Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Equity Bottom-Up

We believe that <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a> is a special situation that warrants a close look from the long side.  Our recent checks in the live broadcasting broadcasters and agencies suggest that broadcasters see a surge in traffic/new viewers from BIDU in recent weeks.  BIDU traffic is of lower quality than YY as BIDU’s existing business model for live streaming is ecommerce.  YY, on the other hand, discusses tips for broadcasters.  <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>  has opened multiple entries to YY.  For example, all viewers of Haokan Video (short video sub of <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> ) now have access to YY subsidiaries.  Haokan is said to have 30MM DAU through independent Haokan App, and 110 MM DAU through all apps in Baidu ecosystem in 2019.  Assuming YY can convert 1% DAU to paying users, that is 26% boost to YY existing paying users.

We believe that JOYY (YY US) is a special situation that warrants a close look from the long side.  Our recent checks in the live broadcasting broadcasters and agencies suggest that broadcasters see a surge in traffic/new viewers from BIDU in recent weeks.  BIDU traffic is of lower quality than YY as BIDU’s existing business model for live streaming is ecommerce.  YY, on the other hand, discusses tips for broadcasters.  Baidu (BIDU US)  has opened multiple entries to YY.  For example, all viewers of Haokan Video (short video sub of Baidu (BIDU US) ) now have access to YY subsidiaries.  Haokan is said to have 30MM DAU through independent Haokan App, and 110 MM DAU through all apps in Baidu ecosystem in 2019.  Assuming YY can convert 1% DAU to paying users, that is 26% boost to YY existing paying users.

BIDU-YY Live Streaming Integration Update: Unlocking Deep Value in YY

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

While both Huya and Douyu failed to escape the downward pressure on Chinese tech stocks in the last quarter the latter noticeably outperformed, falling “just” 33% since our last insight vs. a 43% drop for Huya. Those moves have set things up very well for Huya though…

While both Huya and Douyu failed to escape the downward pressure on Chinese tech stocks in the last quarter the latter noticeably outperformed, falling “just” 33% since our last insight vs. a 43% drop for Huya. Those moves have set things up very well for Huya though…

Huya Vs. Douyu – Both Trading Near Net Cash but Buy the More Expensive One

We have consistently favoured Huya over Douyu over the last year based on the thesis that Douyu appeared to have engaged in some short-term window dressing on costs to obtain a favourable merger multiple and that Huya's operational performance was more sustainable. This appears to have been borne out over recent quarters and <a href="https://news.yahoo.com/chinese-antitrust-regulator-block-tencents-091439825.html" target="_blank" rel="noopener">Reuters is now reporting</a> that the merger will in fact be blocked.

We have consistently favoured Huya over Douyu over the last year based on the thesis that Douyu appeared to have engaged in some short-term window dressing on costs to obtain a favourable merger multiple and that Huya's operational performance was more sustainable. This appears to have been borne out over recent quarters and Reuters is now reporting that the merger will in fact be blocked.

Huya Vs. Douyu - Merger Blockage Is a Problem for Douyu

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.

HUYA (HUYA US)

BIDU-YY Live Streaming Integration Update: Unlocking Deep Value in YY

YY to broadcaster on May 21: “YY and Baidu live streaming channels will start sharing data. We asked our live broadcasters to welcome the new...

JL Warren Capital

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Tencent Investee Selldown - The US$120bn Global Overhang

There have been multiple reports that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. We look at Tencent's...

Sumeet Singh

Huya Vs. Douyu – Both Trading Near Net Cash but Buy the More Expensive One

While both Huya and Douyu failed to escape the downward pressure on Chinese tech stocks in the last quarter the share price falls have set things...

Mio Kato

Huya Vs. Douyu - Merger Blockage Is a Problem for Douyu

Reuters is now reporting that the Huya-Douyu merger will in fact be blocked and we believe this is highly negative for Douyu but could be positive...

Mio Kato