Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>BILI's 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023</li>
<li>The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.</li>
<li>Reiterate our bearish view on the stock and see further downside risks ahead.</li>
</ul>


BILI's 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023
The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.
Reiterate our bearish view on the stock and see further downside risks ahead.


Bilibili (Bili Us): Further Downside Risks Ahead

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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.

<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> 's share price is up 30.8% YTD primarily driven by upbeat 4Q2022 results. The main highlight was strong increase in members alongside improvement in OPM.</li>
<li>The company’s aggressive cost cutting measures have helped reach operating profits, however, we don’t think this is sustainable given user growth depends on content.</li>
<li>We expect iQiyi’s 1Q2023E results to be strong driven by the launch of The Knockout series, however, further cutting down costs will impact the company's long-term prospects.</li>
</ul>



IQIYI Inc (IQ US) 's share price is up 30.8% YTD primarily driven by upbeat 4Q2022 results. The main highlight was strong increase in members alongside improvement in OPM.
The company’s aggressive cost cutting measures have helped reach operating profits, however, we don’t think this is sustainable given user growth depends on content.
We expect iQiyi’s 1Q2023E results to be strong driven by the launch of The Knockout series, however, further cutting down costs will impact the company's long-term prospects.


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

<ul>
<li>IQIYI’s 4Q22 top line was in line with cons., while non-GAAP net income beat cons by 176%, due to reduction of content cost to a historical low. </li>
<li>We raise its 2023 revenue forecasts due to macro recovery, but expect its content cost to rebound to cope with market competition.</li>
<li>Due to long-standing industry challenges, we maintain SELL but raise TP to reflect macro rebound. Our TP is US$ 5.40, which implies 18.4X PE in 2023.</li>
</ul>


IQIYI’s 4Q22 top line was in line with cons., while non-GAAP net income beat cons by 176%, due to reduction of content cost to a historical low. 
We raise its 2023 revenue forecasts due to macro recovery, but expect its content cost to rebound to cope with market competition.
Due to long-standing industry challenges, we maintain SELL but raise TP to reflect macro rebound. Our TP is US$ 5.40, which implies 18.4X PE in 2023.


[iQIYI, Lnc. (IQ US,) Target Price Change]: Short-Term Catalysts Not to Solve Long-Term Challenges

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>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

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

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)

Bilibili (Bili Us): Further Downside Risks Ahead

Disappointing 4Q results highlights the outlook of low growth and limited room for margin improvement. We see further downside risks ahead.

Eric Chen

IQiyi: Upbeat 4Q Is Only Temporary

iQiyi's aggressive cost control measures helped improve profitability. However, we think those have reached its limit as further controls will...

Shifara Samsudeen, FCMA, CGMA

[iQIYI, Lnc. (IQ US,) Target Price Change]: Short-Term Catalysts Not to Solve Long-Term Challenges

We raise its 2023 revenue forecasts due to macro recovery, but expect its content cost to rebound to cope with market competition. Maintain SELL...

Blue Lotus Research Institute

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

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

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