Daily Brief Equity Bottom-Up: Tencent (700 HK): 3Q25 and more

• The revenue growth accelerated for the fourth quarter in 3Q25.
• In 3Q25, the gross margins of all business lines improved year over year.
• Tencent’s operating margin had improved year over year for thirteen quarters.

• NTT DC REIT is a pure -play data center trust backed by a global sponsor and listed in Singapore.
• It holds six stabilized facilities across the U.S., Europe, and Asia with a total design IT load of about 90 MW and 94% occupancy.
• The portfolio comprises of six assets across key hubs with high occupancy and a diversified tenant base.

• Based on the Offer Price of HK$0.35, P/B is 0.69x. This valuation level is lower than the historical average and also has a certain discount compared to the industry average.
• CSM’s net profit may return to positive by 2026. After profitability returns to normal, its P/B ratio is expected to approach 0.8-1x at least. Then reasonable valuation level is HK$0.41-0.51/share.
• Since minorities representing 18.74% of CSM outstanding shares needs to tender to hit the “50% hurdle”, this brings uncertainties as the Offer Price may not be attractive to some minorities.

• Natera is a leader in the high-growth cell-free DNA (cfDNA) testing market, with a strong portfolio spanning women’s health (Panorama), oncology (Signatera), and organ health (Prospera).
• The company is experiencing rapid revenue growth, driven by the strong uptake of its Signatera test for cancer monitoring, and is demonstrating significant operational leverage with improving gross margins and a clear trajectory towards positive free cash flow.
• While the company’s proprietary SNP-based technology provides a competitive advantage, Natera faces significant risks related to reimbursement uncertainty, intense competition, and the need to achieve sustained profitability after a history of net losses.

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• NVIDIA Corporation’s recent earnings for the second quarter of fiscal 2026 highlighted a record quarter in terms of total revenue, driven by widespread adoption of its comprehensive product suite across various sectors.
• The company reported a total revenue of $46.7 billion, surpassing its expectations with substantial growth noted in its data center segment, which increased by 56% year-over-year.
• The rollout of new technology, including the Blackwell platform and GB300 systems, was cited as a key driver of this growth, facilitating NVIDIA’s expansion in the AI infrastructure space.

• Eli Lilly and Company delivered a robust financial and operational performance in the third quarter of 2025.
• The company reported a 54% increase in revenue year-over-year, driven by strong sales of key drugs like Mounjaro and Zepbound.
• These products showed significant market penetration, particularly in the U.S., where Lilly has captured a dominant share of the incretin analogs market.

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• Wasion Group is a leading Chinese provider of smart metering and energy efficiency solutions, well-positioned to benefit from domestic and global grid modernization trends.
• The company is experiencing accelerated growth, driven by China’s ‘dual carbon’ policy, strong investment in smart grids by state-owned utilities, and expansion into higher-growth areas like smart water/gas metering and international markets.
• Key risks include high customer concentration with Chinese state-owned utilities, potential for margin pressure from intense competition, and reliance on government policy direction.

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• Revenue in 3Q25 was 7.8% higher than in 2Q25, in line with stronger seasonal demand. GM: 22.0% in 3Q25, compared with 20.4% in 2Q25 and 20.5% in 3Q24.
• The Company expects: Revenue Flat to up 2% quarter-over-quarter (QoQ). Gross Margin: Between 18% and 20%.
• SMIC’s stock price has risen 160.7% year-to-date in 2025, outperforming Taiwan Semiconductor (TSMC) – ADR (TSM US) at 44.2% and United Microelectron Sp Adr (UMC US) at 10.8%.

• Twilio’s third-quarter results for 2025 reveal a mix of strong performance metrics and ongoing strategic advancements that could impact investors’ perspectives on the company.
• The company reported a record $1.3 billion in revenue, marking a 15% increase year-over-year, and $235 million in non-GAAP income from operations, both above expectations.
• This translates to a non-GAAP operating margin of 18%, albeit with a slight sequential improvement.