11/20 Tech Buzz China Insider Digest
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Insider Digest 11/21/21: Alibaba Q3 Results, ByteDance Financial Model, Svolt: China’s New Battery Darling, and What Does China Think of the Metaverse?
Housekeeping / Announcements:
We’re off the rest of this week for Thanksgiving and Black Friday! :) We’ll also be taking the last week of December and the first week of January off. The Discord never sleeps, of course, I just mean our weekly posts and newsletter.
You might have noticed that the Weekly Digest didn’t go out on Friday as it typically does. That’s because we are testing some optimizations and wanted to see if there’s a better day of the week to send this. Let us know if you have any suggestions!
First things first, if you are an accredited investor (or international equivalent), please fill out this form for the Tech Buzz China Investment Syndicate. We already have a deal up and hope to have our second soon!
We’re switching over to Discord for all Event Calendaring in the future! It’s very simple, just go to the top of the channels where it says “Events” and you can indicate interest there. Our Weekly Chats are also back after this week, and you can see the times there, click on “Interested” so you can be reminded!
[External Expert] Wed 12/1 5PM PST / Asia time 9AM: Richard Turrin on the Chinese Central Bank Digital Currency
If you are interested in sharing what you’re working on with the community, provided that it’s about China tech / investing, please do reach out!
Here are our articles for the week!
11/19/21 What Do You Make of Q3 Alibaba Results?
I won't bore you with the numbers here, but basically, this was a lackluster (the market might have thought: disastrous) report card for the tech giant. Only 14% growth for its core China business, 16% overall (so excluding Sun Art), the lowest ever. But the biggest reaction is probably to the proactive downward adjustment of FY2022 revenues. The original guidance at the beginning of the year was +29% from last year, but now it's more like 20-23%. The primary reason given was lower growth overall for all of Chinese retail (just 3.3% & 4.5% for this August and September).
Hey everyone! If you missed Michael Hsieh and I presenting the ByteDance financial model, then you are in luck, because as we said, we are sharing the excel and PPT with you. Michael did most of the work, and I made most of the mistakes 🤪 (For real though, I contributed minimally and he is the main author.) We took a photo of a summary ByteDance model from a well known fund (it is rumored, so I won't disclose the name here, but it is a global player) and used that as a base, and went and filled in as many detailed assumptions as we could find. The end result is that we learned a lot more about the company, as one naturally does, by trying to untangle its financials. Since this wasn't a super serious attempt, most of the effort was focused on understanding the revenue build for existing units, and so we did not make an effort to try to project the newer business lines (gaming, education, etc.) As you can see by the tabs, we only did Advertising, Livestreaming (entertainment), E-Commerce, and TikTok.Europe)
SVolt - China's Newest Electric Battery Darling
As far as climate tech goes, it's pretty obvious by now that China is all in on electric vehicles, and it's where the next batch of billionaires will be minted. (China already dominates the Green Billionaires list.) You have probably heard of CATL, the lithium ion battery tech company that is now China's 5th largest company by market cap at $230Bn. (Founder Robin Zeng is the 3rd richest man in China currently at $56.7Bn. No one is complaining about his wealth.) But did you know that there is another up and coming battery company that is increasingly mentioned in the same breath as CATL and BYD? Yes, that company is Svolt.
Like CATL, which was founded in 2011 as a spinoff from Zeng's earlier company, ATL, Svolt is also a spinoff. It spun off in February 2018 from Great Wall Motors, one of the few non-SOE, private automobile manufacturers in China. By the way, GWM is not the only automaker to spin off a battery company. Geely did so as well, and the EV maker WM (Weltmeister) did as well.
SVOLT employs around 3,000 people worldwide, half of whom work in research and development (R&D). In 2019, SVOLT registered over 550 patents.
SVolt's claim to fame is its cobalt-free battery manufactured using laminate technology. It supposedly longer cycle life, better safety and higher energy density ... and of course all Chinese made tech.
11/19/21 What Does China Think of the Metaverse?
I already started a post (that I'll probably add to) of some of the more interesting / promising Metaverse companies in China last week, but I also wanted to give all of you a glimpse into what is happening in China right now. And that is, the concept is on fire 🔥 Pretty much everyone in the internet space has been applying for trademarks since mid-year. And as I've noted before, both Soul (the social friendmaking / dating app) and Sensetime (the AI software provider) use Metaverse quite a few times in their prospectuses. In fact, the fever has reached such a pitch that the People's Daily finally wrote an article yesterday telling everyone to calm down and be wary of scams, such as the 6-session paid lesson package on the Metaverse that was sold on a well known platform last week. Investors were also told to be careful about so-called "Metaverse concept stocks," of which there are already nearly 70. The Metaverse may come ... but it's a long ways away.
Finally, here are two documents I shared on Discord that you might find helpful:
Have any comments or questions? See you on the Discord server!
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