Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet 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>NetEase reported C3Q24 revenue, GAAP operating profit and GAAP net income in line, (3.6%) and (5.3%) vs. our estimates, and in line, (4.4%) and (5.0%) vs. consensus. </li>
<li>Mobile game revenue decline is less a concern due to imminent pipeline launches, but PC game’s significantly beat is a positive surprise. </li>
<li>We raised the TP to US$118 for the better outlook of new game launches.</li>
</ul>


NetEase reported C3Q24 revenue, GAAP operating profit and GAAP net income in line, (3.6%) and (5.3%) vs. our estimates, and in line, (4.4%) and (5.0%) vs. consensus. 
Mobile game revenue decline is less a concern due to imminent pipeline launches, but PC game’s significantly beat is a positive surprise. 
We raised the TP to US$118 for the better outlook of new game launches.


[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.</li>
<li>The official index changes and indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.</li>
<li>In this insight, we take a look at our updated flow expectations.</li>
</ul>


The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The official index changes and indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.
In this insight, we take a look at our updated flow expectations.


Quiddity Leaderboard HSTECH Dec 24: Large Flow Expectations Although No Index Changes Expected

Thematic (Sector/Industry)

<ul>
<li>NTES US: &lt;Eggy Party&gt; Launches on Nintendo Switch today (+)</li>
<li>JD US/BABA US/PDD US/VIPS US/3690 HK: NBS publishes social retail consumption data for October 2024 (+/+/////-)</li>
<li>JD US:JD.com Launches "On-Demand Delivery Flagship Stores" for Its On-Demand Retail Business (+)</li>
</ul>


NTES US: &lt;Eggy Party&gt; Launches on Nintendo Switch today (+)
JD US/BABA US/PDD US/VIPS US/3690 HK: NBS publishes social retail consumption data for October 2024 (+/+/////-)
JD US:JD.com Launches "On-Demand Delivery Flagship Stores" for Its On-Demand Retail Business (+)


[Blue Lotus Daily-TMT Update]:NTES US/JD US/BABA US/PDD US/VIPS US/3690 HK/AMZN US

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Tencent Music Entertainment Group / Equity Bottom-Up

<ul>
<li>Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.</li>
<li>
<a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" data-smartkarma-citation="entities:124:1" rel="noopener">CRRC Corp Ltd H (1766 HK)</a> gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-music-entertainment-group" target="_blank" data-smartkarma-citation="entities:36601:1" rel="noopener">Tencent Music Entertainment Group (1698 HK)</a> reported solid results as it shifts to a pay-to-stream subscription model. <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> had a blowout quarter with EV sales surging.
</li>
</ul>


Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.

CRRC Corp Ltd H (1766 HK) gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.


Tencent Music Entertainment Group (1698 HK) reported solid results as it shifts to a pay-to-stream subscription model. Xiaomi Corp (1810 HK) had a blowout quarter with EV sales surging.



BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>China, India, Saudi Arabia, and Taiwan remain key underweights.  Recovery in Malaysia, Thailand, Turkey, and South Africa, correction in Indonesia and Mexico. Developed Markets the largest overweight for EM investors.</li>
<li>Discretionary, Staples, and Industrials the key overweights, Materials and Energy the underweights. Rotation out of Tech moves positioning from overweight to underweight for the first time since 2019.</li>
<li>Ownership climbs for Meituan and SK Hynix, Baidu and Yum China see sharp declines. Downtrends persist in Vale, Telkom Indonesia.  Recovery in SK Telekom, Garanti Bank, highs in Emaar Properties. </li>
</ul>


China, India, Saudi Arabia, and Taiwan remain key underweights.  Recovery in Malaysia, Thailand, Turkey, and South Africa, correction in Indonesia and Mexico. Developed Markets the largest overweight for EM investors.
Discretionary, Staples, and Industrials the key overweights, Materials and Energy the underweights. Rotation out of Tech moves positioning from overweight to underweight for the first time since 2019.
Ownership climbs for Meituan and SK Hynix, Baidu and Yum China see sharp declines. Downtrends persist in Vale, Telkom Indonesia.  Recovery in SK Telekom, Garanti Bank, highs in Emaar Properties. 


China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile

NetEase reports solid C3Q24 revenue with mobile game revenue decline offset by strong PC game performance, leading to raised price target of US$118.

Blue Lotus Research Institute

Quiddity Leaderboard HSTECH Dec 24: Large Flow Expectations Although No Index Changes Expected

We currently estimate total one-way flow to be US$1.2bn during the December 2024 index rebal event. The final caps will be decided based on 3rd...

Janaghan Jeyakumar, CFA

[Blue Lotus Daily-TMT Update]:NTES US/JD US/BABA US/PDD US/VIPS US/3690 HK/AMZN US

New game Eggy Party launches on Nintendo Switch, JD.com introduces On-Demand Delivery Flagship Stores for retail business, NBS releases social...

Blue Lotus Research Institute

BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Hong Kong has seen its Consumer Discretionary and Healthcare sectors perform well since the stimulus in September. CRCC has had several buy...

David Mudd

Active GEM Funds: Positioning Chart Pack

In this chart pack, we highlight the key country, sector and stock exposures among active Emerging Markets equity funds.

Steven Holden

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[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Growth Rebounds Ahead from Both PC and Mobile

​NetEase reports solid C3Q24 revenue with mobile game revenue decline offset by strong PC game performance, leading to raised price target of US$118.

Blue Lotus Research Institute

Quiddity Leaderboard HSTECH Dec 24: Large Flow Expectations Although No Index Changes Expected

We currently estimate total one-way flow to be US$1.2bn during the December 2024 index rebal event. The final caps will be decided based on 3rd...

Janaghan Jeyakumar, CFA

[Blue Lotus Daily-TMT Update]:NTES US/JD US/BABA US/PDD US/VIPS US/3690 HK/AMZN US

​New game Eggy Party launches on Nintendo Switch, JD.com introduces On-Demand Delivery Flagship Stores for retail business, NBS releases social...

Blue Lotus Research Institute

BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Hong Kong has seen its Consumer Discretionary and Healthcare sectors perform well since the stimulus in September. CRCC has had several buy...

David Mudd

Active GEM Funds: Positioning Chart Pack

In this chart pack, we highlight the key country, sector and stock exposures among active Emerging Markets equity funds.

Steven Holden

NetEase reports solid C3Q24 revenue with mobile game revenue decline offset by strong PC game performance, leading to raised price target of US$118.

New game Eggy Party launches on Nintendo Switch, JD.com introduces On-Demand Delivery Flagship Stores for retail business, NBS releases social...