Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

Kanzhun Limited provides online recruitment services. The Company connects job seekers and enterprise users through its mobile application. Kanzhun offers a mobile-native product that promotes instant direct chats between enterprise users and job seekers.

<ul>
<li>Kanzhun, along with Kuaishou, Beike and PDD, are we call the “Macro Mauled Champions” (MMC). We suggest long term investors to accumulate;</li>
<li>Weak industrial sector earnings in October bodes ill for manufacturing hiring into C4Q24 and we think may further extend to early 2025 recruiting season;</li>
<li>We expect BZ to grow profit faster than revenues on cost savings, particularly on marketing and gain shares. We cut the TP from US$19 to US$17. </li>
</ul>


Kanzhun, along with Kuaishou, Beike and PDD, are we call the “Macro Mauled Champions” (MMC). We suggest long term investors to accumulate;
Weak industrial sector earnings in October bodes ill for manufacturing hiring into C4Q24 and we think may further extend to early 2025 recruiting season;
We expect BZ to grow profit faster than revenues on cost savings, particularly on marketing and gain shares. We cut the TP from US$19 to US$17. 


[Kanzhun Ltd. (BZ US, BUY, TP US$17) Target Price Change]: Mark Down C4Q24 and 2025 on Weak Demand

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

Thematic (Sector/Industry)

<ul>
<li>NTES US: NetEase Denies Full Staff Layoff at Shenzhen Game Division, Clarifies It’s a Product-Specific Adjustment (/)</li>
<li>NTES US: NetEase officially Named Their Urban Open-World RPG &lt;Project Mugen&gt; as &lt;Ananta&gt; (+)</li>
<li>NTES US: NTES US: NetEase Closes Overseas Studio "Worlds Untold" (/)</li>
</ul>


NTES US: NetEase Denies Full Staff Layoff at Shenzhen Game Division, Clarifies It’s a Product-Specific Adjustment (/)
NTES US: NetEase officially Named Their Urban Open-World RPG &lt;Project Mugen&gt; as &lt;Ananta&gt; (+)
NTES US: NTES US: NetEase Closes Overseas Studio "Worlds Untold" (/)


[Blue Lotus Daily-TMT Update]:NTES US/700 HK/1024 HK/BIDU US/BABA US/KC US

<ul>
<li>LI US/1211 HK/1810 HK/XPEV US/NIO US/9863 HK/ZK US:In the 47th week of new energy vehicles, LI and BYD were impacted by new new forces. (////////////)</li>
<li>1211 HK:BYD Requests Suppliers to Reduce Prices by 10% in 2025.(+)</li>
<li>1810 HK/JD US: Jiangsu Province Expands Consumer Subsidy Scope, Adding 27 Product Categories Including Mobile Phones and Laptops.(+/+)</li>
</ul>


LI US/1211 HK/1810 HK/XPEV US/NIO US/9863 HK/ZK US:In the 47th week of new energy vehicles, LI and BYD were impacted by new new forces. (////////////)
1211 HK:BYD Requests Suppliers to Reduce Prices by 10% in 2025.(+)
1810 HK/JD US: Jiangsu Province Expands Consumer Subsidy Scope, Adding 27 Product Categories Including Mobile Phones and Laptops.(+/+)


[Blue Lotus Daily]:LI US/1211 HK/1810 HK/XPEV US/NIO US/9863 HK/ZK US/JD US/Macro News

Andy Fu, CFA

Agora, Inc. provides communication software solutions. The Company offers video, voice, and live interactive streaming platform to interact and engage with others online. Agora serves customers worldwide.

<ul>
<li>Agora share price rallied 34% on C3Q24 earning call. During the call Agora outlined plans for large scale layoffs and committed to turn profitable for full year 2025;</li>
<li>With the business rationalization, cooperation with OpenAI now becomes the only growth driver for the future. We believe with Agora's operation-oriented business model, there is a fair chance for success;</li>
<li>Considering the price cut speed of 10x in one year from Chat GPT, the audio GAI price lower from US$9/hour to US$1/hour could happen within one year.</li>
</ul>


Agora share price rallied 34% on C3Q24 earning call. During the call Agora outlined plans for large scale layoffs and committed to turn profitable for full year 2025;
With the business rationalization, cooperation with OpenAI now becomes the only growth driver for the future. We believe with Agora's operation-oriented business model, there is a fair chance for success;
Considering the price cut speed of 10x in one year from Chat GPT, the audio GAI price lower from US$9/hour to US$1/hour could happen within one year.


Agora (API US): Rationalizing All Biz and Zero in on OpenAI

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

<ul>
<li>BIDU reported C3Q24 top line, non-GAAP operating profit and GAAP net income in-line, 4.6% and 66% vs. our estimate and in-line, 8.7% and 46% vs. consensus.</li>
<li>Ads revenue declined and C4Q24 guidance was below expectations. Margin improvement was mainly achieved through personnel cuts, which we think is not sustainable. AI didn’t contribute materially to revenues;</li>
<li>We see no return to growth from any of the business lines. We keep our SELL rating and cut the TP from US$84 to US$78.</li>
</ul>


BIDU reported C3Q24 top line, non-GAAP operating profit and GAAP net income in-line, 4.6% and 66% vs. our estimate and in-line, 8.7% and 46% vs. consensus.
Ads revenue declined and C4Q24 guidance was below expectations. Margin improvement was mainly achieved through personnel cuts, which we think is not sustainable. AI didn’t contribute materially to revenues;
We see no return to growth from any of the business lines. We keep our SELL rating and cut the TP from US$84 to US$78.


[Baidu, Inc. (BIDU US, SELL, TP US$78) TP Change]: C3Q24 Review: No Respite in Going Ex-Growth

Blue Lotus Research Institute
China growth and global non-US Internet equities

[Kanzhun Ltd. (BZ US, BUY, TP US$17) Target Price Change]: Mark Down C4Q24 and 2025 on Weak Demand

Investors advised to accumulate Kanzhun, weak industrial sector earnings may impact manufacturing hiring into early 2025, BZ expected to grow...

Blue Lotus Research Institute

[Blue Lotus Daily-TMT Update]:NTES US/700 HK/1024 HK/BIDU US/BABA US/KC US

NetEase denies full staff layoff in Shenzhen game division, renames RPG project, and closes overseas studio. Tencent Announces Video Generation...

Blue Lotus Research Institute

[Blue Lotus Daily]:LI US/1211 HK/1810 HK/XPEV US/NIO US/9863 HK/ZK US/JD US/Macro News

New energy vehicle companies like LI and BYD face challenges, with BYD requesting suppliers to cut prices by 10% by 2025 ,Jiangsu Province...

Blue Lotus Research Institute

Agora (API US): Rationalizing All Biz and Zero in on OpenAI

Agora's share price surged after announcing layoffs and commitment to profitability by 2025, with cooperation with OpenAI as key growth driver....

Blue Lotus Research Institute

[Baidu, Inc. (BIDU US, SELL, TP US$78) TP Change]: C3Q24 Review: No Respite in Going Ex-Growth

BIDU reports in-line financials, with declining ad revenue and unsustainable margin improvement. No growth expected, SELL rating maintained with...

Blue Lotus Research Institute

[Kanzhun Ltd. (BZ US, BUY, TP US$17) Target Price Change]: Mark Down C4Q24 and 2025 on Weak Demand

​Investors advised to accumulate Kanzhun, weak industrial sector earnings may impact manufacturing hiring into early 2025, BZ expected to grow...

Blue Lotus Research Institute

[Blue Lotus Daily-TMT Update]:NTES US/700 HK/1024 HK/BIDU US/BABA US/KC US

​NetEase denies full staff layoff in Shenzhen game division, renames RPG project, and closes overseas studio. Tencent Announces Video Generation...

Blue Lotus Research Institute

[Blue Lotus Daily]:LI US/1211 HK/1810 HK/XPEV US/NIO US/9863 HK/ZK US/JD US/Macro News

​New energy vehicle companies like LI and BYD face challenges, with BYD requesting suppliers to cut prices by 10% by 2025 ,Jiangsu Province...

Blue Lotus Research Institute

Agora (API US): Rationalizing All Biz and Zero in on OpenAI

​Agora's share price surged after announcing layoffs and commitment to profitability by 2025, with cooperation with OpenAI as key growth driver....

Blue Lotus Research Institute

[Baidu, Inc. (BIDU US, SELL, TP US$78) TP Change]: C3Q24 Review: No Respite in Going Ex-Growth

​BIDU reports in-line financials, with declining ad revenue and unsustainable margin improvement. No growth expected, SELL rating maintained with...

Blue Lotus Research Institute

Investors advised to accumulate Kanzhun, weak industrial sector earnings may impact manufacturing hiring into early 2025, BZ expected to grow...

NetEase denies full staff layoff in Shenzhen game division, renames RPG project, and closes overseas studio. Tencent Announces Video Generation...

New energy vehicle companies like LI and BYD face challenges, with BYD requesting suppliers to cut prices by 10% by 2025 ,Jiangsu Province...

Agora's share price surged after announcing layoffs and commitment to profitability by 2025, with cooperation with OpenAI as key growth driver....

BIDU reports in-line financials, with declining ad revenue and unsustainable margin improvement. No growth expected, SELL rating maintained with...