Alibaba delivered in-line 3QFY24 results. Revenue grew 5% yoy to Rmb260.3b, in line with street estimates. Non-GAAP net profit was Rmb48b, down 4% yoy and in line with street estimates, with net margin of 18.4%. Alibaba has approved an increase of US$25b to its share repurchase programme through to the end of Mar 27. The company remains focused on achieving double-digit growth in ROIC and targets a 3% share reduction in the next three years. Maintain BUY. Target price: HK$100.00 (US$100.00).
KEY HIGHLIGHTS Results Alibaba Group (9988 HK/BUY/HK$74.90/Target: HK$100.00) 3QFY24: Increased shareholder return plan; pivoting focus to reignite e-commerce growth. Yum China Holdings Inc (9987 HK/NOT RATED/HK$332.80) 4Q23: Earnings beat; expect flattish same-store sales and stable core profit in 1Q24. Update Aier Eye Hospital Group Co (300015 CH/BUY/Rmb13.97/Target: Rmb21.00) Expects solid business expansion despite weak economic conditions. TRADERS’ CORNER China Power International (2...
GREATER CHINA Strategy Alpha Picks: February Conviction Calls: We remain hedged, adding COSCO Shipping Holdings and Foxconn Industrial Internet to our BUY list, but include additional SELL calls on Li Auto and Xpeng. INDONESIA Strategy Alpha Picks: Outperformance in Jan 24: Our picks are EXCL, MAPI, BMRI, JSMR, BBNI, CTRA, MYOR and AKRA. MALAYSIA Strategy Alpha Picks: Eyes Also On Results Season Winners: Our Alpha Picks performance again trounced the KLCI in Jan 24 (+9.6% vs +4.0%). Feb 24 pic...
Alibaba saw a meaningful consumption recovery in December on its platform, driven by enhanced ad-tech and a low base. We expect revenue to grow 9% yoy for 3QFY24, underpinned by a resilient recovery in CMR growth. Going into FY24, Alibaba will continue to focus on the Taobao-Tmall group upgrade and investment in AIDC to stimulate revenue growth so as to navigate the intense competitive environment. Maintain BUY with a lower target price of HK$102.00 (US$102.00).
KEY HIGHLIGHTS Sector Catering Pick Haidilao in the near term on better operating leverage. Maintain UNDERWEIGHT. Update Alibaba Group (9988 HK/BUY/HK$69.75/Target: HK$102.00) 3QFY24 preview: Improving GMV and advertising growth bolstered by ad-tech upgrade initiatives. China Merchants Bank Co (3968 HK/BUY/HK$25.80/Target: HK$40.00) When the going gets tough, the tough get going. TRADERS’ CORNER Techtronic Industries (669 HK): Trading Buy range: HK$86.00-87.00 Hisense Home Appliances Group ...
GREATER CHINA Strategy Alpha Picks: January Conviction Calls: We add the potential beneficiaries of the upcoming CNY festival − Galaxy Entertainment and Trip.com − to our BUY list, but include SELL calls on BYD and Geely due to the subsidy reduction. INDONESIA Strategy Alpha Picks: Underperformance in 4Q23 and 2023: Our picks are MAPI, BMRI, JSMR, TLKM, BBNI, CTRA, MYOR and AKRA. MALAYSIA Strategy Alpha Picks: Domestic Event Winners: Our Alpha Picks outperformed the KLCI in Dec 23. Jan 24 pick...
GREATER CHINA Strategy Alpha Picks: December Conviction Calls: We add a mix of turnaround stocks and beneficiaries of policy support to our BUY list − CSPC, HKEX, Lenovo, Longfor, Pinduoduo and Sunny Optical. INDONESIA Strategy Alpha Picks: Underperformance With A 3.7% Return: Our picks are GOTO, BMRI, JSMR, TLKM, BBNI, NCKL, CTRA, MYOR and AKRA. MALAYSIA Strategy Alpha Picks: Still Focusing On Domestic Winners: Our Alpha Picks trounced the FBMKLCI in Nov 23, mostly thanks to Hume’s run-up. De...
Alibaba delivered in-line 2QFY24 results. Revenue grew 9% yoy to Rmb224.8b, in line with street estimates. Non-GAAP net profit was Rmb40.2b, up 19% yoy and in line with street estimates, with net margin of 18%. We believe the market is now concerned about: a) the soft cloud revenue growth of 2% yoy, b) the termination of the full spin-off of the cloud business segment due to US restrictions on the export of high-end computing chips to China, and c) a planned share reduction by its key founder. M...
KEY HIGHLIGHTS Sector Aviation Airlines’ Oct 23 operational data: Recovery continued at a moderate pace; overcapacity issue remains. Maintain UNDERWEIGHT. Initiate Coverage Longi Green Energy Technology (601012 CH/BUY/Rmb23.71/Target: Rmb27.39) Solar modules: China’s dominance to persist; riding on the installation boom. Results Alibaba Group (9988 HK/BUY/HK$81.35/Target: HK$115.00) 2QFY24: Strong AIDC growth; cloud distribution cancelled due to chip restrictions. Lenovo Group (992 HK/BUY/HK...
2023’s 11.11 ended with alleviated GMV growth against a soft macro backdrop and intense competitive landscape. Live-streaming e-commerce and adtech upgrades remain key growth catalysts in the e-commerce sector. We opine that the reduced vitality of 11.11 this year stems from rational consumption behaviours and increased consumption of quality products. Maintain MARKET WEIGHT due to lukewarm macro outlook and brutal price wars undermining the profitability of e-commerce companies.
We expect e-commerce ads and overseas e-commerce expansion to be the main driving forces spurring stagnant growth in 3Q23 and beyond. In addition, we are optimistic about the better-the-expected growth in game gross profit and on-track OTA data on the back of strong seasonality. We are also looking out for meaningful progress in AIGC development in 3Q23 and better visibility in 4Q23. Maintain MARKET WEIGHT on the internet sector.
Taobao, JD, PDD and Kuaishou kicked off pre-sales/11.11 promotions on 24, 23, 20 and 18 October respectively. 11.11 pre-sales data showed signs of pent-up demand release following pressured 3Q23 NBS consumption data. To revitalise the soft macro environment, multiple platforms have adopted low price strategies for users to acquire high-value products at more affordable prices. We remain upbeat on China’s ecommerce sector pending an encouraging recovery in 4Q23. Maintain MARKET WEIGHT.
GREATER CHINA Strategy Alpha Picks: November Conviction Calls: We add a mix of defensives and turnaround stocks − COSCO Shipping, CR Mixc, Great Wall Motor, Innovent, Link REIT and NetEase − to our BUY list. INDONESIA Strategy Alpha Picks: Outperformance Despite Negative Returns: Our picks: TLKM, BBNI, SMGR, NCKL, CTRA, MYOR, AKRA and CMRY. MALAYSIA Strategy Alpha Picks: Focusing On Domestic Winners: Our Alpha Picks underperformed the FBMKLCI in Oct 23. Nov 23 picks: BUY BURSA, EKOVEST, GENM, ...
On 31 Oct 23, in Alibaba APSARA Conference 2023 (“云栖大会”), AliCloud officially launched Tongyi Qianwen 2.0 developed on a foundational model with several hundred billion parameters. Based on authoritative evaluations, Tongyi Qianwen 2.0's overall performance surpasses that of GPT-3.5 and is rapidly catching up to GPT-4. AliCloud aspires to become a symbol of openness in the AI era and inject new productivity across various industries. Maintain BUY. Target price: HK$120.00 (US$120.00).
KEY HIGHLIGHTS Economics PMI September’s improvement was a flash in the pan. Sector Property Top 100 developers’ Oct 23 sales weaker than expected; government housing supply to accelerate. Results Anhui Conch Cement (914 HK/BUY/HK$19.52/Target: HK$28.20) 3Q23: In line; margins compressed by lacklustre demand and high coal prices. Budweiser APAC (1876 HK/BUY/HK$14.88/Target: HK$22.50) 3Q23: Slight miss; expect a better 4Q23. Chongqing Brewery (600132 CH/BUY/Rmb78.50/Target: Rmb100.50) 3Q23: ...
Alibaba saw a gradual improvement in consumption recovery in September after a slowdown in July-August. We expect revenue to grow 7% yoy for 2QFY24, underpinned by merchant initiatives and offset by soft consumption demand. We reckon revenue growth should recover to high single digits in FY24. Alibaba still offers an attractive risk-reward opportunity on the back of its restructuring plan. Maintain BUY with a lower target price of HK$120.00 (US$120.00).
KEY HIGHLIGHTS Sector Property Property sales during National Day holiday weaker than expected; awaiting more stimuli in 4Q23 to restore confidence. Update Alibaba Group (9988 HK/BUY/HK$82.10/Target: HK$120.00) 2QFY24 preview: Eyes on Taobao-Tmall’s focus strategy; near-term growth to be spurred by Double 11. Asian Gems Corporate Highlights CSPC Pharmaceutical Group (1093 HK/BUY/HK$5.52/Target: HK$8.00) Innovative product launches to support double-digit revenue growth from 2024. TRADERS’ CO...
GREATER CHINA Strategy Alpha Picks: October Conviction Calls: We expect further downside pressure, so we add SELLs on Henlius and Xpeng to the list, on top of BUYs on Anta, Lenovo, PICC P&C and SHKP. INDONESIA Strategy Alpha Picks: Potential Bull Market in 4Q23: Our picks: BBNI, SMGR, NCKL, MAPI, CTRA, MYOR, AKRA and CMRY. MALAYSIA Strategy Alpha Picks: A Handful Of Events To Capitalise On: Our Alpha Picks modestly outperformed the FBMKLCI in Sep 23. Oct 23 picks: BUY BURSA, HAPL, HUME, MAHB a...
China’s internet sector delivered solid 2Q23 results with an earnings beat but this was followed by lukewarm 3Q23 guidance from most companies navigating macro uncertainty. In view of the intense competition and saturated growth, internet companies are ramping up AIGC investment and cross border expansion against a favourable regulatory backdrop. Maintain MARKET WEIGHT on the internet sector due to heavy investment in new initiatives leading to margin erosion.
China saw the emergence of 130 LLMs as of end-Aug 23, surpassing the US and positioning it at the forefront of LLM development. AI-related guidelines incorporate enhanced government support and feature less stringent content accuracy requirements as the sector is being leveraged to stimulate economic growth, leading to a robust post-pandemic recovery. We remain optimistic in view of the initial regulatory approvals granted to 11 LLM products. Maintain MARKET WEIGHT.
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