Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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

Equity Bottom-Up

<ul>
<li>BZ reported 4Q23 revenue in-line/2.6% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 3.5%/21.9%, mainly attributable to effective cost control measures. </li>
<li>We think the competitive advantages over peers grand BZ privilege to enjoy the early sign of hiring demand recovery, whereas overall China job market remains lackluster in early 2024.</li>
<li>We upgrade the stock from SELL to BUY and rise TP by US$7.5 to US$22/ADS.</li>
</ul>


BZ reported 4Q23 revenue in-line/2.6% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 3.5%/21.9%, mainly attributable to effective cost control measures. 
We think the competitive advantages over peers grand BZ privilege to enjoy the early sign of hiring demand recovery, whereas overall China job market remains lackluster in early 2024.
We upgrade the stock from SELL to BUY and rise TP by US$7.5 to US$22/ADS.


[Kanzhun Ltd. (BZ US, BUY, TP US$22) Rating Change]: Market Share Gain Ahead of Purported Recovery

<ul>
<li>BZ reported 3Q23 cash billing 0.8% higher than our est., revenue beat our estimate/consensus 5.2%/3.8%, non-GAAP NI beat our estimate/consensus by 103%/50%. </li>
<li>Cost saving and investment income are the main reasons for bottom-line beat, which we think are not sustainable.</li>
<li>Even BZ can deliver its “3 years with 100mn new users” target until 2025, we think its 20% earnings CAGR in 2023-25E still cannot justify its high valuation (TBC)</li>
</ul>


BZ reported 3Q23 cash billing 0.8% higher than our est., revenue beat our estimate/consensus 5.2%/3.8%, non-GAAP NI beat our estimate/consensus by 103%/50%. 
Cost saving and investment income are the main reasons for bottom-line beat, which we think are not sustainable.
Even BZ can deliver its “3 years with 100mn new users” target until 2025, we think its 20% earnings CAGR in 2023-25E still cannot justify its high valuation (TBC)


[Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation

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

China/Asia TMT

Shawn Yang

<ul>
<li>BZ reported 1Q23 cash billing 2.9% higher than our est.; revenue in-line with our estimate and consensus;  and non-GAAP NI 36.3%/35.3% higher than our est. and cons.</li>
<li>As BZ approaching the proxy of China’s labour market, its primary hurdle is the slow recovery of labour demand and mismatch of supply and demand.</li>
<li>We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.</li>
</ul>


BZ reported 1Q23 cash billing 2.9% higher than our est.; revenue in-line with our estimate and consensus;  and non-GAAP NI 36.3%/35.3% higher than our est. and cons.
As BZ approaching the proxy of China’s labour market, its primary hurdle is the slow recovery of labour demand and mismatch of supply and demand.
We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.


[Kanzhun Ltd. (BZ US, SELL) Earnings Review]: Weak Labour Market Adds Uncertainty to Recovery

China

Kanzhun Limited provides online recruitment services. The Company connects job seekers and enterprise users through its mobile application. Kanzhun offers a mobile-native product that promotes instant direct chats between enterprise users and job seekers.

Kanzhun (BZ US)

[Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation

BZ's 3Q23 results exceeded expectations, but the sustainability of cost savings and investment income is questionable. Even if BZ achieves its...

Blue Lotus Research Institute

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

[Kanzhun Ltd. (BZ US, SELL) Earnings Review]: Weak Labour Market Adds Uncertainty to Recovery

We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.

Blue Lotus Research Institute

[Kanzhun Ltd. (BZ US, BUY, TP US$22) Rating Change]: Market Share Gain Ahead of Purported Recovery

​BZ's strong 4Q23 results driven by cost control measures and early signs of hiring demand recovery in China lead to stock upgrade to BUY with...

Blue Lotus Research Institute

[Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation

​BZ's 3Q23 results exceeded expectations, but the sustainability of cost savings and investment income is questionable. Even if BZ achieves its...

Blue Lotus Research Institute

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

[Kanzhun Ltd. (BZ US, SELL) Earnings Review]: Weak Labour Market Adds Uncertainty to Recovery

We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.

Blue Lotus Research Institute

BZ's strong 4Q23 results driven by cost control measures and early signs of hiring demand recovery in China lead to stock upgrade to BUY with...

BZ's 3Q23 results exceeded expectations, but the sustainability of cost savings and investment income is questionable. Even if BZ achieves its...