Meta Platforms Inc (META US, BUY, TP US$221)
Comment: Meta’s deal with Qualcomm to collaborate on developing chips for its VR headsets reaffirms its commitment to investing and improving the company’s Metaverse capabilities, particularly in its hardware as it continues to find a balance between fit and form factor. It’s partnership with Salesforce is also in line with its goal of building out its business messaging capabilities to support commerce activity.
Apple Inc (AAPL US, BUY, TP US$198)
Comment: The new iPhones’ weaker demand compared to Apple’s internal projection was expected as consumers are facing worldwide surging inflation and rising recessionary fears. However, the discontinuation of iPhone Mini and higher demand for the iPhone 14 Pro models should drive up the average selling price (ASP), dampening the downside, if not contributing to revenue growth. We expect sales to be impacted for the near- to medium-term until inflation starts to taper off. With the holiday season coming up, Apple’s ability to capture the seasonal spending is critical as it starts its new financial year, especially when consumers are expected to cut back on discretionary purchases.
Amazon Inc (AMZN US, NEUTRAL, TP US$133)
Comment: Aside for boosting revenue, we view Amazon’s October Prime event as an avenue for the company to clear some of its excess inventory. Its retail business segment is also facing thinning margin levels, mainly attributed to the inefficiencies from overexpansion during the pandemic. Amazon’s efforts in streamlining its operations should help in improving the situation, although we believe high inflation will continue to put pressure on its profitability.
Netflix Inc (NFLX US, BUY, TP US$399)
Comment: We are quite encouraged to see such an aggressive tactic from Netflix as it attempts to beat Disney+ to an earlier release of its new service. We are also quite excited to see what the take-up rate for this new service would be, with Netflix expecting around 500,000 members for the ad-supported tier by the end of FY22e. Streaming continuing to extend its lead in US TV usage over cable and broadcast TV should also provide tailwinds for the overall industry.
Alphabet Inc (GOOGL US, BUY, TP US$139)
Comment: The move to shift Pixel production away from China seems to be the company’s way of diversifying some its production risks geographically. Strategically, it should also help to improve Pixel sales in the world’s 2nd largest market, with an estimated installed base of around 600 million units. Competition with TikTok continues to be fierce, with Alphabet fighting for market share by reducing monetization limits in an attempt to attract more content creators onto its Shorts platform.
Microsoft Corp. (MSFT US, BUY, TP US$332)
Comments: Demand remains strong for Microsoft’s Azure cloud computing platform and Office 365 offerings amid companies’ transitions to the cloud and reopening of offices. The momentum in premium E5 licenses looks solid due to increasing cybersecurity attacks.