(1) Steady core holdings with visible earnings outlook. Tencent’s under-monetised assets & user base should provide longer-term opportunity & visibility. After the recent special dividend of JD shares, we believe, investors would also start attributing more value to its underlying investments which make up close to half of its market cap. NetEase has consistently demonstrated its ability to deliver steady shareholder return and a strong track record of content development with a sticky gamer base. Near-term catalysts include the resumption of game monetisation approval and launch of highly anticipated titles like Harry Potter overseas (2Q22) and Diablo (1H22).

(2) Higher-beta names, but improving fundamentals underappreciated. Kuaishou’s operational improvement & easing competition (Douyin scaling down user acquisition) should allow it to deliver stronger earnings & user growth in 2022. Recent S&M efficiency improvement should filter through earnings in upcoming quarters. The medium-term upsides include efforts to attract more branded merchants and helping e-commerce and advertising. PDD now is trading only at 26x 2022E even if we conservatively assume adj. earnings at only Rmb17.9 bn in 2022E (vs. average of c.Rmb3.5 bn/Q in 2Q-3Q21). With APRU uplift (as brand efforts bear fruit), S&M scaling down, and improving UE from CGP, we see further earnings upside.

(3) Deep-value names post recent share price correction. JOYY is currently trading at a depressed price of US$46/share vs: (1) cash of US$25/share; (2) US$45/share to be received from Baidu (if the deal goes through); and (3) Huya’s market value of US$3, with the rest of the overseas business pretty much for free. Baidu YY acquisition approval and capital action would be catalysts. Trip.com is now trading at 17x 2023E (assuming earnings back to 2019 pre-Covid level), a similar level in Apr-2020 at the height of the global Covid outbreak. Yet looking into 2022, we are arguably finally seeing light at the end of the very long tunnel. With the further containment of Covid globally and potential loosening in domestic zero-Covid policy, we see Trip.com as a prime beneficiary and leveraged reopening play.