Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>A mere 1.41178 billion</li>
<li>Hush now. Central bank calms inflation fears</li>
<li>When a poem, slashes share price</li>
<li>Kerry: China is an adversary</li>
<li>Don’t wait to recharge your batteries</li>
</ul><div class="content-remarks"><p>In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</p></div>

China News That Matters
A mere 1.41178 billion
Hush now. Central bank calms inflation fears
When a poem, slashes share price
Kerry: China is an adversary
Don’t wait to recharge your batteries
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Population/ Commodities/ Meituan/ US-China/ EVs

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Event-Driven

Smoore International Holdings / Event-Driven

<p>For our next Webinar, we 're excited to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> , who will discuss the upcoming rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.</p><h3>The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=87998710285" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div><p>Brian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.</p>

For our next Webinar, we 're excited to welcome back Insight Provider Brian Freitas , who will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX). Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.Register for the Webinar hereBrian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>After a disappointing 4QFY21 results release, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> shares dropped 6.3% yesterday. The company’s share price is <a target="_blank">down 35% from the October 2020 peak </a>but remains 17% above the COVID-19 sell-off low level.</p><p>With increased regulatory scrutiny on Chinese e-commerce and growth to value rotation in the equity markets, Alibaba was under a lot of pressure to release strong 4QFY21 results. However, yesterday’s results were rather disappointing and we think there could be more downside pressure on Alibaba shares with the ongoing growth to value rotation.</p>

After a disappointing 4QFY21 results release, Alibaba Group (BABA US) shares dropped 6.3% yesterday. The company’s share price is down 35% from the October 2020 peak but remains 17% above the COVID-19 sell-off low level.With increased regulatory scrutiny on Chinese e-commerce and growth to value rotation in the equity markets, Alibaba was under a lot of pressure to release strong 4QFY21 results. However, yesterday’s results were rather disappointing and we think there could be more downside pressure on Alibaba shares with the ongoing growth to value rotation.

Alibaba 4QFY21: Marketplace Margins Are Coming Down Hard & Cloud Loses a Big Customer

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

<p>After <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> reported FY2021 results, the stock took a 6% slide in a market that was already skittish and looking for an excuse to jump off the global tech names and even more so for the Chinese platforms because of the continuing regulatory concerns. </p><p>In this environment, it is easy to lose conviction on a stock.  However, I offer three reasons why investors should not be discouraged about BABA and its perceived weak results:</p><ol>
<li>
<strong>Operating profit did NOT decline.</strong>  Excluding the AML penalty of CNY18.2 bn, operating profit in the March quarter would have grown 48% YoY, and 18% on a full-year basis.</li>
<li>
<strong>Revenue growths remain brisk</strong> at 64% for the quarter and 41% for the full year, beating consensus expectations.  Excluding Sun Art consolidation, it would still be a robust 39% and 32%, respectively.  Customer management revenue growth of 40% YoY in the March quarter was promising. </li>
<li>
<strong>Cloud profitability on the rise. </strong> After breaking even in the Dec quarter, the segment EBITA margin rose to 1.8% -- still small but fast improving.       </li>
</ol><p>Keep in mind that Alibaba is out of the crosshair of regulators, while its competitors are only beginning to feel the heat. I believe the company is in a good position to leverage its gigantic free cash flow and the uncertainty facing its competitors to gain market share.   I estimate Alibaba’s operating profit to grow 61% in FY2022.   </p><p><strong>Key risk:</strong> Management stated that it would reallocate incremental profits into generating incremental revenue growth. Alibaba management always states that it does not manage by margins.  However, the company has always maintained its marketplace EBITA margins above 70% (of marketplace revenues, not total revenues).  I believe margins will continue to trend down,  largely because of the faster than expected revenue growth, but its profit growth will remain robust.    </p><p>Previous related reports: </p><p><a href="https://www.smartkarma.com/insights/china-e-commerce-robust-consumption-data-hints-at-online-spending-spree" target="_blank" data-smartkarma-citation="insights:50798" rel="noopener">China E-Commerce: Robust Consumption Data Hints at Online Spending Spree</a></p><p><a href="https://www.smartkarma.com/insights/alibaba-baba-us-record-fine-grin-and-bear-it-as-better-days-are-ahead" target="_blank" data-smartkarma-citation="insights:50219" rel="noopener">Alibaba (BABA US): Record Fine - Grin and Bear It as Better Days Are Ahead</a> </p><p><a href="https://www.smartkarma.com/insights/alibaba-baba-us-ant-group-woes-overly-priced-in" target="_blank" data-smartkarma-citation="insights:48648" rel="noopener">Alibaba (BABA US): Ant Group Woes Overly Priced-In</a> </p>

After Alibaba Group (BABA US) reported FY2021 results, the stock took a 6% slide in a market that was already skittish and looking for an excuse to jump off the global tech names and even more so for the Chinese platforms because of the continuing regulatory concerns. In this environment, it is easy to lose conviction on a stock.  However, I offer three reasons why investors should not be discouraged about BABA and its perceived weak results:

Operating profit did NOT decline.  Excluding the AML penalty of CNY18.2 bn, operating profit in the March quarter would have grown 48% YoY, and 18% on a full-year basis.

Revenue growths remain brisk at 64% for the quarter and 41% for the full year, beating consensus expectations.  Excluding Sun Art consolidation, it would still be a robust 39% and 32%, respectively.  Customer management revenue growth of 40% YoY in the March quarter was promising. 

Cloud profitability on the rise.  After breaking even in the Dec quarter, the segment EBITA margin rose to 1.8% -- still small but fast improving.       
Keep in mind that Alibaba is out of the crosshair of regulators, while its competitors are only beginning to feel the heat. I believe the company is in a good position to leverage its gigantic free cash flow and the uncertainty facing its competitors to gain market share.   I estimate Alibaba’s operating profit to grow 61% in FY2022.   Key risk: Management stated that it would reallocate incremental profits into generating incremental revenue growth. Alibaba management always states that it does not manage by margins.  However, the company has always maintained its marketplace EBITA margins above 70% (of marketplace revenues, not total revenues).  I believe margins will continue to trend down,  largely because of the faster than expected revenue growth, but its profit growth will remain robust.    Previous related reports: China E-Commerce: Robust Consumption Data Hints at Online Spending SpreeAlibaba (BABA US): Record Fine - Grin and Bear It as Better Days Are Ahead Alibaba (BABA US): Ant Group Woes Overly Priced-In 

Alibaba (BABA US): Three Reasons Why Investors Should Not Fret

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Revenue accelerated in 4Q21, even excluding the acquisition of Sun Art.</li>
<li>Operating profit increased YoY after adding back the anti-monopoly fine.</li>
<li>The stock price has fallen significantly from its high this year.</li>
<li>We set an upside of 18%.</li>
</ul><p>Our previous coverage on Alibaba:</p><ul>
<li>
<a href="https://www.smartkarma.com/insights/alibaba-baba-opens-store-in-tencent-wechat-a-surrender" target="_blank" data-smartkarma-citation="insights:50590" rel="noopener">Alibaba (BABA): Opens Store in Tencent WeChat - A Surrender</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/alibaba-baba-fined-2-78-billion-for-either-or-but-impact-is-neither-big-nor-long-term" target="_blank" data-smartkarma-citation="insights:50213" rel="noopener">Alibaba (BABA): Fined $2.78 Billion for “Either Or”, But Impact Is Neither Big Nor Long Term</a> </li>
</ul>


Revenue accelerated in 4Q21, even excluding the acquisition of Sun Art.
Operating profit increased YoY after adding back the anti-monopoly fine.
The stock price has fallen significantly from its high this year.
We set an upside of 18%.
Our previous coverage on Alibaba:

Alibaba (BABA): Opens Store in Tencent WeChat - A Surrender 

Alibaba (BABA): Fined $2.78 Billion for “Either Or”, But Impact Is Neither Big Nor Long Term 


Alibaba (BABA): 4Q21 Result, Not as Bad as It Looks

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba (BABA US)

Population/ Commodities/ Meituan/ US-China/ EVs

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

On 19 May, 5PM SGT, join our webinar with Brian Freitas, where we will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX)...

Smartkarma Research

Alibaba 4QFY21: Marketplace Margins Are Coming Down Hard & Cloud Loses a Big Customer

Alibaba's 1QFY21 results were rather weak as the marketplace business margin came down hard and the Cloud business lost a major customer.

Oshadhi Kumarasiri

Alibaba (BABA US): Three Reasons Why Investors Should Not Fret

Alibaba's shares took a hit in a tough market as the media characterized the company's earnings as disappointing. On the contrary, I offer three...

Mitchell Kim

Alibaba (BABA): 4Q21 Result, Not as Bad as It Looks

Revenue accelerated in 4Q21, even excluding the acquisition of Sun Art. Operating profit increased YoY after adding back the anti-monopoly fine.

Ming Lu

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