Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: Tencent, Xiaomi Corp, Monex Group Inc, Total Access Communication, Freshworks, ByteDance, Kuaishou Technology, Energy Absolute, Jiangsu Hengrui Medicine, Sumitomo Metal Mining and more

In today’s briefing:

  • Riot Games – Arcane Topples Squid Game and Wave’s Virtual Justin Bieber
  • Xiaomi (1810 HK): 3Q21, Stagnant Smartphone Sales
  • Monex – Examining the Domestic Business
  • DTAC: Merger with TRUE Will Expand Its Value
  • Beyond 280 | Freshworks (FRSH US) – Conversation with an Industry Channel
  • A Late Starter, ByteDance Begins to Accelerate Its Effort in Healthcare
  • Kuaishou (1024 HK): 3Q21, Growth Rates of Active Users Recovered Strongly
  • EA: The EV-ESS Chain All Set to Outperform
  • Jiangsu Hengrui Medicine (600276.CH)-The Deal with Cstone,the Accounting Estimate Change and Outlook
  • SMM – Important Breakthrough for Li-Ion Battery Recycling

Riot Games – Arcane Topples Squid Game and Wave’s Virtual Justin Bieber

By Mio Kato

  • Riot has been busy this month as its animated series Arcane based on League of Legends dethroned Squid Game’s long reign on Netflix.
  • It also assisted Wave in noticeably improving its virtual concerts, this time featuring Justin Bieber.
  • Thus, Riot could be Tencent’s best metaverse asset, but is it enough?

Xiaomi (1810 HK): 3Q21, Stagnant Smartphone Sales

By Ming Lu

  • Smartphone revenue stopped growing in 3Q21 and we believe the situation will continue in 2022.
  • We believe the margin is not a concern, as the company close its sales in rural area.
  • We believe the stock has a downside of 30% for the end of 2022.

Monex – Examining the Domestic Business

By Mio Kato

  • Monex’s SPAC of its TradeStation business highlighted the hidden potential of its non-crypto assets.
  • While its domestic business has traditionally been volatile and not grown profit especially quickly that appears to be changing.
  • We examine the potential of the company’s regional bank tie-ups below.

DTAC: Merger with TRUE Will Expand Its Value

By Research Group at Country Group Securities

  • DTAC and TRUE notified the SET of a potential merger and will create a non-binding memorandum of understanding. The deal will involve a share-swap model, where DTAC shareholders can either 
  • We believe accepting the tender offer is the best course of action for short-term oriented shareholders, due to the time-consuming nature of the deal and the potential lingering cost structure 
  • Deal of merger must still undergo approval from board of directors and shareholders of both companies and key regulatory agencies.

Beyond 280 | Freshworks (FRSH US) – Conversation with an Industry Channel

By Pranav Bhavsar

  • In this “Beyond 280”, we speak to an Industry Channel with an objective to understand long term revenue growth potential for SaaS company like Freshworks (FRSH US)
  • We also discuss how one should look into early lock-up releases. (One of the reasons we believe for recent stock price pressure)
  • Based on our discussion, we believe the opportunity size and growth potential is intact, weakness on account of events like lock-up releases could be attractive entry points. 

A Late Starter, ByteDance Begins to Accelerate Its Effort in Healthcare

By Immanuel Nama

  • ByteDance’s ambition in healthcare – According to EqualOcean data, ByteDance has invested in 56 companies in 2021 only
  • Expanding in adjacent fields – It is generally easier to invest in areas that are more compatible with a company’s core businesses.
  • Still, a long way to go – Online healthcare is a domain full of risks. 

Kuaishou (1024 HK): 3Q21, Growth Rates of Active Users Recovered Strongly

By Ming Lu

  • We believe Kuaishou (KS)’s loss was acceptable, as the rapid growth of active users are extremely valuable.
  • Online marketing revenue and e-commerce revenue increased dramatically and the declining rate of live streaming slowed down.
  • We believe the stock will have an upside of 36% for the end of 2022.

EA: The EV-ESS Chain All Set to Outperform

By Research Group at Country Group Securities

  • Yesterday analyst meeting come out in a positive tone. EA kick started the EV business in 3Q21 and booked sales of 77 E-buses. We see the growing EV sales,and commencement
  • We expect the growing E-bus sales to underpin the recurring profit growth in 4Q21. With approximately Bt400m bottom line contribution from the EV segment (from 300 to 400-unit sales),the 4Q21 
  • Positive 2021-25E outlook as we expect a 15% CAGR net profit growth on the back of incrementing contribution from new EV-ESS businesses (commencing on 2H21),viz., EV car/bus/truck sales and ESS

Jiangsu Hengrui Medicine (600276.CH)-The Deal with Cstone,the Accounting Estimate Change and Outlook

By Xinyao (Criss) Wang

  • We analyzed the logic and the potential impact of the deal with CStone for CS1002 as well as the accounting estimate change related to R&D spending.
  • There could be some share price rebound due to the short-term catalyst, and investors could choose to take advantage of it.
  • However, Hengrui has not been in its best time yet, and the Company still needs time for rebalancing. So, we remain conservative about the outlook at the current stage.

SMM – Important Breakthrough for Li-Ion Battery Recycling

By Mio Kato

  • The Nikkei reports that Sumitomo Metal Mining has developed a method to more effectively recycle Li-Ion battery materials. 
  • Importantly, lithium can be recycled in addition to copper, nickel and cobalt and SMM expects costs to be competitive. 
  • This is positive news but timelines also illustrate the hurdles for a quick transition.

Related tickers: Tencent (0700.HK), Xiaomi Corp (1810.HK), Monex Group Inc (8698.T), Total Access Communication (DTAC.BK), Energy Absolute (EA.BK), Jiangsu Hengrui Medicine (600276.SS), Sumitomo Metal Mining (5713.T)

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