Macro and market
Market review – Hang Seng Index closed up 0.55% to 22467 points yesterday; The national index / Science Index closed down 0.10% / 1.16% to 7900 / 4958 points, with a large market turnover of 115615 billion yuan. In terms of sectors, the market is looking forward to the rise of sea freight, and port transport stocks continue to strengthen, Sinotrans Limited(601598) (598hk) / Cosco Shipping Holdings Co.Ltd(601919) (1919hk) / The Pacific Securities Co.Ltd(601099) shipping (2343hk) rose 11.1% / 7.4% / 1.6% respectively. The market is worried that the continued situation in Russia and Ukraine will lead to tight supply of coal and other commodities. The benchmark power coal price in Asia soared 46% yesterday, reaching a new high since 2008, driving the rise of coal stocks, China Coal Energy Company Limited(601898) (1898hk) / Yankuang energy (1171hk) / China Shenhua Energy Company Limited(601088) (1088hk) up 8.2% / 6.1% / 4.4% respectively. US Federal Reserve Chairman Powell tended to support a quarter of an interest rate increase at the March meeting. Hong Kong banking stocks rebounded across the board, with Standard Chartered Bank (2888hk) / HSBC Holdings (5hk) up 4.2% / 4.1% respectively. On the other hand, most auto stocks fell, Great Wall Motor Company Limited(601633) (2333hk) / Geely Automobile (175hk) / ideal automobile (2015hk) / Byd Company Limited(002594) shares (1211HK) fell 10.9% / 5.8% / 4.1% / 2.8% respectively. SaaS concept software stocks generally fell, with Kingsoft (3888hk) / mingyuanyun (909hk) / Kingdee International (268hk) falling 12.8% / 7.3% / 3.7% respectively. Tobacco concept stocks fell, with Smallworld (6969hk) / China Bolton (3318hk) / Warburg International (336hk) falling 9.1% / 5.6% / 3.1% respectively. In terms of individual stocks, Chuangke industry (669hk) reported that its annual results exceeded market expectations, leading by 9.1% to HK $136.1.
Industry outlook / quick review of individual stocks
Bilius – focus on improving efficiency. BiliBili 4q21 has a sound performance, with Mau / revenue increasing by 35% / 51% year-on-year (higher than the consensus expectation of 1% / 1%). Non GAAP net loss was better than consensus expectations. The management’s Guidance Center for 1q22e was 2% lower than the consensus expectation, but higher than our prediction of 1%. Looking forward to 2022, we conservatively estimate that the revenue will increase by 30% year-on-year, among which the game / non game revenue will increase by 0% / 40% year-on-year. Affected by game regulation, short-term gross profit margin is still under pressure. However, the operating profit margin of nongaap will increase by 5%, mainly due to the reduction of operating expenses and the improvement of efficiency. We are optimistic about BiliBili’s long-term user growth and commercialization process, but investors need time to digest the fluctuation of gross profit margin. We slightly fine tuned the expectation of low annual income, but increased the profit margin to reflect the improvement of efficiency. Adjust the target to $55. (Internet team)
Shangtang Technology (20hk) – the demand for computer vision is strong, but the AI cloud service market is highly competitive. The development of AI application and sensing technology has brought strong market demand for computer vision. However, the competition of China’s AI public cloud services market is increasing, and the share of Baidu’s Intelligent Cloud continues to rise. The market is highly concentrated, leaving little room for new entrants. The trend of aiaas business planning and capital expenditure (invested in port AI data center) will be the focus of Shangtang’s fiscal year 21 performance meeting. We expect Shangtang’s revenue in fiscal year 21 to increase by 36% year-on-year to RMB 4.7 billion. At the same time, we are conservative about the gross profit margin. It is expected that the gross profit margin in fiscal year 21 will decrease by 3.6 percentage points to 67.0% (1.5 percentage points lower than the market expectation). Reiterated the buy rating and maintained the target price at HK $8.08. (software and it team)
