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>Bilibili has announced the latest incentive policies for the "Spark Program."</li>
<li>XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project and establish strategic partnership with DiDi (+/+)</li>
<li>SE / PDD: Temu enters the Philippines ( - / +)</li>
</ul>


Bilibili has announced the latest incentive policies for the "Spark Program."
XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project and establish strategic partnership with DiDi (+/+)
SE / PDD: Temu enters the Philippines ( - / +)


China TMT Update-Bili/XPEV/DiDi/SE/PDD-Xpeng Acquire DiDi's EV Project/Temu Enters the Philippines

Equity Bottom-Up

<ul>
<li>BILI reported 2Q23 top-line in-line and non-GAAP net profit 7% better than consensus.  However, gaming revenue was weak, causing BILI to revise down its full-year revenue guidance.</li>
<li>We believe e-commerce ads could become a new near-term driving force, but the rapid growth of game-related ads might fade post-Q3. </li>
<li>Also, the significant consolidation of ACG games could affect BILI’s future game performance. We maintain our US$ 12.3 TP and SELL rating.</li>
</ul>


BILI reported 2Q23 top-line in-line and non-GAAP net profit 7% better than consensus.  However, gaming revenue was weak, causing BILI to revise down its full-year revenue guidance.
We believe e-commerce ads could become a new near-term driving force, but the rapid growth of game-related ads might fade post-Q3. 
Also, the significant consolidation of ACG games could affect BILI’s future game performance. We maintain our US$ 12.3 TP and SELL rating.


[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

<ul>
<li>Meituan/Ctrip.com/Atour: MCT announce the third batch of destination list for outbound group travel, bodes well for outbound travel recovery</li>
<li>ZTO: Cainiao Guoguo launches RMB 1.3bn in logistics subsidies for new Taobao/Tmall SMEs (-)</li>
<li>Tencent held the 2023 WeChat Advertising Ecology Partnership Conference (+)</li>
</ul>


Meituan/Ctrip.com/Atour: MCT announce the third batch of destination list for outbound group travel, bodes well for outbound travel recovery
ZTO: Cainiao Guoguo launches RMB 1.3bn in logistics subsidies for new Taobao/Tmall SMEs (-)
Tencent held the 2023 WeChat Advertising Ecology Partnership Conference (+)


China TMT Update-Meituan/Ctrip/Atour/Baba/ZTO/Tencent/-Cainiao/WeChat Ads Conference/Outbound Travel

<ul>
<li>We updated our revenue forecasts for ByteDance (China domestic) , with the industry models. We estimate that ByteDance's domestic ad revenue/eCommerce GMV/local lifestyle GTV will grow by 17%/50%/134% this year.</li>
<li>In the advertising space, we recommend Tencent and iQIYI. Both Tencent and iQIYI experienced a decline in their advertising revenue market share in 2022, followed by a rebound in 2023.</li>
<li>In transactional GMV/GTV, we prefer Meituan and Pinduoduo. Meituan's market share experienced a significant decline in 2022, but the decline rate is expected to narrow significantly this year.</li>
</ul>


We updated our revenue forecasts for ByteDance (China domestic) , with the industry models. We estimate that ByteDance's domestic ad revenue/eCommerce GMV/local lifestyle GTV will grow by 17%/50%/134% this year.
In the advertising space, we recommend Tencent and iQIYI. Both Tencent and iQIYI experienced a decline in their advertising revenue market share in 2022, followed by a rebound in 2023.
In transactional GMV/GTV, we prefer Meituan and Pinduoduo. Meituan's market share experienced a significant decline in 2022, but the decline rate is expected to narrow significantly this year.


[Blue Lotus Multi-Platform Sector Update]: ByteDance Forecasts and Implications for China Internet

<ul>
<li>We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. </li>
<li>However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.</li>
<li>We maintain a SELL rating, and investors may consider shorting BILI after &lt;Uma Musume&gt; is launched.</li>
</ul>


We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. 
However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
We maintain a SELL rating, and investors may consider shorting BILI after &lt;Uma Musume&gt; is launched.


[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization

China

Bilibili Inc. provides online entertainment services. The Company offers a platform that covers a wide array of genres and media formats, including videos, live broadcasting, mobile games, animation, and comics. Bilibili serves customers in China.

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Bilibili (BILI US)

China TMT Update-Bili/XPEV/DiDi/SE/PDD-Xpeng Acquire DiDi's EV Project/Temu Enters the Philippines

Bilibili has announced the latest incentive policies for the "Spark Program.";XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project(+/+);SE/PDD: Temu...

Blue Lotus Research Institute

[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

We believe e-commerce ads could become a new driving force, but the rapid growth of game-related ads might fade post-Q3. Also, the consolidation of...

Blue Lotus Research Institute

China TMT Update-Meituan/Ctrip/Atour/Baba/ZTO/Tencent/-Cainiao/WeChat Ads Conference/Outbound Travel

MCT announce the third batch of destination list for outbound group travel;Cainiao Guoguo launches RMB 1.3bn in logistics subsidies;Tencent 2023...

Blue Lotus Research Institute

[Blue Lotus Multi-Platform Sector Update]: ByteDance Forecasts and Implications for China Internet

We estimate that ByteDance's domestic ad revenue/eCommerce GMV/local lifestyle GTV will grow by 17%/50%/134% this year. We prefer Tencent, iQiyi,...

Blue Lotus Research Institute

[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization

We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. Most of these catalysts appear to be minor....

Blue Lotus Research Institute

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