In today’s briefing:
- ISC’s Tender Offer Possibility Is Decreasing, Indicating a Potential Shorting Opportunity
- Meituan: Strong 1Q with Operating Profits; No Disclosure on User Numbers and Delivery Costs
- GoTo (GOTO IJ) – Key Initiatives and Foundations
- Intel Has Big Problems Ahead
- NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst
- L3Harris Technologies Inc.: Launch of Next-Generation NTS-3 Satellite & Other Developments
- T-Mobile US Inc.: Acquisition of Ka’ena Corporation & Other Drivers
- Weibo (WB US, BUY, TP US$26.9) Earnings Review: Maintain BUY for Margin Improvement
- Meituan (3690 HK, BUY, TP US$170) Target Price Change: Consolidating Market Share… Maintain BUY
- Mastercard Incorporated: Expanding Global Footprint Enough To Compete With Visa? – Key Drivers
ISC’s Tender Offer Possibility Is Decreasing, Indicating a Potential Shorting Opportunity
- The possibility of SKC securing additional shares other than the planned 40% through a tender offer seems low. This is a basis for the recent short position build-up in ISC.
- ISC began to experience an influx of short selling, leading to it being designated as an overheated short-selling stock, and short selling was restricted for one day on the 26th.
- We need to pay attention to the potential disappointment in the market, which could lead to a sustained downward correction in the stock price.
Meituan: Strong 1Q with Operating Profits; No Disclosure on User Numbers and Delivery Costs
- Meituan (3690 HK) ’s 1Q2023 earnings beat consensus estimates and the key highlight was the company turning into adjusted operating profits after two years.
- Revenue from Core local commerce continued to see strong growth in earnings though we expected growth rates to decline with pandemic conditions easing off.
- Meituan has launched its food delivery app “KeeTa” in Hong Kong which is dominated by Foodpanda and Deliveroo.
GoTo (GOTO IJ) – Key Initiatives and Foundations
- GoTo released a Newsletter for May which reiterated its progress toward profitability as well as some key initiatives including increasing service fees and expanding use cases for GoPay Coins rewards.
- The newsletter also highlighted the release of the Annual Report and its Sustainability report, which are both important documents for longer-term and increasingly ESG-focused investors.
- GoTo also highlights a report from the University of Indonesia regarding the company’s socioeconomic impact in the country, which remains huge given its socio-economic reach through ODS and Tokopedia.
Intel Has Big Problems Ahead
- The chip industry is seeing two “transitions” Intel is being phased out with the GPU shift, according to the company.
- The company is also expected to be phased out of the chip industry with the next generation of processors.
- The chip company is expected to have a new generation of chips in the coming years.
NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst
- NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%.
- <Justice Mobile> is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase’s next potential hit title.
- Maintain a BUY with TP unchanged, implying 18X PE in 2023.
L3Harris Technologies Inc.: Launch of Next-Generation NTS-3 Satellite & Other Developments
- It was a successful first quarter for L3Harris as they delivered an all-around beat while building momentum in orders and backlog.
- The company saw top-line growth of 9% across all segments, along with improved operating income in two out of three segments.
- They also reaffirmed their 2023 guidance, with a potential bias towards the higher end of the revenue range due to strong revenue growth and significant orders.
T-Mobile US Inc.: Acquisition of Ka’ena Corporation & Other Drivers
- T-Mobile delivered a mixed set of results in the first quarter with revenues below Wall Street expectations but it managed an earnings beat.
- The company’s sustained growth in postpaid accounts and ARPU produced the strongest year-over-year postpaid service revenue growth in the market, up 6%.
- This quarter, the company added 287,000 net postpaid account additions.
Weibo (WB US, BUY, TP US$26.9) Earnings Review: Maintain BUY for Margin Improvement
- 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.
Meituan (3690 HK, BUY, TP US$170) Target Price Change: Consolidating Market Share… Maintain BUY
- Meituan reported 1Q23’s rev./non-IFRS net income 2.5%/126% vs. our est., the strong margin beat is due to efficiency improvements in all business lines;
- To compete with Douyin’s in-store business, Meituan will spend more in 2Q23, however FD and insta-shopping continue to have margin upside.
- Our BUY thesis remains unchanged, as we believe investors overestimate Douyin’s impact, while underestimating Meituan’s ability to improve margins.
Mastercard Incorporated: Expanding Global Footprint Enough To Compete With Visa? – Key Drivers
- Mastercard had solid revenue and earnings growth in the latest quarter and started 2023 with an all-around beat.
- On a non-GAAP currency-neutral basis, excluding extraordinary items, adjusted net revenues were up 15% and adjusted operating income was up 17% over the prior year.
- Payment network net revenue climbed 10%, driven by domestic and cross-border transaction and volume growth and a rise in rebates and incentives.
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