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.

Equity Bottom-Up

<ul>
<li>Meituan has been hiring delivery workers in Hong Kong since February 20.</li>
<li>JD will provide a subsidy of RMB1.5 billion to customers to compete with Pinduoduo (PDD) in early March.</li>
<li>Four companies released financial performance for 4Q22, including Baidu, iQiyi, NetEase, and Sohu.</li>
</ul>


Meituan has been hiring delivery workers in Hong Kong since February 20.
JD will provide a subsidy of RMB1.5 billion to customers to compete with Pinduoduo (PDD) in early March.
Four companies released financial performance for 4Q22, including Baidu, iQiyi, NetEase, and Sohu.


China Internet Weekly (2023Feb27): Meituan, JD, Baidu, IQiyi, NetEase, and Sohu

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.

<ul><li>IQ delivered upbeat 4Q22 result, with rev +2.8% YoY (1% above consensus) and adj. NP at RMB856mn (176% above consensus).</li><li>We believe such strong momentum would continue in 1Q23E (forecasting rev to accelerate to +10% YoY), backed by eye-catching performance of The Knockout (狂飙).</li><li>IQ is one of our top picks in online entertainment segment, on its strong pipeline in FY23-24, healthy rev growth, clear margin improvement and the relaxation of LFV content regulation.</li></ul><p><em>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.</em></p>

IQ delivered upbeat 4Q22 result, with rev +2.8% YoY (1% above consensus) and adj. NP at RMB856mn (176% above consensus).We believe such strong momentum would continue in 1Q23E (forecasting rev to accelerate to +10% YoY), backed by eye-catching performance of The Knockout (狂飙).IQ is one of our top picks in online entertainment segment, on its strong pipeline in FY23-24, healthy rev growth, clear margin improvement and the relaxation of LFV content regulation.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.

iQIYI (IQ US) – Stronger momentum ahead

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

<ul>
<li>Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.</li>
<li>With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.</li>
<li>Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.</li>
</ul>


Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.
With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.
Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.


Baidu: Undervalued Cyclical Revenue Growth Acceleration and Margin Expansion Story

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.</li>
<li>Years of investments in original content production capabilities paid off and solidified IQ's leadership in China's long form video industry. </li>
<li>Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  </li>
</ul>


IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
Years of investments in original content production capabilities paid off and solidified IQ's leadership in China's long form video industry. 
Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  


IQIYI (IQ US): From Turnaround to High-Quality Growth

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

China

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

China Internet Weekly (2023Feb27): Meituan, JD, Baidu, IQiyi, NetEase, and Sohu

Meituan is hiring delivery workers in Hong Kong. JD will provide a subsidy of RMB1.5 bn to customers to compete with Pinduoduo (PDD). Baidu, iQiyi,...

Ming Lu

iQIYI (IQ US) – Stronger momentum ahead

IQ delivered upbeat 4Q22 result, with rev +2.8% YoY (1% above consensus) and adj. NP at RMB856mn (176% above consensus).

CMB International

Baidu: Undervalued Cyclical Revenue Growth Acceleration and Margin Expansion Story

In this insight, we analyse Baidu’s search query and digital advertising revenue market share trends, revenue growth outlook, margin expansion...

Wium Malan, CFA

IQIYI (IQ US): From Turnaround to High-Quality Growth

IQ's 4Q results mark end of turnaround and start of high-quality growth. We expect the company to generate RMB3.5 billion net profit for 2023. At...

Eric Chen

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

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