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.

Equity Bottom-Up

<ul><li>Weibo announced 1Q23 financial results on 25 May.</li><li>Total revenue dropped by 15% YoY (or -7% YoY on a constant currency basis) to US$414mn in 1Q23, inline with the consensus estimate.</li><li>1Q23 non-GAAP net income was down by 16% YoY to US$111mn, better than consensus estimate of US$103mn. </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>

Weibo announced 1Q23 financial results on 25 May.Total revenue dropped by 15% YoY (or -7% YoY on a constant currency basis) to US$414mn in 1Q23, inline with the consensus estimate.1Q23 non-GAAP net income was down by 16% YoY to US$111mn, better than consensus estimate of US$103mn. 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.

Weibo (WB US) – Solid Margin and Attractive Valuation; Wait for Top-Line Recovery

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

<ul>
<li>Weibo’s 1Q23 top line was in line with our est., and non-GAAP net income beat our est./cons. by 6.5%/ 7.6%, due to cost-saving measures. </li>
<li>While we dial down its 2Q23 revenue forecast, we remain optimistic about its growth in 2H23, as more brand advertisers gradually recover. </li>
<li>Maintain BUY and TP unchanged, which implies 12X PE in 2023.</li>
</ul>


Weibo’s 1Q23 top line was in line with our est., and non-GAAP net income beat our est./cons. by 6.5%/ 7.6%, due to cost-saving measures. 
While we dial down its 2Q23 revenue forecast, we remain optimistic about its growth in 2H23, as more brand advertisers gradually recover. 
Maintain BUY and TP unchanged, which implies 12X PE in 2023.


Weibo (WB US, BUY, TP US$26.9) Earnings Review: Maintain BUY for Margin Improvement

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>Back in May 2016, a buyout group comprising <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>'s founder Lei Jun terminated its US$2.5bn Offer for <a href="https://www.smartkarma.com/entities/joyy-inc" target="_blank" data-smartkarma-citation="entities:285:1" rel="noopener">JOYY (YY US)</a>, on account of heightened regulatory scrutiny. At the time, Lei was JOYY's chairman. The buyout group also comprised CEO David Xueling Li. The non-binding Offer price for ~64% of shares out not held by the buyout group was US$68.50/share.  </p>
<p>Fast forward to 16 November last year, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> <a href="https://ir.baidu.com/news-releases/news-release-details/baidu-acquire-joyys-live-streaming-business-china" target="_blank" rel="noopener">announced</a> it had entered into definitive agreements with JOYY to acquire its domestic <span id="spanHghltb285">video-based</span> entertainment live streaming business in China ("YY Live"), for US$3.6bn. </p>
<p>Two days later, Muddy Water had a <a href="https://www.muddywatersresearch.com/research/yy/1/" target="_blank" rel="noopener">slightly less favourable</a> take on Baidu "buying growth". </p>
<p>JOYY and certain of its current and former officers and directors were named as defendants in a federal putative securities class action filed on the 20 November 2020, alleging that they made material misstatements and omissions in documents filed with the SEC regarding certain of the allegations contained in the MW report.</p>
<p>On the 8 February, JOYY <a href="https://ir.joyy.sg/static-files/0aeb5b77-b567-4621-bb81-dea6177cdfa6" target="_blank" rel="noopener">disclosed</a> the conclusion of the independent review, which concluded that the allegations raised and conclusions reached in that MW report about JOYY's YY Live business were not substantiated.</p>
<p>The Baidu sale has been substantially completed, with certain customary matters remaining to be completed  - namely SAMR. </p>
<p><strong>The New News</strong></p>
<p>Reuters is reporting that Chairman David Li and Lei Jun are reloading an Offer for JOYY. Reportedly they are looking to offer US$75-$100/share, or a market cap of US$7.8bn at the top end of that range.</p>
<p>More below the fold.</p>
</div>


Back in May 2016, a buyout group comprising Xiaomi Corp (1810 HK)'s founder Lei Jun terminated its US$2.5bn Offer for JOYY (YY US), on account of heightened regulatory scrutiny. At the time, Lei was JOYY's chairman. The buyout group also comprised CEO David Xueling Li. The non-binding Offer price for ~64% of shares out not held by the buyout group was US$68.50/share.  
Fast forward to 16 November last year, Baidu (9888 HK) announced it had entered into definitive agreements with JOYY to acquire its domestic video-based entertainment live streaming business in China ("YY Live"), for US$3.6bn. 
Two days later, Muddy Water had a slightly less favourable take on Baidu "buying growth". 
JOYY and certain of its current and former officers and directors were named as defendants in a federal putative securities class action filed on the 20 November 2020, alleging that they made material misstatements and omissions in documents filed with the SEC regarding certain of the allegations contained in the MW report.
On the 8 February, JOYY disclosed the conclusion of the independent review, which concluded that the allegations raised and conclusions reached in that MW report about JOYY's YY Live business were not substantiated.
The Baidu sale has been substantially completed, with certain customary matters remaining to be completed  - namely SAMR. 
The New News
Reuters is reporting that Chairman David Li and Lei Jun are reloading an Offer for JOYY. Reportedly they are looking to offer US$75-$100/share, or a market cap of US$7.8bn at the top end of that range.
More below the fold.


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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

Alibaba Group Holding  / Equity Capital Markets

<p>In our previous note <a href="https://www.smartkarma.com/insights/china-adrs-kanzhun-full-truck-and-didi-regulators-sending-a-message" target="_blank" rel="noopener">China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message,</a> we spoke about the recent crackdown on the three US listed firms. Since then more news has been coming in along the same theme of a general crackdown on overseas listings for Chinese companies. </p>
<div>
<p>We have looked at the ADRs in the past, in our previous notes:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move</a>, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. </li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-sec-notice-instead-of-three-probably-have-four-years-till-2025-correction-overdone" target="_blank" rel="noopener">China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone, </a> we spoke about the new SEC notice and its implications. </li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-a-new-act-aims-to-put-an-end-to-china-adr-ipos" target="_blank" rel="noopener">China ADRs - A New Act Aims to Put an End to China ADR IPOs</a>, we spoke about the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S. exchanges for Chinese companies. </li>
</ul>
</div>
<div>
<p>In this note, we'll talk about the implications of the recent China regulatory announcements.</p>
</div>

In our previous note China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message, we spoke about the recent crackdown on the three US listed firms. Since then more news has been coming in along the same theme of a general crackdown on overseas listings for Chinese companies. 

We have looked at the ADRs in the past, in our previous notes:




China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. 
In China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone,  we spoke about the new SEC notice and its implications. 
In China ADRs - A New Act Aims to Put an End to China ADR IPOs, we spoke about the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S. exchanges for Chinese companies. 



In this note, we'll talk about the implications of the recent China regulatory announcements.


China ADRs - Now the Message Is Loud and Getting Clearer

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>
<a href="https://www.smartkarma.com/entities/weibo-corp" target="_blank" data-smartkarma-citation="entities:35280:1" rel="noopener">Weibo (9898 HK)</a> is an inexpensive profitable large social media company in China</li>
<li>Weibo generates a large cash flow which it uses to pay a 9% dividend yield</li>
<li>Weibo has synergies with Alibaba's core e-commerce business and fits well within its other media company ecosystem</li>
</ul>



Weibo (9898 HK) is an inexpensive profitable large social media company in China
Weibo generates a large cash flow which it uses to pay a 9% dividend yield
Weibo has synergies with Alibaba's core e-commerce business and fits well within its other media company ecosystem


BABA's Babies: They're All Grown Now! Weibo the Twitter of China

China

Weibo Corp is a social media platform for people to create, distribute and discover Chinese-language content.  The Company offers users public self-expression in real time with a powerful platform for social interaction, as well as content aggregation and distribution.

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Weibo Corp (WB US)

Weibo (WB US) – Solid Margin and Attractive Valuation; Wait for Top-Line Recovery

Total revenue dropped by 15% YoY (or -7% YoY on a constant currency basis) to US$414mn in 1Q23, inline with the consensus estimate.

CMB International

Weibo (WB US, BUY, TP US$26.9) Earnings Review: Maintain BUY for Margin Improvement

While we dial down its 2Q23 revenue forecast, we remain optimistic about its growth in 2H23, as more brand advertisers gradually recover. Maintain...

Blue Lotus Research Institute

JOYY (JOYY US): Rumoured Privatisation

A little over three years after entering into an SPA, Baidu (9888 HK) has now terminated discussions with JOYY (YY US) as the closing conditions...

David Blennerhassett

China ADRs - Now the Message Is Loud and Getting Clearer

In our previous note we spoke about the recent crackdown on the three US listed firms. Since then more news has been coming in along the same theme...

Sumeet Singh

BABA's Babies: They're All Grown Now! Weibo the Twitter of China

Weibo is trading at low valuations and it has potential synergies with its parent Alibaba. Weibo can benefit from Alibaba's social media ecosystem...

David Mudd

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