Research Reports

TAL will report FY2Q20 results on October 24th before the markets open with an 8am EST conference call. Based on our data and model, we believe TAL’s FY2Q20E revenue is likely to be higher than consensus at $915M and our model. Peiyou is likely to grow 25.0% Y/Y vs. 20.0% Y/Y growth in FY1Q20 as its course and attendee capacities increased significantly due to its dual teacher and Peiyou Online. Xueersi.com, TAL’s online education, is also growing rapidly and is likely to grow 115% - 118% Y/Y driven by course unit expansion, as well as its promotions. We maintain our BUY rating.……

EDU will report FY1Q20 results on October 22nd before the markets open with an 8am EST conference call. We are positive on EDU into FY1Q20 earnings. During the quarter, we saw steady expansion in both physical locations as well as dual-teacher model, which is likely to lead to high growth in course offerings as well as attendees. In addition, fewer discounts in summer promotional courses are likely to lead to better margins. ……

We are positive on BABA’s FY2Q20E performance for both its revenues and margins. BABA has adopted data analytics for its business, which enables it to compete in the market smartly, and in turn, generates more GMV and more revenue without hurting its margins. For example, BABA uses Juhuasuan to attract users at all levels with the most popular SKUs, which is the result of its real time data analytics. ……

We are positive on PDD’s 3Q19E performance. We believe the company is still in the stage of building up its e-commerce ecosystem, which requires significant sustainable traffic to operate. Therefore, at the current stage, the key of the business is to buy as much traffic as it can and then sell the traffic to merchants by matching the SKUs with users. That’s why sales and marketing is one of the important factors for PDD as it directly results in revenues.……

We are positive on HUYA’s 3Q19E performance. Based on our data and model, we believe Huya’s revenue is likely to beat consensus at RMB2,133M. The better performance is driven by high user growth, which is the result of rich e-sport tournaments in the quarter. There are four major e-sport vendors in China, including Huya, DouYu (DOYU, $8.24, Not Rated), QQ eSport and Kuaishou, but all of them are invested by Tencent (700.HK, HK$322.80, Not Rated). Therefore, we don’t believe there will be any damaging competition among these vendors. In the long run, we believe Huya is likely to continue to lead in the sector.……

We are positive on JD’s 3Q19 performance. Based on our data and calculations, we believe JD’s net revenue is likely to reach RMB129.2B in 3Q19E, up 23.3% Y/Y vs. 22.9% in 2Q19, better than consensus at RMB127.9B (22.1% Y/Y growth). In the 1H2019, the company accomplished 2.5% non-GAAP net margin, and it plans to invest more back into new business initiatives such as a new version of Pingou on WeChat, lower tier city expansion and category expansion. The current expectation for JD’s 2H2019 net income has already reflected that, in our opinion.……

We are positive on TME’s 3Q19 performance. This is the first time since its IPO that we believe the company is likely to outperform instead of missing consensus expectation. The better result is driven by: 1) more paid songs under the Online Music Services line as more popular songs are VIP songs. As such, we also expect the paying ratio for online music services to improve; 2) user growth for its live broadcasting is encouraging. ……

We are positive on MOMO’s performance in 3Q19, as both of MOMO’s live and VAS businesses grew nicely. After Tantan APP was relaunched on APP stores in July, its popularity and user base came back. MOMO’s live broadcasting business was also growing nicely driven by the growth of concurrent users. Based on our data, we believe the total revenue in 3Q19E is likely to be higher than consensus at RMB4,295M. We maintain our Buy rating. ……

We are positive on TAL’s performance in FY2Q20. The company lowered its FY2Q20 revenue guidance as well as guided down its margins due to its online education expansion efforts. However, based on our data and model, we believe TAL’s FY2Q20E revenue is likely to be higher than consensus at $916M. Peiyou is likely to reach $696M in FY2Q20, growing 25.0% Y/Y vs. 20.0% Y/Y growth in FY1Q20; its course and attendee capacities increased significantly due to its dual teacher and Peiyou Online. ……

We are positive into YY’s 3Q19 performance. Based on our data and model, we believe YY’s 3Q19E revenue is likely to be higher than consensus at RMB6,673M and our model. The growth was mainly driven by: 1) better growth of YY Live users in 3Q19 compared with that in 2Q19; and 2) higher growth in both users and hosts for HUYA in 3Q19 driven by well-known game tournaments.……

QTT will report 2Q19 results on September4th after the markets close followed by a 9pm EST conference call. Based on our data and model, we believe the company’s 2Q19 revenue is likely to be within its guidance range of RMB1,380M - RMB1,420M. However, its new APP, Midu, is under the government’s regulation control and its commercialization is impacted during 3Q19. ……

BITA will report 2Q19 results in late August. Based on our data and calculations, we believe BITA’s 2Q19 revenue is likely to be better than consensus at RMB2,758M. However, BITA’s fundamentals are likely to be impacted by the weaker consumer spending in the auto sector as well as the changes of National Emission Standard (from Guo 5 to Guo 6). ……

BILI will report 2Q19 results on August 26th after the markets close followed by a 9pm EST conference call. We are positive on BILI’s 2Q19 business performance. BILI has a high quality community with users who are sticky and have high spending power. Recently, our data showed that the interaction level on the platform increased significantly for its live broadcasting and video businesses.……

PDD will report 2Q19 financial results on August 21st before the markets open with a conference call at 7:30am EST. As China is geographically big with a diverse population, PDD is developing into a less developed market – populations in lower tier cities with lower income or less sophisticated with internet commerce. This group of the population was ignored in the past. ……

WUBA will report 2Q19 results on August 22nd before the markets open with an 8am EST conference call. While we are positive toward its 2Q19 results, we believe its 3Q19 guidance is likely to be just in line with consensus. We used to believe that WUBA is totally shielded from the slowdown of the macro economy, as it serves a group of people and businesses that are less correlated with the macro; plus WUBA is still in the phase of expanding. ……

BZUN will report 2Q19 results on August 21st before the markets open with an 8:30am EST conference call. We are positive on BZUN into 2Q19 earnings. BZUN’s GMV grew faster in 2Q19 than that in 1Q19 driven by the sales hike of Huawei flagship store. Huawei is under the non-distribution model; therefore, we do not expect the take rate for non-distribution model to improve in 2Q19. ……

HTHT will report 2Q19 results on August 21st after the markets close followed by a 9pm EST conference call. According to HTHT’s preliminary data and our model as well as the data released by the company, total revenue is likely to be in line with consensus at RMB 2,861M and toward the low-end of the company’s guidance at RMB 2,849.0M - RMB 2,899.5M. ……

WB will report 2Q19 results on August 19th before the markets open with a 7am EST conference call. Based on our data and calculations, we believe the company’s 2Q19 revenue is likely to be in line with consensus at $429.9M and towards the low-end of guidance range of $427M - $437M. Fundamentally, 2019 is a challenging year for WB as it is under pressure from multiple fronts including: 1) negative impact from a weak economy on its brand advertising business; 2) ByteDance took more market shares in performance-based advertising market; and 3) politically sensitive year puts constrains on content. ……