Online Games: Over August 14, 2024 Earnings Review Tencent Holdings (700 HK, BUY, TP: HK$485.00) BUY | --- | |-------------------------| | Target Price: HK$485.00 | | | | 52-Week High/Low (HK$) | | Market Cap (US$mn) | | Shares Outstanding (mn) | | 3-mth ADTV (US$mn) | | Free Float (%) | | Major Shareholder (%) | | Naspers | | Ma Huateng | | Lau Chi Ping Martin | | | | | Key Changes DiffNew Old RatingBUYBUYN/A Target Price (HK$)485.000%485.00 2024E EPS (RMB)23.1421.348% 2025E EPS (RMB)23.6622.933% 2026E EPS ...

Investment Rating - The investment rating for Viridian Therapeutics Inc. (VRDN) is "Buy" with a 12-month price target of $25.00, indicating an upside potential of 70.1% from the current price of $14.70 [9]. Core Insights - Viridian Therapeutics Inc. (VRDN) is well-positioned with its VRDN-003 product, which is expected to have best-in-class potential in the subcutaneous (SC) treatment of thyroid eye disease (TED) due to its dosing regimens and autoinjector properties [5][8]. - SLRN has refocused its pipeline strategy to prioritize lonigutamab for TED, moving directly to Phase 3 development by Q1 2025, which increases competitive pressure on VRDN-003 [2][3]. - VRDN plans to initiate Phase 3 trials for VRDN-003 in August 2024, with topline data expected in the first half of 2026, ahead of SLRN's timelines [3][5]. Summary by Sections Pipeline Strategy - SLRN has discontinued investments in HS/PsA and reduced its workforce by 33% to extend its cash runway to mid-2027, focusing solely on lonigutamab for TED [2]. - Early Phase 1/2 data for lonigutamab showed promising results, but VRDN-003's half-life extension and autoinjector features are seen as significant commercial advantages [2][5]. Clinical Development - VRDN-003's Phase 3 REVEAL-1/REVEAL-2 trials are set to begin in August 2024, with topline data expected in 1H26 and a BLA filing by the end of 2026 [3][5]. - SLRN's decision to skip Phase 2b/3 studies and move directly to Phase 3 could intensify competition, but VRDN-003 is anticipated to deliver data from its primary endpoints before SLRN [3][5]. Safety and Efficacy - Updates on tinnitus effects from SLRN's trials indicate that hearing adverse events are mostly transient and manageable, aligning with VRDN's observations [4][5]. - The Phase 3 studies for both VRDN and SLRN may reveal different occurrences of hearing adverse events due to their varying study durations [4].

Investment Rating - The report indicates a forecast of three more rate cuts in 2024 and one additional cut in 2025, leading to a terminal rate of 2.75% [4][8]. Core Insights - The Riksbank's Executive Board maintained the policy rate at 3.75% during the last meeting, with guidance suggesting potential cuts if inflation prospects remain favorable [4]. - Recent inflation data shows that July core inflation was 2.2% year-over-year, aligning with Riksbank's projections, while the activity picture remains subdued with a Q2 GDP decline of -0.8% quarter-over-quarter [5][7]. - The report anticipates a 25 basis point cut to 3.5% in the upcoming meeting, with expectations for further cuts in August, September, and November [8]. Summary by Sections Monetary Policy Outlook - The Riksbank's policy rate is projected to decrease to 3.33% in Q4 2024 and 2.94% in Q2 2025, reflecting a cautious approach due to global developments and economic activity slowdown [4]. - The majority of the Executive Board members are open to delivering three more rate cuts this year, citing favorable inflation prospects and a slowing economy [4]. Inflation Trends - Core inflation metrics have shown mixed progress, with July's core inflation at 2.2% year-over-year and a sequential increase of 0.37% month-over-month [5][6]. - The trade-weighted krona has remained stable since the June meeting, indicating a lack of significant volatility [6]. Economic Activity - The economic activity remains subdued, with a flash GDP print of -0.8% quarter-over-quarter for Q2, following a growth of 0.7% in Q1 [7]. - Unemployment rates have stabilized at 8.2%, and consumer confidence has shown signs of improvement, suggesting potential for economic recovery in Q3 [7].

Investment Rating - The report does not explicitly provide an investment rating for the Polish inflation outlook but indicates a more dovish long-term outlook compared to the National Bank of Poland (NBP) [3]. Core Insights - The final July inflation estimate confirmed a rise from +2.6% year-on-year (yoy) in June to +4.2% yoy in July, primarily driven by higher utility inflation, which increased from -1.6% yoy in June to +10.1% yoy in July due to the partial expiry of energy price shields [2][4]. - Food inflation also rose for the third consecutive month, from +2.5% yoy to +3.2% yoy in July, while core inflation slightly increased from +3.6% yoy to +3.8% yoy [2][4]. - The report forecasts lower-than-expected Polish inflation in the medium term, attributing this to external factors, the recent appreciation of the zloty, and favorable food prices [3]. Summary by Sections Inflation Overview - July inflation rose to +4.2% yoy from +2.6% yoy in June, with a month-on-month (mom) increase of 26.2% (seasonally adjusted, annualized) [2][4]. - Core inflation increased to +3.8% yoy in July from +3.6% yoy in June, with a mom increase of 6.6% (seasonally adjusted, annualized) [4]. Key Figures - Utility inflation surged to +10.1% yoy in July from -1.6% yoy in June, while food inflation rose to +3.2% yoy from +2.5% yoy [4]. - The report highlights significant changes in various inflation components, including a dramatic increase in electricity, gas, and other fuels, which saw a yoy increase of +10.1% [4]. Long-term Outlook - The long-term outlook remains dovish, with expectations of a temporary rebound in inflation due to the expiry of energy price caps, but overall disinflation is anticipated in the second half of 2024 [3][7].

15 Aug 2024 CMB International Global Markets | Equity Research | Company Update Tencent (700 HK) Inline 2Q24 results; games business to drive revenue growth acceleration in 2H24E Tencent reported 2Q24 results on 14 Aug: total revenue grew by 8% YoY to RMB161.1bn, in line with our/consensus estimate of RMB160.9/161.4bn; non- IFRS operating profit grew by 27% YoY to RMB58.4bn, largely in line with our estimate of RMB57.7bn; non-IFRS net income increased by 53% YoY to RMB57.3bn and was 17/18% ahead of our/cons ...

Investment Rating - The report does not explicitly provide an investment rating for the industry or Prudential plc Core Insights - Prudential plc is undergoing a customer-centric transformation driven by digital transformation, with a focus on data and artificial intelligence as key enablers while maintaining the importance of human interaction [1][3] - The company aims to enhance customer experiences through personalized, proactive, and efficient services, leveraging data-driven insights to drive sustainable growth across global markets [3][4] - AI is recognized as a transformative force in the service industry, simplifying processes, enhancing customer interactions, and improving operational efficiency [4][5] Summary by Sections Customer-Centric Transformation - Prudential is prioritizing customer-centricity by establishing a new customer function to centralize data-driven approaches and enhance customer experiences [3][6] - The company has over 18 million customers and operates in 24 markets, emphasizing the need for a sustainable business model that maximizes customer value [3][4] Role of Data and AI - Prudential has been leveraging AI and data analytics for several years to analyze vast amounts of data, enabling better decision-making and risk management [4][5] - AI applications include simplifying underwriting, detecting fraud, and enhancing customer service in call centers, which leads to faster and more accurate service delivery [4][5] Employee Empowerment and Culture Shift - The transformation requires equipping employees with the right mindset, skill set, and tool set to foster a customer-centric culture [6][7] - Prudential is investing in building a unified data platform to gain a comprehensive view of customers and ensure consistent data governance across markets [8][9] Customer Feedback and Satisfaction - The company is adopting customer satisfaction scores to assess progress in becoming more customer-centric, aiming to improve customer experiences and build trust [9] - Prudential's vision includes enriching customers' lives and achieving top quartile customer satisfaction scores by 2027 [9]

Investment Ratings - The report maintains an "Overweight" rating for the cement sector and several specific companies including Gold Cup Electric Apparatus, Weixing, Fuyao Glass, Naipu Mining Machinery, and SMICS [4][5][9][10][11]. Core Insights - The demand for electromagnetic wire is rapidly increasing, benefiting Gold Cup Electric Apparatus, which is projected to have a net profit of RMB611 million in 2024 [4]. - The cement sector is experiencing a decline in sales volume and prices, but specific regions like Tibet are seeing growth due to infrastructure projects [5]. - The chemical sector has faced a decline in the market index, but certain chemicals have seen significant price increases, indicating potential opportunities [6]. - The fund market is showing a high-risk appetite with sector rotation strategies favoring electric power, public utilities, and other sectors [8]. Summary by Sections Top Recommendations - Gold Cup Electric Apparatus (002533): OW, TP@RMB10.36 with a forecasted net profit of RMB611 million for 2024 [4]. - Weixing (002003): OW, TP@RMB14.48 with an increase in EPS forecasts [9]. - Fuyao Glass (600660): OW, TP@RMB55.58 with a revenue increase of 19.12% year-on-year [10]. - Naipu Mining Machinery (300818): OW, TP@RMB26.27 benefiting from overseas market expansion [11]. - SMICS (688981): OW, TP@RMB62.50 with raised revenue forecasts due to market recovery [11]. Sector Ratings - Cement Sector: Overweight rating maintained despite overall market decline, with specific growth in Tibet [5]. - Chemical Sector: Noted price increases in key chemicals, indicating potential investment opportunities [6]. - Fund Market: High-risk appetite with sector rotation strategies favoring specific sectors [8]. Latest Reports - Weixing's revenue and profit exceeded expectations, leading to an increase in EPS forecasts [9]. - Fuyao Glass reported strong quarterly results, maintaining its target price and rating [10]. - Naipu Mining Machinery is positioned well due to the expansion of Chinese mining companies [11]. - SMICS is benefiting from the recovery in the global consumer market, leading to revised revenue forecasts [11].

Investment Rating - The investment rating for Ganyuan Foods is maintained as BUY with a target price of RMB 69.36, indicating a potential upside of 26% from the closing price of RMB 54.90 as of August 7, 2024 [8][9]. Core Insights - Ganyuan Foods experienced a quarter-on-quarter slowdown in revenue growth in 2Q24 due to off-season effects and personnel adjustments within the distribution team. However, year-on-year growth remains strong with revenue, attributable net profit, and recurring net profit for 1H24 increasing by 26.1%, 39.3%, and 40.0% respectively [3][4]. - The company’s gross profit margin (GPM) declined by 0.6 percentage points year-on-year in 2Q24, attributed to structural changes in product sales channels and weakening economies of scale. Despite this, the company expects to increase its payout ratio, enhancing shareholder returns [5][6]. - Ganyuan Foods' classic products, including green peas, melon seeds, and flavored nuts, showed robust revenue growth, with significant contributions from membership supermarkets and bulk sales channels [4][6]. Financial Performance Summary - For 1H24, Ganyuan Foods reported revenues of RMB 1,040 million, with a net profit of RMB 170 million. In 2Q24, revenues were RMB 460 million, reflecting a 4.9% year-on-year increase [3][4]. - The company’s revenue projections for the upcoming years are as follows: RMB 2,254 million for 2024, RMB 2,714 million for 2025, and RMB 3,193 million for 2026, with corresponding net profits of RMB 380.61 million, RMB 468.71 million, and RMB 551.05 million [7][9]. - The estimated earnings per share (EPS) for 2024, 2025, and 2026 are RMB 4.08, RMB 5.03, and RMB 5.91 respectively, with a price-to-earnings (PE) ratio projected at 17x for 2024 [6][7].

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The global economy is rapidly evolving, significantly influenced by climate change and the transition to cleaner energy sources, which will impact global trade patterns and demand for critical minerals [4][10][11] - By 2040, demand for critical minerals may increase fourfold, with emerging economies positioned to benefit from this shift [4][15] - The role of trade agreements and policies will be crucial in securing supply chains for these minerals, as rising protectionism and supply chain disruptions are observed [4][10][30] Summary by Sections Executive Summary - The report outlines the significant changes in global trade flows due to the energy transition, emphasizing the increasing demand for critical minerals essential for clean energy technologies [9][10] Commodities of the Future - Key minerals such as lithium, cobalt, nickel, and rare earth elements are projected to see substantial demand growth, particularly driven by electric vehicles (EVs) and renewable energy technologies [11][24][25] Trade in Transition - The shift towards cleaner energy will lead to a surge in demand for specific minerals, necessitating changes in trade flows and policies [10][15] Revolutions and Evolutions - Climate change is a defining issue, with many economies committing to net zero targets, which will significantly increase the demand for critical minerals [11][30] What Commodities Will Play a Role? - The report identifies various minerals that will be crucial for the energy transition, including lithium, cobalt, and rare earth elements, highlighting their increasing importance in clean energy technologies [45][51] Who Sells What? - The report discusses the geographical concentration of critical mineral production, with countries like China playing a dominant role, while emerging economies may gain prominence [4][15][30] Protectionism is on the Rise - The report notes a trend towards protectionism, with countries implementing export controls on critical minerals to enhance domestic supply chains [4][10][30] Diversification to Secure Supply Chains - The need for diversification in supply chains is emphasized, as reliance on a few dominant producers poses risks to the stability of mineral supplies [4][10][30] Role for Trade Agreements - Trade agreements will be essential in facilitating the supply of critical minerals, as countries seek to secure their energy transition needs [4][10][30] Who Could Be the Winners? - Emerging economies with abundant mineral resources are likely to benefit from the growing demand for critical minerals, positioning them as key players in the global trade landscape [4][15][30]

Investment Rating - The report maintains a cautious outlook on the truck industry, with specific recommendations to prefer companies positioned for a truck downcycle, such as Knorr-Bremse and Traton, while advising a sell on Volvo due to its exposure to the deteriorating truck cycle [1]. Core Insights - The North American truck market shows a significant decline, with a net score of -8 in July, indicating a deeper deterioration in market conditions compared to previous months [1][14]. - In Europe, the net score improved to +2 in July, marking the first positive score in a year, although sustained momentum is necessary for optimism [1][73]. - The report highlights that while North America faces challenges with high inventory levels and declining orders, Europe is experiencing a slight recovery in carrier metrics, albeit from a low base [1][14][73]. North America Overview - The preliminary truck net orders in North America decreased by 3.7% month-over-month in July to 17.5k, down 13% year-over-year [1][42]. - Inventory levels are at near all-time highs, driven by macroeconomic factors and the upcoming US election, which is affecting orders [1][49]. - The backlog to build ratio has narrowed to 4.5 months, the lowest level since 2017, indicating potential production slowdowns [1][42]. Europe Overview - The European truck market's net score of +2 reflects an improvement from June, with carrier confidence showing positive signs for the first time since July 2022 [1][73]. - Despite a year-over-year decline of 8% in truck orders, registrations in the EU and UK increased by approximately 9% [1][73]. - The report suggests that production levels in Europe are expected to slow in the second half of 2024 compared to the first half due to normalized supply chains [1][73]. Market Dynamics - The report notes that the truck crowding scores have deteriorated across the industry, with specific brands like Knorr-Bremse remaining positive compared to peers [1][3]. - The overall sentiment in the North American market is cautious, with macro indicators and truck rates contributing to the negative outlook [1][14]. - The report emphasizes the importance of monitoring leading indicators, which have historically correlated with truck order developments [1][13][72].