AI insights from China’s Tech giants
Technology
Westlake’s latest reports draw on discussions with AI experts from Tencent, ByteDance and Alibaba, offering fresh perspectives on China’s evolving GPU and ASIC landscape. Tencent’s AI Product Manager detailed the rationale behind increased domestic GPU procurement this year and outlined potential market shifts if B30A and H20 export policies are relaxed. ByteDance’s AI Solution Architect described surging AI compute and token usage and the rapid expansion of AI investments and custom chip development. Alibaba’s AI Project Manager discussed GPU procurement trends, progress in its T-Head ASIC programme and ongoing Qwen model development, including on-device use-cases.
Edition: 222
- 17 October, 2025
Tencent (700 HK) & NetEase (NTES US) US
Technology
While China’s e-commerce sector is mired in subsidy fuelled competition, Arete argues this is outweighed by strength in gaming and online entertainment. Record approvals and blockbuster titles underpin upgrades for Tencent and NetEase, while Alibaba shows early signs of a turnaround in quick commerce and cloud. The report also examines mounting cost pressures at Meituan, the lack of near term catalysts at Xiaomi and SEA, and the structural headwinds still facing JD and Baidu.
Edition: 219
- 05 September, 2025
India China Ties Warm Boosting Chinese Firms
India and China are witnessing their most significant thaw in relations since 2020, with border trade, flights and visas reopening. Yet India’s dependence on Chinese imports, especially in pharmaceuticals and electronics, leaves its deficit at record highs. The revived engagement appears to offer greater benefits to Chinese companies for now, with names like Xiaomi, Alibaba, BYD and Tencent best positioned, while Indian groups such as Cipla, Dixon and Adani seek to leverage selective partnerships.
Edition: 219
- 05 September, 2025
Communications
Blue Lotus expects Tencent to beat 2Q25 revenue, IFRS operating profit and net income forecasts, supported by success in the extraction shooter genre, which has exploded in popularity within the Chinese market recently. Tencent’s Delta Force has surged from ~5m MAUs in Jan to 38m in July, making it the company’s 3rd largest game. Arena Breakout is also proving to be extremely popular. While both Tencent and NetEase have blockbuster titles in development, the former appears to be moving faster - likely due to its generative modelling strengths. With upside to valuation and near-term catalysts, Blue Lotus names Tencent as their Top Pick in the gaming sector.
Edition: 217
- 08 August, 2025
The China dividend story
David Scott explores Chinese investors’ growing appetite for dividends. Unlike Japan, where it took a generation for companies to deliver meaningful payouts, China’s path looks very different. The companies are younger and are often still run by the founder who owns a controlling interest. Domestic institutional shareholders are active, rights-conscious, and increasingly reliant on dividends amid falling interest rates and an ageing population. Dividend growth is also seen as a strategic signal - proof that tariffs are not going to derail the business model. Finally, both private and state-linked firms are raising dividends at a surprising pace. David's China dividend plays include Midea Group, BYD, Tencent and CATL.
Edition: 209
- 18 April, 2025
Xi's Champions: A closer look at fund positioning
Following President Xi’s recent meeting with select private sector leaders, Steven Holden breaks down the percentage of funds invested in each stock, segmented by fund type, from broad-based Global and GEM funds to specialist China strategies (MSCI and A-Shares). As expected, ownership increases as we move from global strategies to China-focused funds. Beyond Tencent, Alibaba, BYD, CATL, Meituan and Xiaomi, representation in non-China funds is limited. Some names, such as Shiyuan and Qi An, are almost entirely absent from all fund groups. Will Semiconductor and Muyuan Foods stand out as the biggest discrepancies - despite decent representation in specialist China funds, they barely register in Global, GEM, or Asia Ex-Japan allocations.
Edition: 207
- 21 March, 2025
China’s recent high-profile meeting with private entrepreneurs signalled Beijing’s strategic priorities, highlighting firms advancing state goals while sidelining others. Key invitees included Alibaba, Tencent and Huawei, while Baidu, ByteDance and JD.com were absent. This distinction suggests Beijing’s support for companies driving innovation in AI, advanced manufacturing and strategic industries like EVs and semiconductors. Xi Jinping reinforced the Party’s control, urging businesses to serve national interests and promote "Common Prosperity". Firms like DeepSeek, Alibaba and BYD align with these objectives. Conversely, Baidu and other omitted firms may face tolerance but lack government backing.
Edition: 206
- 07 March, 2025
Tactical trading will struggle in 2025
According to Paul Krake, the problem is that every trade of a tactical nature is influenced by Trump policy. In his latest report, he sets out his view over the next six months. Expect China to work on AI plays like Alibaba, Baidu and Tencent, as AI remains a leading driver of global beta. Investors can benefit from staying LONG commodities and infrastructure plays, especially electricity. Stick to the world’s best firms, many of which are US-based, whilst fading Germany in light of the inevitable EU recession. Stay away from rates and currencies as long as the Fed isn’t moving. Finally, when it comes to crypto, investors are looking at a clear Trump favourite and should see zero reasons to sell.
Edition: 205
- 21 February, 2025
Big Tech: Asia vs. US - Samsung spoils the chase
Technology
2024 was a banner year for mega-cap US Tech companies, with Apple, Nvidia, Microsoft, Amazon and Meta rising a collective +64%. Were it not for Samsung Electronics crashing -41%, Asia’s mega-cap Tech companies (TSMC, Tencent, Samsung, Alibaba and Meituan) would have almost matched their US peers: +61% collective return (USD) without Samsung but +40% with Samsung. The good news: rolling into 2025, Crystal Shore has a positive risk rating on all 5 Asian Tech companies. Even Samsung.
Edition: 202
- 10 January, 2025
Consumer Discretionary
BABA’s transformation from China’s eBay to China’s Microsoft continues - the group’s AI strategy involves both the development of its open-source LLM model (Qwen), which has performed well on benchmarks in China, and investment in Chinese AI startups. This strategy has already proven successful with Moonshot and MiniMax developing popular AI applications. BABA provides these start-ups with credits that can be used for training or inference, which has driven growing demand for AI services on AliCloud. Although GPU supply is a constraint, Blue Lotus sees domestic breakthroughs in semiconductor equipment providing BABA with an avenue to expand its supply of AI compute and expects the group (and Tencent) to reinvent China’s software industry.
Edition: 193
- 23 August, 2024
Online gaming bucks the trend of weak consumption
Communications
Blue Lotus’s research suggests game and online video revenues are holding up better than movie theatres and that Tencent, NetEase and Bilibili’s 2Q24 NI will comfortably beat consensus forecasts. Over the past seven years, they have found an inverse relationship between online game and video with offline movie receipts. Gross billings of China’s gaming industry grew by 2.1% Y/Y in 1H24, reversing a decline since 2022. Online video grew by 1.4%. While smaller developers continue to struggle (economies of scale / large companies benefitting from AI investments and acquisitions), Blue Lotus raises their target prices for NetEase and Bilibili. Tencent remains their top pick.
Edition: 192
- 09 August, 2024
Communications
The globalisation of WeChat - which has done what Facebook never did - they combined chat, social and payments. And now they are innovating again by going over the top of iOS and Android with Mini-Programs. The Mini-Program combo of apps/social/chat and payments is a superior platform and as businesses outside of China start to realise this Erik@YWR sees users hitting 2bn by 2030. The faster growth of WeChat relative to games and social media will transform the company’s revenue mix. The expanding international customer base will unlock growth in payment fees, advertising and Tencent Cloud. Erik sees EPS over HK$35 in 2028 (vs. HK$20 in 2024). TP HK$1000.
Edition: 192
- 09 August, 2024
Prosus (PRX NA) Netherlands
Communications
Profitable growth, elevated discount - after effectively removing the cross-holding structure between PRX and Naspers and simplifying its holding in Tencent and other subsidiaries, there has been little impact on their respective discounts to NAV with the Tencent share price and continued open-ended share repurchase programme remaining the main share price drivers. Wium Malan has historically argued that PRX warrants a c.25% (and NPN a further 15%) holding company discount. In his latest report, Wium analyses this discount to NAV, the performance of its underlying consolidated operations, cash flow generation, capital allocation and valuation.
Edition: 191
- 26 July, 2024
A ban on TikTok will have a profound impact on Chinese Internet companies
Blue Lotus believes the optimum strategy of the Chinese government is to facilitate the shutdown of TikTok in the US, make a global mega-app only available on Huawei phones and spur a global “guerrilla war” against US ideology. This leads them to believe that: 1) Alibaba (recently upgraded to Buy) will benefit from TikTok’s US shutdown by gaining momentum in its international ecommerce business; 2) Tencent will benefit from levelling the playfield against TikTok in user and usage bases for AI / LLM applications globally; 3) PDD and Shein might benefit in the short run but less so in the long run, due to their own compliance deficiencies in tax adherence and privacy protection.
Edition: 182
- 22 March, 2024
The narrowing divide between China and India’s weight in the MSCI Indices
The spread between India and China weights in active Asia Ex-Japan funds has narrowed to the lowest levels in Copley’s 13-year history and now stands at 16.17% vs. a peak of 45.3% in Aug 20. China’s decline over this period has been dominated by Consumer Discretionary, Communication Services and Financials. 3 companies standout as key drivers of the move lower: Alibaba, Tencent and Ping An Insurance. Increases in fund weight have been minimal with PDD, BYD and Trip.com seeing moderate upticks. India’s rise has been driven by the Financials sector. Specifically, 3 banks: ICICI Bank, HDFC Bank and Axis Bank.
Edition: 180
- 23 February, 2024
China: Cautious ad spending outlook but branding ads likely to be driven by major 2024 sports events
Communications
From Westlake's primary research, most large advertisers remain cautious about their 4Q ad spending and 2024 ad allocation outlook, but the UEFA European Football Championship and Paris Olympics this year will likely drive branding ad spending growth. Baidu can deliver 4Q online marketing (primarily search and feed) revenue growth at least in line with street expectation of 5-6% given the strength from medical, eComm, EV, travel and restaurants, offsetting some share loss to closed-loop searches within mega or popular apps. Tencent saw solid 4Q social ads, healthy online video ads & subscriptions and in line global game performance, and is likely on track to meet street revenue expectation. Westlake continues to see strong growth momentum from Tencent's Video Account ads.
Edition: 178
- 26 January, 2024
China Gaming: A misstep overshadows positives
Communications
The Christmas massacre of Tencent and NetEase was another grim reminder of the regulatory exhaustion sapping investor confidence in China. However, RedTech argues that the underlying policy stance is more supportive of gaming than it has been for some years and the introduction of the draft rules was a ham-fisted misfire and not another change in course. The regulator has already hinted that the final draft is negotiable and the companies’ own actions (buybacks) also suggest they are not overly concerned. If the new rules are more bark than bite, then investors should be looking for opportunities instead of the exits.
Edition: 177
- 12 January, 2024
Through the lens of demographics
Shamil Ismail discusses how demographic shifts could impact investment performance through weakening demand and higher wage costs. He forecasts the number of countries with severe labour shortages to increase dramatically after 2040, so it is imperative for investors to assess the demographic risk to companies and investments. In his latest report he outlines multiple examples, including in the case of Tencent which could see the target market of its games division in China fall by 18.1% by 2030. He also examines the Chinese real estate crisis through the lens of demographics, with the rapid construction of new homes continuing despite the decline in the young adult population, contributing to c.60m incomplete or abandoned apartment units. With the population of the 25-44 years age group set to decline 35% by 2030, the crisis could be protracted.
Edition: 173
- 10 November, 2023
Communications
In Sumeet Singh’s earlier note in 2022, ‘Tencent investee selldown - The US$120bn global overhang’, he had looked at the group's overall investment portfolio. With two of its heavyweight investments having now been spun-out, Sumeet re-looks at Tencent’s shareholdings in various companies to try and gauge which ones it could sell out of and how. In terms of regulatory scrutiny, Pinduoduo is probably very high up on the list, alongside Kuaishou, Futu and PolicyBazaar. Announcements re. the divestments of JD.com and Meituan occurred towards the end of 2021 and 2022, respectively. Thus, some of these names could start to come under pressure by the last quarter.
Edition: 162
- 09 June, 2023
Communications
The most well-communicated beat in TME's history happened last week and it wasn't impressive. That is according to Felix Wang, who says the market is pricing TME as a high growth company which it is certainly not. 2023 will be no different. The stock is way ahead of itself (up >75% since Q3 earnings) even though the revenue decline in Q4 improved from 6% to 3%. Big whoop. The huge lift from the new music albums (Jay Chou, BLACKPINK, etc) will dissipate in 1Q23. The profitability gains in 2022 is mainly due to a 60% decline in marketing costs (ex stock comp) but that bottomed as a % of revenues. Felix believes TME does not deserve to trade at a forward P/E multiple higher than 10x.
Edition: 157
- 31 March, 2023
Baidu (9888 HK) & Tencent (700 HK)
Communications
From Westlake's primary research, they observed 4Q online ad spending fared better than offline and grew modestly Q/Q despite Covid disruptions, while industry professionals are cautiously optimistic about their ’23 ad spending outlook. Baidu can meet 4Q online marketing revenue growth expectation given budget shift from branding ads to performance ads and offline ads to online. Tencent likely saw 4Q revenue growth in-line with consensus forecasts. Its game biz remained weak, but can meet street estimates and return to growth in ’23 propelled by new game approvals and international game launches. They also saw strong growth momentum from WeChat Channels ads.
Edition: 152
- 20 January, 2023
Communications
US$20bn overhang for Meituan as China's social media giant slashes its stake in the food delivery firm from 17% to just 1.6% - the share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021. In this note, Sumeet Singh discusses the implications of the deal and thinks next on the list for stake divestment is likely to be Pinduoduo, but that will have to be via a placement as it trades in the US.
Edition: 149
- 25 November, 2022
Technology
Multiple new agencies have been reporting that Tencent plans to trim its investment portfolio over the remainder of the year. The company has been duly denying these rumours. Although, after it distributed over US$16bn worth of JD.com shares at the end of 2021, and then sold US$3bn worth of SEA stock in early Jan 2022, it clearly showed that the tide for Tencent investments had turned. The company is becoming a seller after having been on a voracious investment spree over the past few years.
Edition: 145
- 30 September, 2022
Prosus (PRX NA) Netherlands
Communications
The long-term open-ended share repurchase programme, funded by PRX’s on-market sale of its Tencent shares, is a massive positive catalyst for reducing the discount to NAV from its trough of ~60%. However, given the estimated short- to medium-term drag on cash flow from consolidated operations, Wium Malan concludes that it is difficult to argue for much less than a 30% discount. He also thinks it is likely that PRX’s management will significantly scale back its buyback programme should the discount approach the 20% level.
Edition: 139
- 08 July, 2022
Communications
The time has come to simplify its confusing sprawl of assets with a series of spin-outs - Tencent Games could replace Activision as the largest global game content stock, worth $150bn, and this excludes its vast portfolio of studios, IP and private stakes. While Tencent will likely be obliged to put Fintech into a standalone Holdco., this creates an opportunity to spin out Cloud & Business Services; potential to be a $10bn business by FY26. Major stakes in Tesla, Meituan, Sea and Kuaishou are not required / should be unwound. Importantly, by taking decisive action, it would make it less threatening to the government and limit the impact of regulation across the group.
Edition: 133
- 14 April, 2022
Chinese regulators come out swinging for round 2
Communications
After a period of relative calm which emboldened the bottom fishers, it looks like the Chinese state is not done with reigning in its technology sector. Richard Windsor thinks that the hammer of regulation will continue to fall hardest on the privately-owned Fintech sector. Tencent is likely to once again find itself firmly in the regulator’s crosshairs and given the importance of its Fintech business (+30% YoY growth in Q3 2021; made up 30% of total turnover), he sees the stock going much lower from here.
Edition: 130
- 04 March, 2022
Global Funds: Investor positioning insights
EM Unwind - Allocations among active Global managers have taken an aggressive move lower led by China & HK, South Korea and Brazil.
China & HK Style Switch - Value and Yield managers have aggressively reduced underweights, whilst Growth and Aggressive Growth managers have moved to new lows. AIA Group takes the crown as the most widely held stock and largest overweight.
Asia's Communication Services Fall - Ownership breaking new lows led by Tencent, Nintendo, NetEase and Nippon Telegraph.
Energy Conviction Underweight - TotalEnergies is the most widely held stock, but there is little conviction or consensus to suggest managers are concerned over long-term outperformance of Energy vs. sector peers.
Edition: 129
- 18 February, 2022
Technology
An Epic partner - Mio Kato has been arguing that significant collaboration between Sony and Epic Games is likely in forming the key infrastructure for the metaverse. The recent Matrix Awakens demo starts to reveal some of the possibilities. In addition, it demonstrates why Mio believes popular metaverse theme names like Meta and Roblox have no realistic chance of competing. Mio also discusses the (increasingly high) likelihood that Tencent decides to sell its stake in Epic with Sony expected to be one of several interested parties.
Edition: 126
- 07 January, 2022
Alibaba (BABA US) vs. Tencent (700 HK)
Alibaba is now in a much better position than Tencent when it comes to regulatory matters - Alibaba's activities have very little bearing on societal issues that the Chinese government is so keen to address and Jack Ma has already been severely punished for his indiscretions. In contrast, the problems that Tencent faces are only just beginning. Richard Windsor believes it is only a matter of time before its financial services business is decimated by the state in the same way that Ant Group has been. Buy Alibaba, Sell Tencent.
Edition: 119
- 17 September, 2021
Communications
Wium Malan estimates that the current fair market value of Tencent's listed associates has recently declined by a whopping 26% (RMB378bn). Given that Tencent already faces very tough comps from its online gaming revenue segment, not to mention uncertainty around the Chinese regulatory environment, Wium expects a significant earnings miss in 3Q21 reported numbers. On a more positive note, its consolidated operations currently trade on only a 12.1x NTM PE ratio, which offers an extremely attractive longer-term entry point given NOPAT is expected to grow at mid-teens levels from next year onwards.
Edition: 118
- 03 September, 2021
Risky Business: China’s Tech Crackdown & How to Navigate it
While the official ban on the most lucrative activities in the after-school tutoring sector marks a new low in the regulatory crackdown, RedTech maintain that China is not trying to strangle the golden goose. A handful of big losers will be offset by a majority of companies that are well positioned for growth in a tighter regulatory environment. The less risky (Tencent) are being dragged down with the more risky (Didi), creating lucrative, long-term investing opportunities. Other companies mentioned include Alibaba, Ant Group, ByteDance, Douyu, Huya, JD, Meituan, Pinduoduo, Sogou and TAL.
Edition: 116
- 06 August, 2021
Ceridian (CDAY)
Technology
Underappreciated opportunity - CDAY’s Dayforce Wallet is the company’s first foray into a very different segment of the fintech ecosystem: digital wallets and earned wage access solutions. In this industry primer, Veritas assess the competitive landscape and compare CDAY's offering to products launched by Apple, Alphabet, PayPal, Square, Mastercard, Visa, Tencent and Alibaba. Veritas think the long-term gains of developing a fintech ecosystem are incredibly attractive and CDAY’s unique distribution advantage will help carve itself a piece of the market. Estimates that the module can generate ~US$220m of annual net earnings and be worth US$19 per share.
Edition: 114
- 09 July, 2021
Tencent (700 HK)
Communications
Pursuit of global gaming domination; acquisition strategy to continue - Tencent has already closed 50+ video game related deals YTD (vs. 31 in the whole of 2020 and over 5x more than in 2019). Niko Partners discuss how the company's investment strategy has evolved over the last few years and the reasons behind its more aggressive approach in 2021. Topics covered include international expansion (esp. Europe); targeting of high growth areas such as fans of anime content and female gamers; as well as the challenge posed by the likes of Alibaba and Bytedance.
Edition: 111
- 28 May, 2021