In today’s briefing:
- JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- Tencent (700 HK): 1Q22, Zero Growth, But Will Recover for New Policies, Upgrade to Buy
- Tencent 1Q2022– Weaker than Expected
- Li Ning (2331): Turning Positive.
- Taste Gourmet: Update Post Management Call / Bullish
- Shanghai Haohai Biological Technology (688366CH)- Diversified Business Layout Doesn’t Secure Outlook
- Leapmotor Pre-IPO – The Negatives – Related Party Sanctions, Lags Peers
JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
- The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
- In this note, we talk about the shareholding pattern and increase in shares held in CCASS.
Tencent (700 HK): 1Q22, Zero Growth, But Will Recover for New Policies, Upgrade to Buy
- Authorities encourage platform economy and restarted approving the licenses for new games.
- Fintech just met a high comparison base in 1Q21 and we believe the growth rate will rise.
- We believe the stock has an upside of 39% for the year end 2022.
Tencent 1Q2022– Weaker than Expected
- Tencent (700 HK) reported 1Q2022 results today. Revenue grew 0.1% YoY to RMB135.5bn (vs consensus RMB140.7bn) while reported OP decreased 34% YoY to RMB37.2bn (vs consensus RMB37.3bn).
- Adjusted OP was down 36% YoY to RMB22.3bn while adjusted OPM declined to 39.2% from 56.1% in the same period a year ago.
- Tencent’s 1Q2022 revenues were below our estimates of RMB144.3bn which was mainly due to significant drop in Fintech and business services revenues.
Li Ning (2331): Turning Positive.
- Q1 22 operating figures are better than the smaller peers although not exactly beating Anta.
- Launching the cafe to boost SSSG post-COVID-19 is a positive strategy.
- Its valuation is currently trading below its historical highs . Turn positive on Li Ning (2331 HK) .
Taste Gourmet: Update Post Management Call / Bullish
- Taste Gourmet Group (8371 HK) held a webinar with Smartkarma on the 17th of May, highlighting the sharp and swift recovery of F&B in Hong Kong.
- Post 19th May, eight people can dine in till midnight (vs. four). With mid-May revenue tracking 109% of June 2020 (restrictions were fully relaxed), recovery should be better than expectations.
- Despite the 13% move yesterday, the stock is still cheap at 5.9x PE FY23 earnings and an 8-10% dividend yield (with a potential for further upgrades).
Shanghai Haohai Biological Technology (688366CH)- Diversified Business Layout Doesn’t Secure Outlook
- Haohai’s development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.
- Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.
- Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.
Leapmotor Pre-IPO – The Negatives – Related Party Sanctions, Lags Peers
- Leapmotor (LM) aims to raise around US$1bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
- It focuses on the mid- to high-end segment in China’s NEV market with a price range of RMB150,000-300,000. As of end FY21, it had delivered a total of 52,832 cars.
- In this note, we talk about the not so positive aspects of the deal.
Before it’s here, it’s on Smartkarma
