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>JD.com stock price surged after its 4Q23 results and repurchase decision.</li>
<li>It is not big issue that BYD sales decreased in the weak season.</li>
<li>Alibaba began to close unprofitable Freshippo stores in February, but the company said it has expansion plan.</li>
</ul>


JD.com stock price surged after its 4Q23 results and repurchase decision.
It is not big issue that BYD sales decreased in the weak season.
Alibaba began to close unprofitable Freshippo stores in February, but the company said it has expansion plan.


China Consumption Weekly (11 Mar 2024): JD.com, JD Logisitics, BYD, Alibaba, NIO

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>JD.com (JD) reported (6 March) better-than-expected 4Q23 results with solidly improved outlook for shareholder return: revenue was RMB306.1bn, up 3.6% YoY, 3%/2% higher than our forecast/Bloomberg consensus; non-GAAP net income was RMB8.4bn, ahead of our/consensus estimates of RMB7.4bn/7.2bn thanks to a beat on revenue and better-than-feared margin performance of JD Retail (JDR) business, translating into a non-GAAP NPM of 2.7% (4Q22: 2.6%). For 2023, total revenue was RMB1.1tn, up 3.7% YoY, and non-GAAP net income reached RMB35.2bn, up 25% YoY, with the implied non-GAAP NPM expanding 0.5pp YoY to 3.2%.</li><li>For 2024, management highlighted key priorities on user experience enhancement and market share gains, and we expect JD to reinvest incremental profit in 2024 to drive user acquisition and wallet share gains, amid current intensified market competition.</li><li>However, the improved shareholder return policy should provide support for valuation, while further rerating may hinge on the recovery of consumption sentiment, as well as the fully wearing off of business adjustment impact. </li></ul>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.

JD.com (JD) reported (6 March) better-than-expected 4Q23 results with solidly improved outlook for shareholder return: revenue was RMB306.1bn, up 3.6% YoY, 3%/2% higher than our forecast/Bloomberg consensus; non-GAAP net income was RMB8.4bn, ahead of our/consensus estimates of RMB7.4bn/7.2bn thanks to a beat on revenue and better-than-feared margin performance of JD Retail (JDR) business, translating into a non-GAAP NPM of 2.7% (4Q22: 2.6%). For 2023, total revenue was RMB1.1tn, up 3.7% YoY, and non-GAAP net income reached RMB35.2bn, up 25% YoY, with the implied non-GAAP NPM expanding 0.5pp YoY to 3.2%.For 2024, management highlighted key priorities on user experience enhancement and market share gains, and we expect JD to reinvest incremental profit in 2024 to drive user acquisition and wallet share gains, amid current intensified market competition.However, the improved shareholder return policy should provide support for valuation, while further rerating may hinge on the recovery of consumption sentiment, as well as the fully wearing off of business adjustment impact. 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.

JD.com (JD US) - Driving Growth in a More Ambitious Way

Equity Analyst

Steve Zhou, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> reported a set of better-than-expected 4Q23 results yesterday, as the ADR rose 16% last night in US trading session. </li>
<li>The improvement in net profit margin showed that being more price competitive did not lead to lower margins. </li>
<li>I believe the key takeaway, aside from the resilient 4Q23 results and solid 2024 outlook, is the much improved shareholder return measures.</li>
</ul>



JD.com Inc (ADR) (JD US) reported a set of better-than-expected 4Q23 results yesterday, as the ADR rose 16% last night in US trading session. 
The improvement in net profit margin showed that being more price competitive did not lead to lower margins. 
I believe the key takeaway, aside from the resilient 4Q23 results and solid 2024 outlook, is the much improved shareholder return measures.


JD.com (JD US):  Improved Shareholder Return Is Key

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene (2367 HK)</a> aims to raise up to US$205m via a top-up placement.</li>
<li>We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>



Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement.
We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Giant Biogene Placement - Has Been Doing Well but Doesn’t Need the Cash

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

In Q1 2021, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects.

In Q1 2021, JD.com Inc (ADR) (JD US) reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects. 

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com Inc (ADR) (JD US)

China Consumption Weekly (11 Mar 2024): JD.com, JD Logisitics, BYD, Alibaba, NIO

JD.com stock price surged after its 4Q23 results and repurchase decision. It is not big issue that BYD sales decreased in the weak season. Alibaba...

Ming Lu

JD.com (JD US) - Driving Growth in a More Ambitious Way

JD.com (JD) reported (6 March) better-than-expected 4Q23 results with solidly improved outlook for shareholder return: revenue was RMB306.1bn, up...

CMB International

JD.com (JD US): Improved Shareholder Return Is Key

JD.com (JD US) reported a set of better-than-expected 4Q23 results yesterday. The improvement in net profit margin showed that being more price...

Steve Zhou, CFA

Giant Biogene Placement - Has Been Doing Well but Doesn’t Need the Cash

Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement. In this note, we talk about the deal dynamics and run the deal through...

Sumeet Singh

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

JD has at times revised disclosures possibly to conceal growth or margin weakness. We discuss how to analyse earnings calls and disclosures using a...

Jason Yap, CFA

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