Review
Meta Platforms Inc (META US, ACCUMULATE, TP US$113)
Comment: Meta’s stock was relatively flat in December, after a huge gain in November following news of employee cuts. With 4Q22 earnings results coming up shortly, we do think that there is some optimism around the stock with margins expected to rebound in FY23e due to spending cuts and a rebound in digital advertising. Meta’s operating margin for 3Q22 was 20%, down from 36% a year ago.
Apple Inc (AAPL US, BUY, TP US$190)
Comment: Apple’s stabilizing iPhone supply has calmed some of the worries on the company’s sales and we believe the focus is now shifting towards its ability to re-capture the sales lost during the December quarter. However, the surge in Covid-19 cases in China following the easing of its zero-Covid policy presents some degree of uncertainties as factories require healthy workers in order to maintain a stable production level. Apple will be announcing its 1Q23 results on 2nd February 2023.
Amazon Inc (AMZN US, NEUTRAL, TP US$108)
Comment: We view Amazon’s revenue will continue to face pressure as consumers struggle with high inflation, while AWS’s clients are opting for lower-tiered products as companies cut down their spending. It will be interesting to see how Amazon performed in 4Q22, especially as it said that the latest holiday shopping weekend from Thanksgiving through Cyber Monday was its biggest ever, and we believe any deviation from expectations is going to cause significant market reactions.
Netflix Inc (NFLX US, BUY, TP US$346)
Comment: Netflix continued to perform well in 4Q22, up 25% after positive news surrounding the launch of its new ad-supported subscription plan. Streaming continues to gain as the main source of entertainment in the US, extending its lead over cable TV, which should continue to be tailwinds for Netflix as it continues to grow its subscriber base and pricing power YoY.
Alphabet Inc (GOOGL US, BUY, TP US$124)
Comment: Alphabet stock was down 13% in December amidst concerns over declining holiday spend, dragging the stock down about 9% in 4Q22. Its rights acquisition of NFL Sunday Ticket comes as other streaming competitors continue to focus on live sports as a way of attracting new subscribers to the platform. It also reinforces Alphabet’s emphasis on YouTube and connected TV as a way of generating additional digital advertising and recurring subscription revenues for the company. YouTube Ads made up about 11% of total revenue in 3Q22.
Microsoft Corp. (MSFT US, BUY, TP US$319)
Comments: Microsoft is witnessing a slowdown in the PC business and cloud-computing platform Azure, but the long-term trajectory remains intact. The company enjoys tailwinds from digital transformation and cloud-migration trends, as the cloud-computing market will grow at 16% CAGR to reach US$1.6tn by 2030, according to Grand View Research. The demand for its Office 365 suite of productivity software will also continue to be robust amid the rising need to manage tasks and workflows.
Important Information
This report is prepared and/or distributed by Phillip Securities Research Pte Ltd ("Phillip Securities Research"), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.
By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.
The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.
Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.
This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.
This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.
IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSE
Where the report contains research analyses or reports from a foreign research house, please note: