China/Asia TMT

Shawn Yang

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

Thematic (Sector/Industry)

<ul>
<li>Boss Zhipin: Boss Zhipin MAU growth rate is higher than peers’, but still hard to monetize this year.</li>
<li>PDD/3690.HK: PDD launches local life services portal (+ / -)</li>
<li>NTES/700HK: The Rise of "Gaming with Influencers" on Douyin (+/-)</li>
</ul>


Boss Zhipin: Boss Zhipin MAU growth rate is higher than peers’, but still hard to monetize this year.
PDD/3690.HK: PDD launches local life services portal (+ / -)
NTES/700HK: The Rise of "Gaming with Influencers" on Douyin (+/-)


China TMT Update-BZ/PDD/3690/NTES/700/Douyin-PDD Launches Local Life Services Portal

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Despite soft seasonality and epidemic impact, Huya delivered better-than-feared 1Q23 results (with upbeat rev and better margin).</li><li>2Q23E guidance was mixed on muted livestreaming (time spent shifted to offline on holidays and conservative operation) but better ads &amp; margin.</li><li>We forecast 2Q23E rev stable QoQ (1% below consensus), with adj. NPM at 1.4% (vs. consensus at -0.4%). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Despite soft seasonality and epidemic impact, Huya delivered better-than-feared 1Q23 results (with upbeat rev and better margin).2Q23E guidance was mixed on muted livestreaming (time spent shifted to offline on holidays and conservative operation) but better ads &amp; margin.We forecast 2Q23E rev stable QoQ (1% below consensus), with adj. NPM at 1.4% (vs. consensus at -0.4%). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Huya Inc. (HUYA US) – Better margin improvement ahead

<ul><li>Huya delivered upbeat 4Q22 results (with in-line rev and better margin), but 1Q23E guidance muted on seasonality and epidemic (forecasting rev -13% QoQ).</li><li>We suggest to look beyond soft 1Q23E, and expect livestreaming to resume positive growth in 2H23E (forecasting -5% YoY in FY23E), backed by: 1) a rebase after the regulatory change in livestreaming in June last year; 2) macro recovery after China’s reopening; and 3) new blockbuster game launch.</li><li>With continuous cost control and license rearrangement, we keep positive on its margin improvement ahead, forecasting its net loss to narrow to RMB146mn in FY23E and expect to turn profitability at group level in FY24E.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Huya delivered upbeat 4Q22 results (with in-line rev and better margin), but 1Q23E guidance muted on seasonality and epidemic (forecasting rev -13% QoQ).We suggest to look beyond soft 1Q23E, and expect livestreaming to resume positive growth in 2H23E (forecasting -5% YoY in FY23E), backed by: 1) a rebase after the regulatory change in livestreaming in June last year; 2) macro recovery after China’s reopening; and 3) new blockbuster game launch.With continuous cost control and license rearrangement, we keep positive on its margin improvement ahead, forecasting its net loss to narrow to RMB146mn in FY23E and expect to turn profitability at group level in FY24E.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Huya Inc. (HUYA US) – Moving into mild recovery in 2H23E

<ul><li>We expect Huya to deliver upbeat margin in 4Q22E, despite muted livestreaming disrupted by epidemic outbreak which is well priced in.</li><li>We suggest to look beyond soft 1Q23E owing to weak seasonality &amp; epidemic, and expect 2H23E livestreaming to resume positive growth, backed by: 1) a rebase after the regulatory change in livestreaming in June last year; 2) macro recovery after reopening; and 3) new blockbuster game launch.</li><li>After rearrangement of LoL tournament licensing in Jan 2023, we are more positive on Huya’s margin expansion ahead (forecasting narrowing loss in FY23E and group profit in FY24E). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We expect Huya to deliver upbeat margin in 4Q22E, despite muted livestreaming disrupted by epidemic outbreak which is well priced in.We suggest to look beyond soft 1Q23E owing to weak seasonality &amp; epidemic, and expect 2H23E livestreaming to resume positive growth, backed by: 1) a rebase after the regulatory change in livestreaming in June last year; 2) macro recovery after reopening; and 3) new blockbuster game launch.After rearrangement of LoL tournament licensing in Jan 2023, we are more positive on Huya’s margin expansion ahead (forecasting narrowing loss in FY23E and group profit in FY24E). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HUYA (HUYA US) – Clear Margin Improvement

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">IQIYI Inc (IQ US)</a> aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.</li>
<li>The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. </li>
<li>The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. </li>
</ul>



IQIYI Inc (IQ US) aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.
The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. 
The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. 


IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

United States

HUYA Inc. operates as a game live streaming platform. The Company offers interactive video broadcast services including e-sports, music, reality show, entertainment genres, talent shows, and anime and outdoor activities. HUYA serves customers in China.

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HUYA (HUYA US)

China TMT Update-BZ/PDD/3690/NTES/700/Douyin-PDD Launches Local Life Services Portal

Boss Zhipin: Boss Zhipin MAU growth rate is higher than peers’; PDD/3690.HK: PDD launches local life services portal; NTES/700HK: The Rise of...

Blue Lotus Research Institute

Huya Inc. (HUYA US) – Better margin improvement ahead

Despite soft seasonality and epidemic impact, Huya delivered better-than-feared 1Q23 results (with upbeat rev and better margin).

CMB International

Huya Inc. (HUYA US) – Moving into mild recovery in 2H23E

Huya delivered upbeat 4Q22 results (with in-line rev and better margin), but 1Q23E guidance muted on seasonality and epidemic (forecasting rev -13%...

CMB International

HUYA (HUYA US) – Clear Margin Improvement

We expect Huya to deliver upbeat margin in 4Q22E, despite muted livestreaming disrupted by epidemic outbreak which is well priced in.

CMB International

IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin...

Arun George

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