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.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over roughly 4 years and implemented in its current state for nearly 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over roughly 4 years and implemented in its current state for nearly 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.


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

Thematic (Sector/Industry)

<ul>
<li>XPEV: BYD cut prices for the older models of its Dynasty series (-)</li>
<li>700HK/SE/NTES: &lt;Undawn&gt; performance lower than expectation  (-/-/+)， hence we cut our estimation of annual gross billings of the game</li>
<li>9995HK: Daiichi Sangyo/Astra Zeneca's ADC blockbuster DS8201 (Enhertu) approve by NMPA... Impact to Remegen is material in the long run (-)</li>
</ul>


XPEV: BYD cut prices for the older models of its Dynasty series (-)
700HK/SE/NTES: &lt;Undawn&gt; performance lower than expectation  (-/-/+)， hence we cut our estimation of annual gross billings of the game
9995HK: Daiichi Sangyo/Astra Zeneca's ADC blockbuster DS8201 (Enhertu) approve by NMPA... Impact to Remegen is material in the long run (-)


China TMT Update(Feb.28):  700HK/SE/NTES/XPEV/9995HK - BYD Cut Prices for the Older Models

Equity Bottom-Up

<ul>
<li>NetEase’s 4Q22 revenue was in-line with cons., while its non-GAAP net income missed cons. by (8%) because of a one-off, non-renewal contract with Blizzard.</li>
<li>We still see NetEase as a BUY because of &lt;Eggy Party&gt;’s overseas publishing and &lt;Justice Mobile&gt;, which we estimate will contribute about 1-2bn/3-4bn RMB for annual gross billing, respectively. </li>
<li>We maintain BUY and TP US$ 87, which implies 16.0X PE in 2023.</li>
</ul>


NetEase’s 4Q22 revenue was in-line with cons., while its non-GAAP net income missed cons. by (8%) because of a one-off, non-renewal contract with Blizzard.
We still see NetEase as a BUY because of &lt;Eggy Party&gt;’s overseas publishing and &lt;Justice Mobile&gt;, which we estimate will contribute about 1-2bn/3-4bn RMB for annual gross billing, respectively. 
We maintain BUY and TP US$ 87, which implies 16.0X PE in 2023.


[NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts

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

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>NetEase reported 4Q22 results on 23 Feb. 4Q22 revenue was up by 4% YoY to RMB25.4bn, in line with our and consensus estimate.</li><li>Full-year revenue in FY22 grew by 8% YoY to RMB96.5bn. Non-GAAP net income declined by 27% YoY to RMB4.8bn in 4Q22, lower than the consensus estimate of RMB5.2bn, primarily due to the lower-than-expected gross margin.</li><li>Overall GPM was down by 0.8pct YoY to 52.2% (vs. consensus 55.2%) in 4Q22, mainly due to the oneoff recognition of c.RMB1bn royalty fees related to certain licensed games (c.4% of total revenue). </li></ul><p><em>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.</em></p>

NetEase reported 4Q22 results on 23 Feb. 4Q22 revenue was up by 4% YoY to RMB25.4bn, in line with our and consensus estimate.Full-year revenue in FY22 grew by 8% YoY to RMB96.5bn. Non-GAAP net income declined by 27% YoY to RMB4.8bn in 4Q22, lower than the consensus estimate of RMB5.2bn, primarily due to the lower-than-expected gross margin.Overall GPM was down by 0.8pct YoY to 52.2% (vs. consensus 55.2%) in 4Q22, mainly due to the oneoff recognition of c.RMB1bn royalty fees related to certain licensed games (c.4% of total revenue). 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.

Netease (NTES US) – Aiming for long-term growth

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

Screening for GEMs: March 2023

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

China TMT Update(Feb.28): 700HK/SE/NTES/XPEV/9995HK - BYD Cut Prices for the Older Models

9995HK: Daiichi Sangyo/Astra Zeneca's ADC blockbuster DS8201 (Enhertu) approve by NMPA; XPEV: BYD cut prices for the older models (-); 700HK/SE...

Blue Lotus Research Institute

[NetEase (NTES US) Earnings Review]: Eggy Party and Justice Mobile Are Two Catalysts

We still see NetEase as a BUY because of <Eggy Party>’s overseas publishing and <Justice Mobile>, which we estimate will contribute about 1-2bn/3...

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

Netease (NTES US) – Aiming for long-term growth

NetEase reported 4Q22 results on 23 Feb. 4Q22 revenue was up by 4% YoY to RMB25.4bn, in line with our and consensus estimate.

CMB International

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