Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul>
<li>Tencent Music Entertainment Group (TME) posted robust results in its fourth quarter and full year 2023 earnings call.</li>
<li>Increasing subscribers and expedited revenue growth were notable positives, taking the total number of subscribers to the 100 million milestone due to the company’s focus on content leadership, platform value, and offering a high-quality user experience.</li>
<li>Yet, the company also faced some headwinds, particularly in the social entertainment business.</li>
</ul>


Tencent Music Entertainment Group (TME) posted robust results in its fourth quarter and full year 2023 earnings call.
Increasing subscribers and expedited revenue growth were notable positives, taking the total number of subscribers to the 100 million milestone due to the company’s focus on content leadership, platform value, and offering a high-quality user experience.
Yet, the company also faced some headwinds, particularly in the social entertainment business.


Tencent Music Entertainment Group: Initiation Of Coverage - Core Business Strategy

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>TME announced its 4Q23 results on 19 Mar: total revenue decreased by 7% YoY to RMB6.9bn, 3% ahead of consensus/our estimate thanks to the robust core music revenue growth (+41% YoY); non-IFRS net income grew 10% YoY to RMB1.58bn, beating consensus/our estimate of RMB1.56/1.50bn.</li><li>For FY23, total revenue declined by 2% YoY, while non-IFRS net income was up 25% YoY on solid improvement in GPM and operating efficiency.</li><li>For FY24E, we expect total revenue will return to the growth track (+3% YoY), backed by the robust core music business. </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.

TME announced its 4Q23 results on 19 Mar: total revenue decreased by 7% YoY to RMB6.9bn, 3% ahead of consensus/our estimate thanks to the robust core music revenue growth (+41% YoY); non-IFRS net income grew 10% YoY to RMB1.58bn, beating consensus/our estimate of RMB1.56/1.50bn.For FY23, total revenue declined by 2% YoY, while non-IFRS net income was up 25% YoY on solid improvement in GPM and operating efficiency.For FY24E, we expect total revenue will return to the growth track (+3% YoY), backed by the robust core music business. 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.

TME (TME US) - Expect Solid Core Music Business and GPM Expansion in FY24

<ul><li>TME is making steady progress in online music paying user growth: we expect 4Q23 total revenue to decline by 10% YoY to RMB6.7bn, but non-IFRS net income to grow by 5% YoY to RMB1.5bn, mainly due to continuous improvement in online music GPM and the effective control on opex.</li><li>Despite macro uncertainty, we expect TME’s online music business to maintain solid growth in 4Q23 (+36% in 4Q23E based on our estimate), supported by the steady growth of both paid users and ARPPU.</li><li>In our view, TME’s current valuation of 16x FY24E Non-IFRS PE remains attractive given its resilience against macro uncertainty, unparalleled leadership in online music sector and solid earnings growth outlook (FY23-25E CAGR of 15%). </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.

TME is making steady progress in online music paying user growth: we expect 4Q23 total revenue to decline by 10% YoY to RMB6.7bn, but non-IFRS net income to grow by 5% YoY to RMB1.5bn, mainly due to continuous improvement in online music GPM and the effective control on opex.Despite macro uncertainty, we expect TME’s online music business to maintain solid growth in 4Q23 (+36% in 4Q23E based on our estimate), supported by the steady growth of both paid users and ARPPU.In our view, TME’s current valuation of 16x FY24E Non-IFRS PE remains attractive given its resilience against macro uncertainty, unparalleled leadership in online music sector and solid earnings growth outlook (FY23-25E CAGR of 15%). 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.

TME (TME US) - Online Music Business Maintains Solid Growth Amid Macro Uncertainty

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC 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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhubajie-co-ltd" target="_blank" data-smartkarma-citation="entities:40654:1" rel="noopener">Zhubajie Co Ltd (ZHUHKZ HK)</a> is looking to raise at least US$100m in its upcoming Hong Kong IPO.</li>
<li>Zhubajie (ZBJ) is a customized enterprise services e-commerce platform in China. The firm focuses on matching and facilitating the transactions between enterprise clients and service providers through its ZBJ platform.</li>
<li>In this note, we talk about the firm’s historical performance.</li>
</ul>



Zhubajie Co Ltd (ZHUHKZ HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
Zhubajie (ZBJ) is a customized enterprise services e-commerce platform in China. The firm focuses on matching and facilitating the transactions between enterprise clients and service providers through its ZBJ platform.
In this note, we talk about the firm’s historical performance.


Zhubajie Pre-IPO - Profitability Looks like a Long Shot

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

<ul>
<li>TME reported C3Q23 revenue, non-IFRS operating profit and IFRS net income inline, 12.9%, 2.3% vs. consensus. The bottom-line beat mainly due to the cost-effective operation and music subscription services.</li>
<li>We notice TME has become less reliable on live streaming and more on monetizing its user base through ARPU enhancement</li>
<li>We upgraded TME to BUY and raised the target price to US$ 9.7, implying a 21.1x PE ratio compared to its current trading at 17.8x in 2024.</li>
</ul>


TME reported C3Q23 revenue, non-IFRS operating profit and IFRS net income inline, 12.9%, 2.3% vs. consensus. The bottom-line beat mainly due to the cost-effective operation and music subscription services.
We notice TME has become less reliable on live streaming and more on monetizing its user base through ARPU enhancement
We upgraded TME to BUY and raised the target price to US$ 9.7, implying a 21.1x PE ratio compared to its current trading at 17.8x in 2024.


[Tencent Music (TME US, BUY, TP US$9.7) Rating Change]: Unique Content Unlocked Paying Potential

China

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

Tencent Music (TME US)

Tencent Music Entertainment Group: Initiation Of Coverage - Core Business Strategy

Tencent Music Entertainment Group (TME) posted robust results in its fourth quarter and full year 2023 earnings call. Increasing subscribers and...

Baptista Research

TME (TME US) - Expect Solid Core Music Business and GPM Expansion in FY24

TME announced its 4Q23 results on 19 Mar: total revenue decreased by 7% YoY to RMB6.9bn, 3% ahead of consensus/our estimate thanks to the robust...

CMB International

TME (TME US) - Online Music Business Maintains Solid Growth Amid Macro Uncertainty

TME is making steady progress in online music paying user growth: we expect 4Q23 total revenue to decline by 10% YoY to RMB6.7bn, but non-IFRS net...

CMB International

Zhubajie Pre-IPO - Profitability Looks like a Long Shot

Zhubajie Co Ltd (ZHUHKZ HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. In this note, we talk about the firm’s historical...

Ethan Aw