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

Equity Bottom-Up

<ul>
<li>We think the mild recovery is driven by the delayed orders in Jul. and Aug, thus expect transaction volume to be flattish MoM in Sep.</li>
<li>We think the recovery is on-track and expect Oct. volume to begin recovery and expect more meaningful rebound in Mar.-Apr. 2024, supported by 1) strong leading indicators from property agents, </li>
<li>2) refer to the recover trajectory in 2014-2015.  We maintain the stock as BUY rating and maintain TP at US$24/ADS.</li>
</ul>


We think the mild recovery is driven by the delayed orders in Jul. and Aug, thus expect transaction volume to be flattish MoM in Sep.
We think the recovery is on-track and expect Oct. volume to begin recovery and expect more meaningful rebound in Mar.-Apr. 2024, supported by 1) strong leading indicators from property agents, 
2) refer to the recover trajectory in 2014-2015.  We maintain the stock as BUY rating and maintain TP at US$24/ADS.


[KE Holdings (BEKE US, BUY, TP US$24) Update]: Our View of Gradual Property Recovery into 2024

<ul>
<li>KE Holdings (Beike) reported 2Q23 GTV 5.6% lower than our estimate, revenue (2.6%)/0.4% vs. our estimate/consensus, and non-GAAP NI 21.8%/42.9% higher than our estimate/consensus. </li>
<li>We think 3Q23 is the trough and expect a rebound in 4Q23 as more substantial supportive policies laying out in China. </li>
<li>We maintain the stock as BUY rating and raised TP by US$2 to US$24/ADS</li>
</ul>


KE Holdings (Beike) reported 2Q23 GTV 5.6% lower than our estimate, revenue (2.6%)/0.4% vs. our estimate/consensus, and non-GAAP NI 21.8%/42.9% higher than our estimate/consensus. 
We think 3Q23 is the trough and expect a rebound in 4Q23 as more substantial supportive policies laying out in China. 
We maintain the stock as BUY rating and raised TP by US$2 to US$24/ADS


[KE (BEKE US, BUY, TP US$24) TP Change]: Silver Lining Appear in Industry Cycle, Maintain BUY

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

Thematic (Sector/Industry)

<ul>
<li>1211 HK/300750 SZ: Geely and SK Group sign cooperation agreement to deepen cooperation in batteries and components.(-/-)</li>
<li>BEKE US: PBoC urge local governments and banks to implement the affordable housing re-lending program.(+)</li>
<li>LKNCY US: Luckin expands its non-coffee drinks, selling 5.08 million cups of lemonade in a week(/)</li>
</ul>


1211 HK/300750 SZ: Geely and SK Group sign cooperation agreement to deepen cooperation in batteries and components.(-/-)
BEKE US: PBoC urge local governments and banks to implement the affordable housing re-lending program.(+)
LKNCY US: Luckin expands its non-coffee drinks, selling 5.08 million cups of lemonade in a week(/)


[Blue Lotus Daily]:1211 HK/300750 SZ/BEKE US/LKNCY US

Andy Fu

<ul>
<li>Aging population, coupled with under-development of retirement pensions, is the major headwind against enhancing consumption; </li>
<li>The headroom of urbanization as a driver for enhanced consumption is not as big as depicted;</li>
<li>Residential housing has, over the years, become the social safety net for the Chinese. Therefore, the bust of the property market takes many years, if not decades, to heal. </li>
</ul>


Aging population, coupled with under-development of retirement pensions, is the major headwind against enhancing consumption; 
The headroom of urbanization as a driver for enhanced consumption is not as big as depicted;
Residential housing has, over the years, become the social safety net for the Chinese. Therefore, the bust of the property market takes many years, if not decades, to heal. 


How to Stimulate China's Consumption, Part II

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>Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.</li>
<li>In our earlier note in 2022, <a href="https://www.smartkarma.com/insights/tencent-investee-selldown-the-us-120bn-global-overhang" target="_blank" data-smartkarma-citation="insights:81153" rel="noopener">Tencent Investee Selldown - The US$120bn Global Overhang</a>, we had looked at its overall investment portfolio.</li>
<li>With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how. </li>
</ul>


Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.
In our earlier note in 2022, Tencent Investee Selldown - The US$120bn Global Overhang, we had looked at its overall investment portfolio.
With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how. 


Tencent Investee Selldown - JD.com Done, Meituan Done, Two More Still Left

China

KE Holdings Inc. operates as an integrated online and offline platform for housing transactions and services. The Company offers existing and new home sales, home rentals, home renovation, real estate financial solutions, and other services. KE Holdings conducts businesses in China.

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KE Holdings (BEKE US)