Meta Platforms Inc (META US, BUY, TP US$221)
Comment: The issuance of bonds seems like a very calculated strategy for the company, especially as it has seen a US$24bn YoY decrease in its cash position due to an increase in spending on the metaverse. The launch of end-to-end grocery purchases within WhatsApp is in line with the company’s continued focus on increasing monetization in its business messaging products. We do expect this expansion of monetization to continue across more products and geogrpahies.
Apple Inc (AAPL US, BUY, TP US$198)
Comment: Apple’s move to boosting its production outside of China is an indication that the company is attempting to mitigate concentration risks, especially during the recent heightened political tension between USA and China. However, such transition may pose a challenge as it requires Apple’s suppliers to make substantial investments on building new production plants. Both skilled and unskilled workers in India may not be as available as they are in China with India’s infrastructure also lagging. Apple fans are also excited about the annual product launch event taking place on 7 Sep 22. The attractiveness of the to-be-launched products will likely be the key sales growth driver for FY23.
Amazon Inc (AMZN US, NEUTRAL, TP US$133)
Comment: Amazon’s move to counter inflationary pressure via new revenue streams may prove to be a creative way to boost FY22 performance, especially during the holiday season when retail sales are at its peak. The iRobot acquisition will allow Amazon to enhance its smart home capabilities as it adds Roomba to its portfolio alongside other existing products like Alexa virtual assistant speaker and Ring video doorbell.
Netflix Inc (NFLX US, BUY, TP US$399)
Comment: Netflix’s development of its new ad-supported subscription tier seems to be well underway and on schedule, it would be interesting to see the take-up rate for this new plan, especially with a price point that is around half that of a standard plan. Streaming continues to grow from strength-to-strength in the US, finally surpassing cable TV with regard to total TV usage. This should continue to provide tailwinds for the overall streaming industry, which should directly benefit Netflix.
Alphabet Inc (GOOGL US, BUY, TP US$139)
Comment: Big Tech continues to be monitored very closely by regulators around the world, with Alphabet no exception to this. The latest fine by Australian regulators is just another example of attempts to keep Big Tech in check. We like Alphabet’s continued investments in the pandemic-accelerated smart-fitness industry, especially as it leverages on its ecosystem of hardware products and fitness apps. We do believe that this industry will continue to grow in the long-term, especially as consumers focus more on their mental and physical well-being.
Microsoft Corp. (MSFT US, BUY, TP US$332)
Comment: We believe that strong corporate demand for premium E5 licenses will continue to grow given the increasing cybersecurity attacks. The demand for cloud infrastructure Azure and Office 365 offerings will also continue to be robust as offices reopen and companies shift to the cloud.