China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

Atour Lifestyle Holdings / Equity Bottom-Up

<ul>
<li>Atour reported 2Q23 revenue 9.5%/11.7% higher than our estimate/ consensus, which leads to non-GAAP NI 15.1%/21.1% higher than our estimate/ consensus respectively. Both retail and hotel business have positive contribution.</li>
<li>We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23. </li>
<li>We maintain the stock as BUY rating, and raise TP by US$1.5 to US$36.5 to factor in the better operating efficiency in retail business.</li>
</ul>


Atour reported 2Q23 revenue 9.5%/11.7% higher than our estimate/ consensus, which leads to non-GAAP NI 15.1%/21.1% higher than our estimate/ consensus respectively. Both retail and hotel business have positive contribution.
We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23. 
We maintain the stock as BUY rating, and raise TP by US$1.5 to US$36.5 to factor in the better operating efficiency in retail business.


[Atour (ATAT US, BUY, TP US$36.5) TP Change]: Demand Supply Imbalance to Sustain…maintain BUY

Thematic (Sector/Industry)

<ul>
<li>Meituan/Ctrip.com/Atour: MCT announce the third batch of destination list for outbound group travel, bodes well for outbound travel recovery</li>
<li>ZTO: Cainiao Guoguo launches RMB 1.3bn in logistics subsidies for new Taobao/Tmall SMEs (-)</li>
<li>Tencent held the 2023 WeChat Advertising Ecology Partnership Conference (+)</li>
</ul>


Meituan/Ctrip.com/Atour: MCT announce the third batch of destination list for outbound group travel, bodes well for outbound travel recovery
ZTO: Cainiao Guoguo launches RMB 1.3bn in logistics subsidies for new Taobao/Tmall SMEs (-)
Tencent held the 2023 WeChat Advertising Ecology Partnership Conference (+)


China TMT Update-Meituan/Ctrip/Atour/Baba/ZTO/Tencent/-Cainiao/WeChat Ads Conference/Outbound Travel

<ul>
<li>We view the rallies in Chinese Internet and Consumer names to be sustainable in C3Q23 as regulatory environment to be both favourable and macro environment to be conducive; </li>
<li>Our China Internet top picks are Meituan and Tencent, and investors could buy PDD and NetEase after 2Q23 earnings. </li>
<li>Domestic consumption will also bottom out, but sustainability only confines to a few, our top picks in China consumer names are Miniso, Luckin Coffee, and Atour.</li>
</ul>


We view the rallies in Chinese Internet and Consumer names to be sustainable in C3Q23 as regulatory environment to be both favourable and macro environment to be conducive; 
Our China Internet top picks are Meituan and Tencent, and investors could buy PDD and NetEase after 2Q23 earnings. 
Domestic consumption will also bottom out, but sustainability only confines to a few, our top picks in China consumer names are Miniso, Luckin Coffee, and Atour.


[Blue Lotus Sector Update]: Time to Buy China Internet and Consumer Names

<ul>
<li>XPEV/NVIDIA: Xpeng ADAS head to join Nvidia ( - /+)</li>
<li>Real Estate Industry Update: Zhengzhou announced 15 supportive policies on real estate industry, including suspending the home selling restrictions, and others. Minor positive: KE Holdings (BEKE US, BUY, TP US$22）</li>
<li>ATAT: Popularity of summer vacation continued in July, and the supply shortage resulted in the surge of hotel ADR（+）</li>
</ul>


XPEV/NVIDIA: Xpeng ADAS head to join Nvidia ( - /+)
Real Estate Industry Update: Zhengzhou announced 15 supportive policies on real estate industry, including suspending the home selling restrictions, and others. Minor positive: KE Holdings (BEKE US, BUY, TP US$22）
ATAT: Popularity of summer vacation continued in July, and the supply shortage resulted in the surge of hotel ADR（+）


China TMT Update-XPEV/NVIDIA/BEKE/ATAT-Xpeng ADAS Head to Join Nvidia/Surge of Hotel ADR

<ul>
<li>ATAT: Legacy-Huazhu 2Q23 RevPAR increased 21% vs. same period in 2019（+）</li>
<li>XPEV: weekly data indicates G6 capacity still needs time to ramp up (-)</li>
<li>XPEV : The VW brand concludes technological framework agreement for long-term cooperation with Xpeng (+)</li>
</ul>


ATAT: Legacy-Huazhu 2Q23 RevPAR increased 21% vs. same period in 2019（+）
XPEV: weekly data indicates G6 capacity still needs time to ramp up (-)
XPEV : The VW brand concludes technological framework agreement for long-term cooperation with Xpeng (+)


China TMT Update-ATAT/XPEV-The VW Brand Cooperate with Xpeng;G6 Capacity;Legacy-Huazhu 2Q23 RevPAR

China

Atour Lifestyle Holdings Limited operates as a holding company. The Company, through its subsidiaries, owns and manages midscale hotel chain through offline and online channels, including mobile application and weixin-wechat mini program. Atour Lifestyle Holdings serves customers in China.

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Atour Lifestyle Holdings (ATAT US)

[Atour (ATAT US, BUY, TP US$36.5) TP Change]: Demand Supply Imbalance to Sustain…maintain BUY

We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23.

Blue Lotus Research Institute

China TMT Update-Meituan/Ctrip/Atour/Baba/ZTO/Tencent/-Cainiao/WeChat Ads Conference/Outbound Travel

MCT announce the third batch of destination list for outbound group travel;Cainiao Guoguo launches RMB 1.3bn in logistics subsidies;Tencent 2023...

Blue Lotus Research Institute

[Blue Lotus Sector Update]: Time to Buy China Internet and Consumer Names

We view the rallies in Chinese Internet and Consumer names to be sustainable in C3Q23 as regulatory environment to be both favourable and macro...

Blue Lotus Research Institute

China TMT Update-XPEV/NVIDIA/BEKE/ATAT-Xpeng ADAS Head to Join Nvidia/Surge of Hotel ADR

XPEV/NVIDIA: Xpeng ADAS head to join Nvidia ( - /+);Zhengzhou announced 15 supportive policies on real estate industry; the supply shortage...

Blue Lotus Research Institute

China TMT Update-ATAT/XPEV-The VW Brand Cooperate with Xpeng;G6 Capacity;Legacy-Huazhu 2Q23 RevPAR

XPEV : The VW brand cooperation with Xpeng (+);XPEV: weekly data indicates G6 capacity still needs time to ramp up (-);ATAT: Legacy-Huazhu 2Q23...

Blue Lotus Research Institute

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