In today’s briefing:
- Alibaba Kicks Off Overhaul With Spinoff and Share Sale Targets
- Growatt Technology IPO: The Investment Case
- Tencent/Netease: Game Approval Rotation in May
- Angelalign Technology (6699.HK) – 2023 May Not See a Turnaround in Performance
- [Kuaishou (1024 HK) Target Price Change]: Solid Monetization Amid Decelerated User Growth
Alibaba Kicks Off Overhaul With Spinoff and Share Sale Targets
- Alibaba Group Holding Ltd. outlined timetables for several key business units to complete spinoffs or pursue independent share sales, kicking off major moves in a sweeping reorganization to break up the gigantic conglomerate and unleash new growth momentum.
- Alibaba’s board of directors approved a full spinoff of its cloud services division while exploring initial public offerings for the logistics and grocery arms, the company said Thursday.
- The e-commerce giant plans to carve out the Cloud Intelligence Group within 12 months through a stock dividend distribution to shareholders, meaning it could relinquish control of China’s biggest cloud services platform.
Growatt Technology IPO: The Investment Case
- Growatt Technology (1833969D CH), a leading PV inverters manufacturer, is pre-marketing a US$400 million HKEx IPO, according to press reports.
- We previously discussed the IPO in Growatt Technology IPO: Growing Watts, Growatt Technology IPO: The Bull Case and Growatt Technology IPO: The Bear Case.
- The updated PHIP which disclosed the 2022 results and latest developments suggests that Growatt continues to deliver profitable and cash-generative growth.
Tencent/Netease: Game Approval Rotation in May
- China just announced game approval for May batch. The number of games approved is in-line with the pace of approval in recent month.
- Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
- Both Tencent and Netease received approval for one game. We saw a pattern of approval rotation for the duo.
Angelalign Technology (6699.HK) – 2023 May Not See a Turnaround in Performance
- Angelalign’s business model is easily challenged by lower priced similar competing products. Once Angelalign’s products lose price advantage, it would lead to a rapid decline in overall sales performance.
- Performance growth could still be under pressure this year due to unsatisfactory demand.The potential price war, further price reduction and increasing selling/marketing expenses would put more pressure on profit margin.
- Angelalign hasn’t accumulated enough data size due to few overseas customers, which could lead to product quality issues and slow internationalization progress. There is downside risk due to overvaluation.
[Kuaishou (1024 HK) Target Price Change]: Solid Monetization Amid Decelerated User Growth
- Kuaishou reported 1Q23 top-line 4% vs. our est., and non-IFRS net profit of RMB 42mn vs. our est. of RMB (688mn);
- We raise 2023 live-streaming/ads/ecommerce revenue growth from 12%/ 17%/26% YoY to 18%/20%/43% YoY, and non-IFRS net income from RMB 860mn to RMB 3.89bn due to a series of monetization methods;
- We maintain SELL due to the competitive pressure of Douyin and WeChat Video Account, reflected by decelerated user growth and time spent.
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