Meta Platforms Inc (FB US, BUY, TP US$312)
Comment: Roll out of Reels to more countries should help Meta combat user attrition to its competitors, while also providing more monetization opportunities for advertisers. Restrictions in Russia will definitely hurt user growth in the country, as well as limit digital ad sales.
Apple Inc (AAPL US, BUY, TP US$214)
Comment: On the supply side, Apple’s supply chain dominance allowed them to launch a slew of new products. 4G phones are facing more component shortages than Apple’s premium 5G devices. On the demand side, however, we’re starting to see more competition in China from local OEM foldable phones. 5G penetration in China is also high at 82%, which could point to a slowing of smartphone upgraders. China contributed 21% to 1Q22 revenue.
Amazon Inc (AMZN US, BUY, TP US$4,079)
Comment: Amazon announced a 20 to 1 stock split on 11 March and effective 6 June. The move will make the shares more accessible to retail investors. The company will also buy back US$10bn in shares, replacing the previous US$5bn repurchase program from 2016.
Netflix Inc (NFLX US, BUY, TP US$673)
Comment: Acquisition of Next Games should boost NFLX’s own mobile game development capabilities as it looks to gaming as an additional lever of entertainment for users. The ongoing conflict in Russia presents strong headwinds for growth moving forward.
Alphabet Inc (GOOGL US, ACCUMULATE, TP US$3,493)
Comment: Acquisition of Mandiant is in line with the company’s effort in shoring up its Cybersecurity capabilities. The suspension of selling ads in Russia should present only about a 0.5% loss in potential revenue for GOOGL in FY22e.
We remain OVERWEIGHT on the FAANGM. Our preferred picks are AAPL, AMZN, GOOGL and MSFT. On the hardware side, AAPL and AMZN will benefit from the continued easing of supply chains and labour shortages. AMZN will also start seeing easier comparisons as the pandemic demand spike was not as large in 2021. For software, increased cybersecurity priority amid the Russia-Ukraine conflict should push up demand for MSFT’s higher-end licenses. And for the internet, GOOGL is still benefiting from digital advertising tailwinds.