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.

Thematic (Sector/Industry)

<ul><li>Alibaba released its 3QFY25 earnings (see our internet team report) with a significant step-up in capex plan for the next three years, the total of which is expected to surpass the company’s cumulative capex of the past decade, per mgmt., reaching as high as ~RMB120bn per year during CY2026-28E, according to our calculation.</li><li>We believe cloud service providers (CSPs) in China are trying to pick up the pace in capex in compute infrastructure to keep up with the relentless investment strides of overseas CSPs (Amazon, Meta, Microsoft, and Google).</li><li>We believe the ripple effects of Alibaba’s increased capex plan will benefit domestic AI infrastructure supply chain names, such as Innolight (300308 CH, BUY, TP: RMB186) and Shengyi Tech (600183 CH, BUY, TP: RMB34.5), which supply critical components (e.g., high-speed optical transceivers, ultra-low-loss CCL) for datacenter buildout.</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.

Alibaba released its 3QFY25 earnings (see our internet team report) with a significant step-up in capex plan for the next three years, the total of which is expected to surpass the company’s cumulative capex of the past decade, per mgmt., reaching as high as ~RMB120bn per year during CY2026-28E, according to our calculation.We believe cloud service providers (CSPs) in China are trying to pick up the pace in capex in compute infrastructure to keep up with the relentless investment strides of overseas CSPs (Amazon, Meta, Microsoft, and Google).We believe the ripple effects of Alibaba’s increased capex plan will benefit domestic AI infrastructure supply chain names, such as Innolight (300308 CH, BUY, TP: RMB186) and Shengyi Tech (600183 CH, BUY, TP: RMB34.5), which supply critical components (e.g., high-speed optical transceivers, ultra-low-loss CCL) for datacenter buildout.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.

Semiconductors - Thematic Investing and Megatrends

<ul><li>Chinese AI startup DeepSeek has surged to the top of AI-related downloads on both domestic and overseas iOS App Stores over the weekend, showcasing its super-efficient open-source model (~10k A100) running on a cost-effective compute infrastructure. </li><li>This milestone has immediately ignited intense debate around the trade-offs between big and small models, open vs. closed-source approaches, and cost-efficient vs. premium infrastructure.</li><li>The impact of DeepSeek’s emergence has also sent shockwaves across global markets. </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.

Chinese AI startup DeepSeek has surged to the top of AI-related downloads on both domestic and overseas iOS App Stores over the weekend, showcasing its super-efficient open-source model (~10k A100) running on a cost-effective compute infrastructure. This milestone has immediately ignited intense debate around the trade-offs between big and small models, open vs. closed-source approaches, and cost-efficient vs. premium infrastructure.The impact of DeepSeek’s emergence has also sent shockwaves across global markets. 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.

Semiconductors - Thematic Investing and Megatrends: Views on DeepSeek

Equity Bottom-Up

<ul><li>Meta reported 3Q24 results: total revenue grew by 19% YoY to US$40.6bn, in line with Bloomberg consensus estimate; net income was up by 35% YoY to US$15.7bn, 15% ahead of the consensus estimate thanks to effective control of S&amp;M and G&amp;A expenses.</li><li>For 4Q24E, management guides total revenue to grow by 12-20% YoY to US$45-48bn, the midpoint of which is in line with consensus (US$46.1bn).</li><li>Looking ahead, management will continue to step up investment in strategic priorities such as GenAI, infrastructure, and monetization, and expects significant capex growth and acceleration in infra-related expense growth in 2025E. </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.

Meta reported 3Q24 results: total revenue grew by 19% YoY to US$40.6bn, in line with Bloomberg consensus estimate; net income was up by 35% YoY to US$15.7bn, 15% ahead of the consensus estimate thanks to effective control of S&amp;M and G&amp;A expenses.For 4Q24E, management guides total revenue to grow by 12-20% YoY to US$45-48bn, the midpoint of which is in line with consensus (US$46.1bn).Looking ahead, management will continue to step up investment in strategic priorities such as GenAI, infrastructure, and monetization, and expects significant capex growth and acceleration in infra-related expense growth in 2025E. 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.

Meta (META US) - AI Development on Track; Stepped-Up Investment to Drag Margin Expansion Pace

<ul><li>Meta announced 2Q24 results: total revenue increased by 22% YoY to US$39.1bn, 2% ahead of Bloomberg consensus estimate; net income grew by 73% YoY to US$13.5bn, beating consensus estimate by 10%, primarily due to effective control in headcount-related expenses.</li><li>For 3Q24E, management expects total revenue to grow by 13-20% YoY to US$38.5-41.0bn, which is largely in line with consensus estimate (US$39.2bn) and remains resilient despite the high-base effect.</li><li>Despite stepped-up Capex investment, management maintains its FY24 full-year total expenses guidance unchanged at US$96-99bn, which should ease investor concern on its margin expansion trajectory in FY24. </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.

Meta announced 2Q24 results: total revenue increased by 22% YoY to US$39.1bn, 2% ahead of Bloomberg consensus estimate; net income grew by 73% YoY to US$13.5bn, beating consensus estimate by 10%, primarily due to effective control in headcount-related expenses.For 3Q24E, management expects total revenue to grow by 13-20% YoY to US$38.5-41.0bn, which is largely in line with consensus estimate (US$39.2bn) and remains resilient despite the high-base effect.Despite stepped-up Capex investment, management maintains its FY24 full-year total expenses guidance unchanged at US$96-99bn, which should ease investor concern on its margin expansion trajectory in FY24. 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.

Meta (META US) - 2Q24 Earnings Beat; Intact FY24 Earnings Growth Outlook Despite AI Investment

<ul><li>Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.</li><li>From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;</li><li>2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.com</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.

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our previous expectation.From a full-year perspective, given the rate cut cycle has not yet started and liquidity remains tight, we suggest focusing on: 1) companies capable of boosting shareholder returns or maintaining decent returns, supported by solid fundamentals (strong competitive advantages, steady growth in core business, and stable profitability) and committed to enhancing shareholder returns (also depends on management's willingness), such as Alibaba, Tencent, and NetEase;2) companies whose new businesses have significant market potential and are poised to bring considerable capital gains in the long run, particularly from overseas expansion and AI-related initiatives, such as Pinduoduo, Tencent, Alibaba, and Trip.comContent 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.

Internet - 1Q24 recap & our three stock-picking ideas

United States

Meta Platforms Inc. operates as a social technology company. The Company builds applications and technologies that help people connect, find communities, and grow businesses. meta Platform is also involved in advertisements, augmented and virtual reality.

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Meta (META US)

Semiconductors - Thematic Investing and Megatrends

We believe cloud service providers (CSPs) in China are trying to pick up the pace in capex in compute infrastructure to keep up with the relentless...

CMB International

Semiconductors - Thematic Investing and Megatrends: Views on DeepSeek

Chinese AI startup DeepSeek has surged to the top of AI-related downloads on both domestic and overseas iOS App Stores over the weekend, showcasing...

CMB International

Meta (META US) - AI Development on Track; Stepped-Up Investment to Drag Margin Expansion Pace

Meta reported 3Q24 results: total revenue grew by 19% YoY to US$40.6bn, in line with Bloomberg consensus estimate; net income was up by 35% YoY to...

CMB International

Meta (META US) - 2Q24 Earnings Beat; Intact FY24 Earnings Growth Outlook Despite AI Investment

Overall, we raise FY24-26E total revenue forecast by 1-2% in view of the solid ad demand across verticals. We lift our TP by 5% to US$565.0 on 27x...

CMB International

Internet - 1Q24 recap & our three stock-picking ideas

Year to date, the internet sector has pulled back after rapid rallies buoyed by improved sentiment and short-term fund inflows, in line with our...

CMB International

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