
- Subscription revenues grew by 20% year-over-year, further supporting the company’s financial momentum.
EPAM Systems Inc.: An Analysis Of Its Global Expansion & Diverse Delivery Locations & Other Major Drivers
- EPAM Systems, Inc., a global leader in software development and digital platform engineering services, reported its third-quarter 2024 results, which were stronger than analysts anticipated.
- The company demonstrated revenue growth on both a year-over-year and sequential basis, signaling potential stabilization in the market.
- This growth was primarily fueled by increased customer engagement across various verticals, notably in life sciences and healthcare, financial services, software, and biotech.
Datadog Inc.: Sales Capacity & Strategic Market Penetration Driving Our ‘Outperform’ Rating! – Major Drivers
- Datadog’s third quarter 2024 financial results indicate continued growth and expansion in their operations, though there are a mix of positive and challenging elements to consider.
- Revenue for the quarter was $690 million, representing a 26% increase year-over-year and surpassing the high end of the company’s guidance.
- The company added about 2,400 customers over the past year, reaching a total of approximately 29,200.
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