In today’s briefing:
- Tencent/Netease: Smell of Common Prosperity in June Game Approval
- Tencent – Cold Shoulder On New Game Approvals Is A Concern
- TMT Quick Hits: INTC/AMD, NFLX/ROKU
- Escorts Ltd (ESC IN) | Expected to Grow Slower than Industry
- GoTo: Growth in Top Line Doesn’t Mean Improvement in Profitability
- Ironwood Pharmaceuticals (IRWD US): Brand Leadership of Linzess Continues; Pipeline Advances
Tencent/Netease: Smell of Common Prosperity in June Game Approval
- China announced game approval last night for June batch, after a break in May.
- We discussed in our previous note that China had resume game approval but at a slower pace.
- Tencent and Netease continue to score zero in June domestic game approval.
Tencent – Cold Shoulder On New Game Approvals Is A Concern
- As reported by Reuters, yesterday China’s gaming regulator granted licences for 60 new games, none of which were published by Tencent or NetEase.
- The two dominant companies in the industry did not feature in the list of 45 approvals in April either and this pattern should not be ignored by investors.
- The lack of approval of foreign titles in the two batches is also striking and a further negative in our view.
TMT Quick Hits: INTC/AMD, NFLX/ROKU
- Intel warned that conditions outlined in 1Q22 have worsened, key to see what AMD says tomorrow.
- Netflix – Roku rumor doesn’t make much sense, we think its more likely Roku cut off insider selling because it is looking to acquire Starz.
- Netflix churn is rising among longtime customers – going to ad-supported Peacock and Paramount. We think another guide down is coming in 2Q22.
Escorts Ltd (ESC IN) | Expected to Grow Slower than Industry
- Escorts Ltd (ESC IN) has been losing market share. As per management, “there are no “big” problems and they will regain the market share”, but we do not think so.
- Some flash channel checks are suggesting issues with some of the company’s products. These issues still remain unaddressed as per some dealers and customers.
- While the export opportunity and overall industry dynamics are positive unless the market share is regained, growth is likely to be slower than industry.
GoTo: Growth in Top Line Doesn’t Mean Improvement in Profitability
- GoTo (GOTO IJ) announced 1Q2022 and FY2021 results on 30th May. Gross income grew by 43.5% YoY in 2021 with a growth of 53.5% YoY in 1Q2022.
- However, gross margins show no improvement and operating losses have also worsened with the merger of Tokopedia in May 2021.
- GoTo plans to turnaround its profitability through synergies, improved monetisation and cost efficiencies. However, we don’t expect profits in the near future.
Ironwood Pharmaceuticals (IRWD US): Brand Leadership of Linzess Continues; Pipeline Advances
- Ironwood Pharmaceuticals, Inc (IRWD US)’s sole marketed drug Linzess is the #1 prescribed branded treatment in the U.S. for adults with IBS-C/CIC with ~4M unique patients since launch.
- First commercialized in December 2012, Linzess achieved blockbuster drug status in 2021. The earliest licensed entry of any generic Linzess in the U.S. is expected only in March 2029.
- The company’s potential drug candidate IW-3300 is in phase 1 trial for interstitial cystitis/bladder pain syndrome (IC/BPS). Recently, Ironwood has shared positive findings from the study.
Related tickers: Tencent (0700.HK), Tencent (0700.HK), Netflix Inc (NFLX.O), Escorts Ltd (ESCO.NS), GoTo (GOTO.JK), Ironwood Pharmaceuticals, Inc (IRWD.O)
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