Saturday, December 10

Asia Earnings Week Ahead: CATL, Moutai, HKEX, Hindustan Unilever


China’s earnings season kicks off next week with a peek into its hard-hit consumer industry — and a reminder of the nation’s staggering scale. Results are due from the world’s biggest maker of electric-vehicle batteries, Contemporary Amperex Technology, and the largest beverage company, Kweichow Moutai. Their performance and commentary will be closely watched by investors keen to assess how the world’s strictest Covid restrictions continue to weigh on consumer activity and industry sentiment.

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(Bloomberg) — China’s earnings season kicks off next week with a peek into its hard-hit consumer industry — and a reminder of the nation’s staggering scale. Results are due from the world’s biggest maker of electric-vehicle batteries, Contemporary Amperex Technology, and the largest beverage company, Kweichow Moutai. Their performance and commentary will be closely watched by investors keen to assess how the world’s strictest Covid restrictions continue to weigh on consumer activity and industry sentiment.

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As China starts its twice-a-decade Communist Party congress on Sunday to select top leadership, any signs of policy shifts, subtle as they may be, could have a broad impact on markets. As for earnings commentary, it’s worth looking out for any new ESG commitments, given Chinese President Xi Jinping’s 2060 “carbon neutrality” goal and greater focus on anti-poverty campaigns.

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  • To subscribe to earnings coverage across your portfolio or other earnings analysis, run NSUB EARNINGS function on the Bloomberg terminal.

Highlights to look for next week:

Sunday: Kweichow Moutai (600519 CH), the largest Shanghai-listed stock by market value, will report third-quarter earnings in the evening. The distiller forecast a 19% increase in net income to 44.4 billion yuan ($6.2 billion) for the nine months ended September, which some analysts saw as below estimates. Investors may watch for guidance for next year as the expected easing of Covid restrictions should boost consumption. Earnings per share of the liquor maker could climb 22% in 2022 and 20% in 2023, exceeding consensus by about 2% and 4%, according to expectations from Bloomberg Intelligence before the company announced its preliminary results. Any comments from the company on a report suggesting China will ban civil servants from drinking alcohol may also shed some light on future of the industry.

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Monday: No major earnings expected.

Tuesday: No major earnings expected.

Wednesday: Hong Kong Exchanges & Clearing (388 HK) is set to release third-quarter results around noon. Known by the name HKEX, the city’s stock exchange may report a 28% profit decline, according to a consensus estimate in a Bloomberg survey. Bloomberg Intelligence attributed it to a drop in revenue from cash equities, derivatives, clearing and commodities, adding that tighter cost controls and higher investment income on margin and clearing house funds could offset some of the pressure on profit. In Hong Kong, funds raised through first-time share sales in the three quarters ended September were down 71% from the same period last year. Updates on its IPO pipeline, yuan stock listings and efforts to retain talent may be in focus.

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Thursday: Axis Bank (AXSB IN) is likely to report after market close. Indian banks are expected to post strong sequential earnings growth, although an increase in treasury losses may partly offset the gains while bonds continue to perform weakly. Most Indian lenders’ margins could widen on rising rates amid increasing competition as festive season nears, with sector liquidity adequate despite falling to a record low, according to Bloomberg Intelligence. Axis Bank’s earnings growth may be lower than that of other top banks, but the lender’s focus has shifted from growth to profitability, analysts at Elara Securities wrote. Investors are watching for comments on the progress of the Citi portfolio acquisition.

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Friday: Contemporary Amperex Technology (300750 CH), the world’s biggest maker of electric-vehicle batteries, is due to report earnings after market close. The Fujian-based company on Monday reported as much as a 200% year-on-year jump in preliminary net income to 9.8 billion yuan for the third quarter, in line with consensus estimate in a Bloomberg survey. CATL, as the battery maker is commonly referred to, cited continued growth in the energy storage industry for the profit surge. The company’s earnings are expected to start coming in better than consensus expectations, Bloomberg Intelligence’s Steve Man said, adding that demand for electric vehicles remains strong and the battery-maker and the EV-makers are seen to be able to pass on the higher prices. Additionally, it would be interesting to watch out for any mentioning of its biggest customer, Tesla, which is scheduled to report its own results earlier in the week.

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  • Inflation in Focus: Hindustan Unilever (HUVR IN) reports after market close. Easing prices of some commodities, such as edible and crude oil, are expected to partially counter the declining volume growth in rural markets for the Indian unit of the global consumer goods giant . Investors will be watching for comments on the sustained high levels of retail inflation in local economy and its impact on consumer demand, especially in rural markets amid an inconsistent monsoon season. Consumer companies have cut pack sizes and increased prices to protect margins. That, and widely anticipated gains in market share across key product categories are expected to boost its profits by about 11% from a year earlier in the second quarter. Outlook on demand and pricing for the remainder of the year will be crucial, amid rising competition from two of Asia’s richest. Mukesh Ambani’s Reliance Industries announced a foray into consumer goods business while Gautam Adani’s Adani Wilmar Ltd. is boosting its food operations.

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