Kuaishou, Bilibili & Full Truck Beat, Tencent Releases Valorant
7 Min. Read Time
Kuaishou Q2 Earnings Overview
Online video and social media company Kuaishou reported Q2 earnings after the close in Hong Kong, beating analyst expectations on revenue, adjusted net income, and adjusted earnings per share (EPS). Expectations were high going into the quarterly results due to the company’s Kling AI, which allows users to create AI-generated video content, having launched the Kling AI 2.1 model, which the company describes as “state-of-the-art (SOTA) large visual generation model technology”.
Daily users hit an all-time high of 409 million in Q2 as average time spent on the Kuaishou app is 126.8 minutes, confirming the tool’s popularity. The company is monetizing this popularity through online marketing services, revenue from which increased +55.1% year-over-year (YoY) to RMB 19.77 billion, live streaming, revenue from which increased +30.1% to RMB 10.04 billion, and E-Commerce, which increased revenue by +14.8% to RMB 5.24 billion. Kuaishou’s all-time high is HKD 415, which it reached on February 17th, 2021, versus yesterday’s closing price of about HKD 72.
- Revenue increased +13.1% to RMB 35.046B from RMB 30.975B, versus expectations of RMB 34.5B
- Adjusted Net Income increased +20.1% to RMB 5.618B from RMB 4.679B, versus expectations of RMB 5.06B
- Adjusted EPS increased +22% to RMB 1.33 from RMB 1.08, versus expectations of RMB 1.18
- Special dividend of HK$0.46 payable on October 6th
Bilibili Q2 Earnings Overview
Online video company Bilibili reported Q2 earnings after the close in Hong Kong, beating analyst expectations on revenue, adjusted net income, and adjusted EPS. The company’s advertising revenues increased by +20% YoY to RMB 2.45 billion, while mobile game revenue increased +60% to RMB 1.61 billion. The company’s profitability trend continues. Daily average users increased 7% while the average daily time spent on the app is up 6 minutes to 105 minutes. The company bought 5,588,140 shares in Q2 for $100 million, bringing the buyback total to $6.4 million with another $83.6 million to buy. Bilibili’s all-time high $156.37 was reached on February 10, 2021, versus yesterday’s close of $25.30.
- Revenue increased +20% to RMB 7.34B ($1.024) from RMB 6.1 billion, versus expectations of RMB 7.3 billion.
- Adjusted Net Income increased to RMB 561.3 million ($78.4 million) from a loss of RMB -270 million versus expectations of RMB 520 million
- Adjusted EPS increased to RMB 1.29 ($0.18) from a net loss per share of RMB -0.65 in Q2 2024
Full Truck Q2 Earnings Overview
Full Truck Alliance (YMM US), often called the Uber for truck drivers, a digital freight platform, reported after the Hong Kong close beating analyst expectations on revenue, adjusted net income and adjusted EPS. The stellar earnings release was a positive sign for the company and the Chinese economy. Fulfilled orders increased +23.8% YoY to 60.8 million, and average monthly users increased +19.3% to 3.16 million. Full Truck’s all-time high is June 22, 2021, with the stock at $21.50 versus yesterday’s close of $11.01. I would be curious if the company touches on a potential Hong Kong listing during the conference call.
- Revenue increased +17.2% to RMB 3.329 billion ($452.2 million) from RMB 2.76 billion, versus expectations of RMB 3.09 billion
- Adjusted Net Income increased +39.3% to RMB 1.35 million ($188.7 million) from RMB 970 million, versus expectations of RMB 1.24 billion
- Adjusted EPS increased to RMB 1.27 ($0.18) from RMB 0.91 versus expectations of RMB 1.19
- Q3 revenue outlook is between RMB 3.07B and RMB 3.17 billion, representing a YoY growth rate between 1.3% to 4.6%
- Company is paying out $100 million in dividends, which is $0.09 per ADR
Key News
Asian equity markets were mixed as the US dollar strengthened before Powell’s Friday press conference. Taiwan rebounded from yesterday’s hit as Australia and Vietnam outperformed. At the same time, the Philippines were closed for Ninoy Aquino Day, which commemorates the assassination of former Senator Benigno “Ninoy” Aquino Jr.
Hong Kong trading was mixed. Tencent gained +0.42% on the launch of its blockbuster mobile game Valorant, and NetEase gained +1.09%. Meanwhile, banks, telecom, and oil stocks all moved higher. On the downside, Alibaba fell -1.53%, despite spinning off its electric vehicle operating system unit Banma Network Technology, via a Hong Kong IPO, along with declines in Meituan, which fell -3.06%, Xiaomi, which fell -2.28%, BYD, which fell -1.76%, and CATL, which fell -0.2%. I guess that foreign investors are likely selling Hong Kong growth stocks while waiting for Powell’s guidance, though Mainland investors bought today’s dip via Southbound Stock Connect. Apple supplier AAC Technology was whacked -13.17% after stopping its dividend. The Hang Seng is a bit range-bound at the moment, as the 25,000 level is support while the 25,500 level is resistance.
The only big story was Premier Li’s visit to healthcare companies and his voice of support for the industry, which led the sector to gain +2.61% in Hong Kong and +2.66% in Mainland China. Mainland China sold off on no news, as several recent outperformers sold off in afternoon trading. It was a pretty quiet night overall!
Mainland brokerage stocks were off despite the Mainland media source 21st Century Business Herald’s article on Mainland investors opening new brokerage accounts and reactivating old brokerage accounts. The article didn’t provide numbers on the number of accounts opened, other than noting a strong month-on-month increase, though nothing it was similar to the brokerage opening boom following last September’s stimulus announcement. I’ll try to dig up the numbers and report back.
The National Energy Administration reported that July electricity consumption increased by +8.6% as air conditioners got cranked.
Having visited two of the largest commodity-producing countries in the last quarter, I’ve got a new theory: the best Chinese economists are the CEOs of commodity companies. A China demand pick-up is occurring, based on reading half a dozen commodity companies’ Q2 and CEO comments. We’ll be publishing the whole piece in a week or so. Here is a taste from BHP Group CEO Mike Henry from the August 19th Q2 financial results:
"China exceeded economic growth expectations in the first half of this year, with strong export growth. We also saw robust domestic commodity demand from various sectors, including infrastructure and electrification, even as demand from the property sector remained subdued."
China’s economic growth is expected to remain resilient, even as the pace moderates slightly in the second half as the boost from ‘pulled forward’ exports unwinds and new tariffs take effect. It has many policy levers to support its domestic economy, and its exports are likely to remain resilient due to its significant cost competitiveness.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.2% |
| Hang Seng Tech | HSTECH Index | -0.8% |
| Hong Kong Turnover | HKTurn Index | -16.1% |
| Hong Kong Short Sale Turnover | HKSST Index | -1.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.1% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | $954 |
| China (Shanghai) | SHCOMP Index | 0.1% |
| China (Shenzhen) | SZCOMP Index | -0.2% |
| China (STAR Board) | Star50 Index | 0.1% |
| Mainland Turnover | .chturn Index | 0.6% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.9% |
| Japan | NKY Index | -0.6% |
| India | SENSEX Index | 0.2% |
| Indonesia | JCI Index | -0.7% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | -0.8% |
| Philippines | PCOMP Index | 0% |
| South Korea | KOSPI Index | 0.4% |
| Taiwan | TWSE Index | 1.4% |
| Thailand | SET Index | -0.3% |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | 1.1% |
| Vietnam | VNINDEX Index | 1.4% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 109 | 164 |
| Advancing Stocks | 251 | 2178 |
| Declining Stocks | 228 | 2787 |
| Outperforming Factors | EPS Revisions, Momentum, Quality | Value, Low Volatility, Large Caps |
| Underperforming Factors | Liquidity, Value, Growth | Liquidity, EPS Revisions, Growth |
| Top Sectors | Healthcare, Energy, Staples | Healthcare, Energy, Communication |
| Bottom Sectors | Tech, Discretionary, Utilities | Tech, Real Estate |
| Top Subsectors | Machinery, Pharmaceuticals, Building | Telecom, Diversified Financials, Energy Equipment |
| Bottom Subsectors | Tech Hardware, National Defense, Consumer Discretionary Distribution | Industrial Machinery, Fine Chemical, Power Generation Equipment |
| Southbound Connect Buys | Meituan, Tencent, Xiaomi (Large), ZTE (Moderate) | |
| Southbound Connect Sells | Alibaba, SMIC (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.27 |
| Communication Services | 9 | 0.27 |
| Consumer Discretionary | 28 | -1.2 |
| Consumer Staples | 13 | 0.7 |
| Energy | 7 | 1.21 |
| Financials | 23 | 0.06 |
| Health Care | 13 | 2.61 |
| Industrials | 20 | 0.4 |
| Information Technology | 10 | -2.22 |
| Materials | 10 | -0.64 |
| Real Estate | 6 | -0.55 |
| Utilities | 12 | -0.9 |
| Mainland China Listed | 404 | 0.24 |
| Communication Services | 6 | 0.93 |
| Consumer Discretionary | 31 | 0.1 |
| Consumer Staples | 24 | 0.28 |
| Energy | 13 | 1.05 |
| Financials | 64 | 0.19 |
| Health Care | 31 | 1.31 |
| Industrials | 64 | 0.13 |
| Information Technology | 91 | -0.35 |
| Materials | 58 | 0.58 |
| Real Estate | 6 | -0.32 |
| Utilities | 16 | 0.8 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.4 |
| Alibaba HK | 9988 HK Equity | -1.5 |
| JD.com HK | 9618 HK Equity | -1.1 |
| NetEase HK | 9999 HK Equity | 1.1 |
| Yum China HK | 9987 HK Equity | -0.4 |
| Baozun HK | 9991 HK Equity | -1.8 |
| Baidu HK | 9888 HK Equity | -2.6 |
| Autohome HK | 2518 HK Equity | 0.3 |
| Bilibili HK | 9626 HK Equity | -1.2 |
| Trip.com HK | 9961 HK Equity | -0.9 |
| EDU HK | 9901 HK Equity | 0.1 |
| Xpeng HK | 9868 HK Equity | 0.6 |
| Weibo HK | 9898 HK Equity | -0.1 |
| Li Auto HK | 2015 HK Equity | -1.2 |
| Nio Auto HK | 9866 HK Equity | 5.3 |
| Zhihu HK | 2390 HK Equity | -4.5 |
| KE HK | 2423 HK Equity | -2 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.3 |
| Meituan HK | 3690 HK Equity | -3.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0.4 |
| MEITUAN-CLASS B | -3.1 |
| ALIBABA GROUP HOLDING LTD | -1.5 |
| XIAOMI CORP-CLASS B | 0.3 |
| ZTE CORP-H | 5.4 |
| POP MART INTERNATIONAL GROUP | 12.5 |
| SEMICONDUCTOR MANUFACTURI-H | 3.4 |
| BYD CO LTD-H | -1.8 |
| ZHONGAN ONLINE P&C INSURAN-H | 7 |
| LAOPU GOLD CO L-H | -4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZTE CORP-A | 5.7 |
| IEIT SYSTEMS CO LTD-A | -0.7 |
| CHINA NORTHERN RARE EARTH -A | 2.2 |
| EAST MONEY INFORMATION CO-A | 0.7 |
| CAMBRICON TECHNOLOGIES-A | 8.5 |
| GIGADEVICE SEMICONDUCTO-CL A | 8 |
| FOXCONN INDUSTRIAL INTERNE-A | -2 |
| BEIJING COMPASS TECHNOLOGY-A | 3.2 |
| ZHONGJI INNOLIGHT CO LTD-A | -2.8 |
| EOPTOLINK TECHNOLOGY INC L-A | -0.6 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.17 versus 7.17 yesterday
- CNY per EUR 8.36 versus 8.36 yesterday
- Yield on 10-Year Government Bond 1.77% versus 1.78% yesterday
- Yield on 10-Year China Development Bank Bond 1.87% versus 1.90% yesterday
- Copper Price +0.03%
- Steel Price +0.26%
