Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy 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>On November 18th, 2024, Temasek-affiliated investment fund 65Equity bought 13% of TUYA, an IOT hardware company and planned to bring the company to list on the Singapore Stock Exchange;</li>
<li>TUYA is trading at US$901mn market cap, equivalent to 3.2x 12TTM sales. This isn't cheap. Xiaomi, a high flying stock, now trades at 2.0x 12TTM sales. TUYA is not profitable;</li>
<li>TUYA is a good and real company but in a bad business. Electronics inventory cycle and advanced stocking for Trump's Tariff Hike shall support earnings in the next few quarters.</li>
</ul>


On November 18th, 2024, Temasek-affiliated investment fund 65Equity bought 13% of TUYA, an IOT hardware company and planned to bring the company to list on the Singapore Stock Exchange;
TUYA is trading at US$901mn market cap, equivalent to 3.2x 12TTM sales. This isn't cheap. Xiaomi, a high flying stock, now trades at 2.0x 12TTM sales. TUYA is not profitable;
TUYA is a good and real company but in a bad business. Electronics inventory cycle and advanced stocking for Trump's Tariff Hike shall support earnings in the next few quarters.


TUYA: Is The King of White Label IOT Ready to Charter a Different Course?

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

<ul><li>Tuya reported another strong quarter, with revenue of $81.6 million, up 34% Y/Y (1Q and 2Q were up 30% and 29%, respectively).</li><li>Gross margin stayed in the mid-40s (46%). IoT PaaS revenue grew 26% Y/Y to $57.9 million.</li><li>Its 230-bp Y/Y margin improvement was significant, coming in at 46.9%. </li></ul>

Tuya reported another strong quarter, with revenue of $81.6 million, up 34% Y/Y (1Q and 2Q were up 30% and 29%, respectively).Gross margin stayed in the mid-40s (46%). IoT PaaS revenue grew 26% Y/Y to $57.9 million.Its 230-bp Y/Y margin improvement was significant, coming in at 46.9%. 

Tuya, Inc. - Another Strong Quarter of Revenue Growth (+34%) And Stable Margins

<ul><li>Tuya reported another strong quarter, with revenue of $73.3 million, up 29% Y/Y (1Q24 was up 30%).</li><li>Gross margin continued to grow, up 130 bps Y/Y to 48.0% (a company 2Q record). IoT PaaS revenue grew 32% Y/Y to $54.3 million.</li><li>Its 320-bp Y/Y margin improvement was significant to corporate margin growth.</li></ul>

Tuya reported another strong quarter, with revenue of $73.3 million, up 29% Y/Y (1Q24 was up 30%).Gross margin continued to grow, up 130 bps Y/Y to 48.0% (a company 2Q record). IoT PaaS revenue grew 32% Y/Y to $54.3 million.Its 320-bp Y/Y margin improvement was significant to corporate margin growth.

Tuya, Inc. - 2Q24 Revenue Up 29% Y/Y; First Non-GAAP Profit

<ul><li>Tuya is leveraging GenAI technology to enhance user experiences and strengthen its footprint in the consumer electronics sector.</li><li>The strategic integration of GenAI addresses market demands for greater automation and customization, boosting Tuya’s product intelligence.</li><li>On July 18, at the CICC Consumer Sector Summit 2024, Tuya showcased several upcoming GenAI- powered functions in the pipeline, including smart multicolor LED strips, smart pet cameras, AI Developer and AI Business Analyst portals, and the App AI Assistant.</li></ul>

Tuya is leveraging GenAI technology to enhance user experiences and strengthen its footprint in the consumer electronics sector.The strategic integration of GenAI addresses market demands for greater automation and customization, boosting Tuya’s product intelligence.On July 18, at the CICC Consumer Sector Summit 2024, Tuya showcased several upcoming GenAI- powered functions in the pipeline, including smart multicolor LED strips, smart pet cameras, AI Developer and AI Business Analyst portals, and the App AI Assistant.

Tuya, Inc - Ramps Up GenAI Efforts as Valuation Analysis Has Tuya Below Comps

<ul><li>Tuya reported a strong 1Q24, with revenue of $61.7 million, up 30% Y/Y (consensus was for ~15% Y/Y growth).</li><li>Gross margin continued to grow, up 360 bps Y/Y to 47.8% (a company record). IoT PaaS revenue grew 36% Y/Y to $45.6 million.</li><li>Its 590-bp Y/Y margin improvement was significant to corporate margin growth. </li></ul>

Tuya reported a strong 1Q24, with revenue of $61.7 million, up 30% Y/Y (consensus was for ~15% Y/Y growth).Gross margin continued to grow, up 360 bps Y/Y to 47.8% (a company record). IoT PaaS revenue grew 36% Y/Y to $45.6 million.Its 590-bp Y/Y margin improvement was significant to corporate margin growth. 

United States

Tuya Inc., doing business as Tuya Smart, provides IoT cloud platform. The Company offers solutions which enables brands, retailers, OEMs, and manufacturers to develop, launch, manage, and monetize software-enabled devices and services. Tuya Smart serves customers worldwide.

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Tuya Inc (TUYA US)

TUYA: Is The King of White Label IOT Ready to Charter a Different Course?

Temasek bought 13% of TUYA and planned to list on SGX. We believe TUYA's valuation is high and the company's business model, customer segment and...

Blue Lotus Research Institute

Tuya, Inc. - Another Strong Quarter of Revenue Growth (+34%) And Stable Margins

Tuya reported another strong quarter, with revenue of $81.6 million, up 34% Y/Y (1Q and 2Q were up 30% and 29%, respectively).

Water Tower Research

Tuya, Inc. - 2Q24 Revenue Up 29% Y/Y; First Non-GAAP Profit

Gross margin continued to grow, up 130 bps Y/Y to 48.0% (a company 2Q record). IoT PaaS revenue grew 32% Y/Y to $54.3 million.

Water Tower Research

Tuya, Inc - Ramps Up GenAI Efforts as Valuation Analysis Has Tuya Below Comps

Tuya is leveraging GenAI technology to enhance user experiences and strengthen its footprint in the consumer electronics sector.

Water Tower Research

Tuya, Inc. - 1Q24 Earnings Strong

Tuya reported a strong 1Q24, with revenue of $61.7 million, up 30% Y/Y (consensus was for ~15% Y/Y growth). Gross margin continued to grow, up 360...

Water Tower Research

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