In today’s briefing:
- Alibaba (BABA US): Buy Ahead of March Quarter Results This Thursday
- AEM Holding: Weak 1Q23 Not a Surprise, Hoping for Better FY24
- Tencent Holdings Ltd (700 HK) – Critical Weekly Close Awaits – 302/330 Buy Zone Achieved in May
- CentralNic Group – Cash allocated to deliver on objectives
- Cisco: Quarterly Earnings, Guidance And What To Look For
- [Hua Hong (1347 HK) Earnings Review]: Capacity Ramp and High LIBOR Impact Profitability
- Tencent Announced Game Pipeline in Annual Conference “Spark 2023”, and Our Estimations
Alibaba (BABA US): Buy Ahead of March Quarter Results This Thursday
- We believe BABA’s upcoming 4QFY23 results will surprise the market to the upside by a wide margin in terms of recovery in bottomline, catalyzing trading opportunity for short-term investors.
- We also expect that the results will usher in a period of sustained re-rating for the stock due to China’s continued yet slow consumption recovery and Alibaba’s well-executed restructuring plan.
- Geo-Political risks will not go away, but have been very much reflected in current pricing in our view. Buy ahead of results on Thursday.
AEM Holding: Weak 1Q23 Not a Surprise, Hoping for Better FY24
- AEM reported weak 1Q23 showing significant revenue and margin pressure across the board
- The company mentioned it was an indirect beneficiary of AI and ChatGPT hype going forward
- AEM could achieve 0.40 EPS in FY24 once the semiconductor industry rebounds. Fair Value of 6 SGD is unchanged.
Tencent Holdings Ltd (700 HK) – Critical Weekly Close Awaits – 302/330 Buy Zone Achieved in May
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- Our multi-quarter outlook for Tencent Holdings Ltd (700 HK) remains extremely bullish with a multi-quarter target towards 451.95. In April we identified the 302/330 range as a potential buy zone.
- The recent low of 323.20 has preceded an impulsive bullish daily confirmation. This week we await a bullish weekly close (above 343.99) to confirm a renewed MT uptrend bias.
CentralNic Group – Cash allocated to deliver on objectives
CentralNic’s Q123 results showed robust revenue and profit growth, as well as a further deleveraging of its balance sheet. Its product comparison business VGL’s entry into France provides a strong organic growth opportunity, with potential to expand into other regions. The group continues to showcase its commitment to shareholder returns with its latest share buyback programme.
Cisco: Quarterly Earnings, Guidance And What To Look For
- Cisco is about to report its Q3 2023 results, but the market does not seem to fully appreciate the business momentum.
- Decisions regarding capital allocation could give us some valuable clues on where is the business headed, says CNN’s John Sutter.
- The company is expected to report Q32023 results on Thursday.
[Hua Hong (1347 HK) Earnings Review]: Capacity Ramp and High LIBOR Impact Profitability
- Hua Hong reported C1Q23 top-line, IFRS EBIT, and non-IFRS net income in-line, (15.3%), and 13.3% vs. our est., and in-line, (3.4%), and 34.9% vs. cons., respectively.
- Hua Hong reported 1Q23 utilization rate of 103%, higher than peers, which we believe is due to (1) large EV and new energy exposure, and (2) 8” price cuts.
- Despite near-term margin deterioration, we maintain Hua Hong’s BUY and HK$ 35 TP due to auto IC exposure and localization, implying 11x FY24 PE.
Tencent Announced Game Pipeline in Annual Conference “Spark 2023”, and Our Estimations
- On May 15th, Tencent holds its annual game conference “Spark 2023” and releases its latest game pipeline, including updates of 15 launched games and 20 new games.
- Considering Tencent’s large size, only a game that has the potential to exceed RMB 10 bn in annual gross billing could be considered as a positive sign.
- Yet, we don’t find any game title that could reach over RMB 10bn annualized gross billing in the game pipeline.
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