In today’s briefing:
- Taiwan Top 50 ETF Rebalance: One Change Expected in June
- Alibaba (BABA US): What It Takes for Re-Rating
- Grab (GRAB US) – Living in an Ethereal World
- ECM Asia Takeaways from Hong Kong Investor Meetings – Rakuten, Growatt, JD Industrial and Others
- Kuaishou (1024 HK): 1Q23, All Business Lines Accelerated
- Kuaishou 1Q2023: Upbeat Quarter with a Small Share Buyback
- Quiddity Leaderboard T50/100 Jun 23: One T50 Change and Four T100 Changes (With TDIV Implications)
- NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)
- PhilEnergy IPO Valuation Analysis
- Vection Technologies – Integrating with ChatGPT to enable intelligent VR
Taiwan Top 50 ETF Rebalance: One Change Expected in June
- Today was the review cutoff for the June rebalance of the Yuanta/P-Shares Taiwan Top 50 ETF. We see one potential change at the review.
- Passive trackers are estimated to buy nearly 6 days of ADV on Pegatron Corp (4938 TT) while selling around 1.7 days of ADV on Silergy Corp (6415 TT).
- Short interest on Pegatron Corp (4938 TT) has continued to drop as the stock has moved higher; Silergy Corp (6415 TT)‘s short interest has risen as the stock has dropped.
Alibaba (BABA US): What It Takes for Re-Rating
- Weaknesses of BABA stock and China tech sector in general post their strong earnings recovery for March quarter suggest market’s concerns centering around growth outlook.
- BABA fundamental has tracked well to our projection since last November. P/E multiple contraction – which priced in too much pessimism – prevented our bullish call from materializing, for now.
- We stick to our thesis that March quarter results set stage for BABA re-rating on sustained recovery, well-executed overhaul effectively unlocking value and investors’ renewed appetite for China assets.
Grab (GRAB US) – Living in an Ethereal World
- Grab‘s1Q2023 made for positive reading with rapid revenue growth and a quickening of progress towards profitability but the focus perplexingly seemed to be drawn to the ethereal measure of GMV.
- The delivery segment saw the most significant GMV slowdown, impacted by a high base and seasonality but saw rapid revenue growth and record margins. Mobility remained the cash cow.
- Grab‘s profitability improved considerably in 1Q2023 across all segments, with management upgrading the outlook for FY2023 for adjusted EBITDA and maintaining its breakeven target for 4Q2023, which now looks conservative.
ECM Asia Takeaways from Hong Kong Investor Meetings – Rakuten, Growatt, JD Industrial and Others
- We spent the second half of last week meeting ECM focused clients in Hong Kong.
- Overall, the mood remains somewhat grim for Hong Kong/China and it will be up to a few upcoming deals to open up the market again.
- In this note, we talk about some of the feedback for the upcoming IPOs and placements.
Kuaishou (1024 HK): 1Q23, All Business Lines Accelerated
- The revenue growth rates of all business lines accelerated in 1Q23.
- Operating losses shrank to RMB1.3 bn in 1Q23, less than RMB3 bn in two previous quarters.
- We believe the stock has an upside of 66% for the yearend 2023.
Kuaishou 1Q2023: Upbeat Quarter with a Small Share Buyback
- Kuaishou Technology (1024 HK) ’s 1Q2023 earnings were above consensus estimates with the company reporting positive adj. EBITDA and adj. net profit during the quarter.
- Operating profit margin of the domestic business further improved while the company managed to significantly reduce operating losses of the overseas business during the quarter.
- Kuaishou also announced a small share buyback worth of HK$4bn which further affirms the company’s improving fundamentals and should help attract investors.
Quiddity Leaderboard T50/100 Jun 23: One T50 Change and Four T100 Changes (With TDIV Implications)
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the June 2023 Rebalance.
- I see one change for the T50 index and four changes for the T100 index.
- Even though our standalone flow expectations for the T100 index is insignificant, there is one name with important flow consequences in June 2023.
NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)
- In the evening of May 20th, NetEase held an online conference where it announced release dates for games…
- …that It has Previously Announced, and Unveiled New Titles that Will Be Launched in the Future.
- Overall, June Will Be the Peak Month for Newly Launched Titles from NetEase, with One Big Game (Justice Mobile) And Two Smaller Games (Badlanders and Racing Mobile)
PhilEnergy IPO Valuation Analysis
- Our base case valuation of PhilEnergy is target price of 41,545 won per share, which represents 38% higher than the high end of the IPO price range of 30,000 won.
- We believe a premium valuation multiple to the comps (20%) is appropriate due to PhilEnergy’s higher sales growth rate and higher ROE than the comps in 2021 to 2023.
- We estimate the company to generate sales of 312.5 billion won in 2023 (up 64.7% YoY) and 361.5 billion won (up 15.7% YoY) in 2024.
Vection Technologies – Integrating with ChatGPT to enable intelligent VR
Vection Technologies recently announced the integration of ChatGPT into its flagship product, 3D Frame, enabling the creation of an artificial intelligence (AI) assistant within three dimensional (3D) and virtual reality (VR) environments. We believe this is a good example of an enterprise quickly integrating third-party AI to deliver a significant enhancement to its existing products within a timescale (and budget) that was unimaginable 12 months ago.
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