Daily BriefsTMT/Internet

Daily Brief TMT/Internet: Meituan, Tencent, Megvii Technology, Ace Technologies, SmartMore Technology, Asustek Computer, Cisco Systems and more

In today’s briefing:

  • Meituan Tactical Slide into Our Buy Zone
  • Meituan (3690 HK) Earnings Preview: Less Loss in 4Q22 and to See Profit in 2023
  • China Internet Weekly (20Mar2023): Baidu, Tencent, KE
  • Megvii: An Artificial Intelligence Powerhouse in China
  • Potential Inclusions & Exclusions in KOSDAQ 150 Rebalance in May 2023
  • Smartmore: Using AI to Implement Smart Manufacturing
  • PC Industry Monitor: Signs of Inventory Improvement at PC Industry’s Leading Edge; Shares Diverged
  • Cisco: It’s The Opposite Of A Dot-Com Moment

Meituan Tactical Slide into Our Buy Zone

By Thomas Schroeder

  • Macro trend remains challenging for Meituan over the summer. We see a tactical short out of triangulation and view a new low as a turn and buy signal.
  • RSI bull divergence support a series of tactical rally sequences off of a new low, but macro headwinds will cap over the summer.
  • Bull set up at lower expanding wedge support with wedge resistance coming in near 140. 

Meituan (3690 HK) Earnings Preview: Less Loss in 4Q22 and to See Profit in 2023

By Ming Lu

  • We believe total revenue grew 18% in 4Q22 and 22% in 2023.
  • We believe operating losses decreased YoY in 4Q22 and the company will report an operating profit in 2023.
  • We expect the stock has an upside of 47% for year end 2023.

China Internet Weekly (20Mar2023): Baidu, Tencent, KE

By Ming Lu

  • Baidu launched a beta test of a ChatGTP-like function, WXYY.
  • Tencent announced it will close its digital collection platform, Huanhe, in June.
  • KE’s revenue decreased by 25% and new losses were RMB1.4 billion.

Megvii: An Artificial Intelligence Powerhouse in China

By Douglas Kim

  • Megvii is a leading artificial intelligence company in China focusing on IoT scenarios for mainly three fields including Consumer IoT, City IoT and Supply Chain IoT. 
  • In June 2022, Megvii’s chief scientist Sun Jian passed away due to a sudden illness. His death was one of the key reasons why the company has postponed the IPO.
  • Major investors in Megvii include Ant Group, Alibaba Group (9988 HK), Lenovo (992 HK), and Abu Dhabi Investment Authority.

Potential Inclusions & Exclusions in KOSDAQ 150 Rebalance in May 2023

By Douglas Kim

  • In this insight, we discuss the potential inclusions and exclusions of the upcoming KOSDAQ 150 rebalance in May 2023.
  • The next round of KOSDAQ 150 rebalance will be announced in May and it will be effective as of end of May 2023.
  • Typically, the potential inclusions and exclusions to KOSDAQ 150 make their biggest moves in the one to three months prior to the rebalance announcements.

Smartmore: Using AI to Implement Smart Manufacturing

By Douglas Kim

  • Established in 2019 and headquartered in Hong Kong, Smartmore is a technology company that focuses on the use of artificial intelligence to implement smart manufacturing and ultra-high definition videos.
  • The company’s intelligent manufacturing technology helps detect malfunction at manufacturing lines in numerous industries such as autos and semiconductors.
  • Since the inception of the company, Smartmore has raised nearly $300 million in funding. Its major investors include Hermitage Capital, IDG Capital, Sequoia Capital China, and Lenovo Capital.

PC Industry Monitor: Signs of Inventory Improvement at PC Industry’s Leading Edge; Shares Diverged

By Vincent Fernando, CFA

  • Asustek, Acer, and HP’s recent quarterly results indicate decreases in inventory days, highlighting potential improvement happening at the leading edge of the PC industry chain.
  • Asustek (Asus) has substantially underperformed Acer YTD with one factor likely being Asus reporting worse margin performance. Asus is flat YTD after its post-results drop vs. +15% YTD for Acer.
  • Long/Short: One can explore Long Asustek vs. Short Acer based on expectations of normalization of relative operational performance.

Cisco: It’s The Opposite Of A Dot-Com Moment

By Vladimir Dimitrov, CFA

  • The company ranks very high in terms of capital allocation prudence and this is going to serve long-term shareholders well.
  • Cisco’s stock appears conservatively priced given the company’s strategic positioning and the ability to improve margins.
  • Cisco appears increasingly attractive as market liquidity conditions normalize, says analyst.

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