HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Bosideng International Holdings / Equity Bottom-Up

<ul>
<li>Even China's consumption market is tough, <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng Intl Holdings (3998 HK)</a> has still achieved a 25.1% profit growth. Revenue maintained a healthy trend while gross margin was stable.</li>
<li>Sales trend stayed solid in 2H FY24, and it ranked first in major online channels in various categories of apparel sales during the "double-11" shopping festival.</li>
<li>Store efficiency improved as revenue saw double-digit growth despite a 9.7% YoY fewer retail network. It is encouraging to see its 3-year target is to outperform the last 5 years.</li>
</ul>


Even China's consumption market is tough, Bosideng Intl Holdings (3998 HK) has still achieved a 25.1% profit growth. Revenue maintained a healthy trend while gross margin was stable.
Sales trend stayed solid in 2H FY24, and it ranked first in major online channels in various categories of apparel sales during the "double-11" shopping festival.
Store efficiency improved as revenue saw double-digit growth despite a 9.7% YoY fewer retail network. It is encouraging to see its 3-year target is to outperform the last 5 years.


Bosideng (3998 HK): Never Fail to Deliver

<ul>
<li>While having a slow FY23, <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> is well-positioned to capture the rebound in down apparel sales growth as pent-up demand is released.  </li>
<li>We also expect a recovery in margin, further improvement in channel efficiency and operating leverage from cost control will add to earnings momentum. </li>
<li>Management expects revenue growth will at least sustain at the rate in the last 5 years. The stock's valuations are cheap when compared with growth outlook and global peers. </li>
</ul>


While having a slow FY23, Bosideng International Holdings (3998 HK) is well-positioned to capture the rebound in down apparel sales growth as pent-up demand is released.  
We also expect a recovery in margin, further improvement in channel efficiency and operating leverage from cost control will add to earnings momentum. 
Management expects revenue growth will at least sustain at the rate in the last 5 years. The stock's valuations are cheap when compared with growth outlook and global peers. 


Bosideng (3998 HK): Outlook Stays Promising

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>FY3/23 was a miss as the core income only increased by 7% YoY.</li><li>However, given: 1) the low base, 2) more innovative product launches and 3) continual improvement in store productivity, we believe 15%/ 19% sales/ net profit are still achievable in FY25E.</li><li>We are still cautious on the level of competition and weather condition but current valuation of 12x FY2/24E and 6.2% yield are protective.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

FY3/23 was a miss as the core income only increased by 7% YoY.However, given: 1) the low base, 2) more innovative product launches and 3) continual improvement in store productivity, we believe 15%/ 19% sales/ net profit are still achievable in FY25E.We are still cautious on the level of competition and weather condition but current valuation of 12x FY2/24E and 6.2% yield are protective.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bosideng (3998 HK) – FY23 results missed and a moderate outlook

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/enm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16267:1" rel="noopener">Enm Holdings (128 HK)</a> announced a privatisation offer from Chime Corporation at HK$0.58 per scheme share, a 54.7% premium to the undisturbed price of HK$0.375 per share (24 May). </li>
<li>The key condition is the scheme be approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). No shareholder holds a blocking stake. The offer price is final.</li>
<li>Detractors will argue the offer is low due to ENM’s net cash (75% of the market cap). However, the offer is reasonable compared to historical multiples and share prices. </li>
</ul>



Enm Holdings (128 HK) announced a privatisation offer from Chime Corporation at HK$0.58 per scheme share, a 54.7% premium to the undisturbed price of HK$0.375 per share (24 May). 
The key condition is the scheme be approved by at least 75% disinterested shareholders (&lt;10% disinterested shareholders rejection). No shareholder holds a blocking stake. The offer price is final.
Detractors will argue the offer is low due to ENM’s net cash (75% of the market cap). However, the offer is reasonable compared to historical multiples and share prices. 


ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> will likely see its 4Q22 and 1Q23 businesses negatively affected by the increase in infections as China loosens its COVID combating measures.</li>
<li>The market environment faced by <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> is more challenging as peak season demand is affected. However, the positive long-term growth story remains unchanged.</li>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> will be less affected when compared with the other two. We see better margin in FY23 and share buyback is positive. </li>
</ul>



Anta Sports Products (2020 HK) will likely see its 4Q22 and 1Q23 businesses negatively affected by the increase in infections as China loosens its COVID combating measures.
The market environment faced by Bosideng International Holdings (3998 HK) is more challenging as peak season demand is affected. However, the positive long-term growth story remains unchanged.

Haier Smart Home Co Ltd (6690 HK) will be less affected when compared with the other two. We see better margin in FY23 and share buyback is positive. 


China Consumer Discretionary: Short-Term Tough Buying Long-Term Up

Hong Kong

Bosideng International Holdings Limited develops down apparel products in the Peoples Republic of China. The Company's products include down jackets, vests, and pants which it offers through retail outlets located in multiple cities.

Bosideng International Holdings (3998 HK)

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Bosideng International Holdings (3998 HK)

Bosideng (3998 HK): Never Fail to Deliver

Bosideng achieved 25.1% profit growth despite tough consumption market. Healthy revenue growth, stable margins, and improved store efficiency are...

Osbert Tang, CFA

Bosideng (3998 HK): Outlook Stays Promising

The release of pent-up demand, recovery in gross margin, further improvement in channel efficiency and operating leverage from cost control will...

Osbert Tang, CFA

Bosideng (3998 HK) – FY23 results missed and a moderate outlook

We are still cautious on the level of competition and weather condition but current valuation of 12x FY2/24E and 6.2% yield are protective.

CMB International

China Consumer Discretionary: Short-Term Tough Buying Long-Term Up

The increase in infections will drag on operating performance for China's consumer discretionary names in the near term. However, we should not...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bosideng (3998 HK): Never Fail to Deliver

Bosideng achieved 25.1% profit growth despite tough consumption market. Healthy revenue growth, stable margins, and improved store efficiency are...

Osbert Tang, CFA

Bosideng (3998 HK): Outlook Stays Promising

The release of pent-up demand, recovery in gross margin, further improvement in channel efficiency and operating leverage from cost control will...

Osbert Tang, CFA

Bosideng (3998 HK) – FY23 results missed and a moderate outlook

We are still cautious on the level of competition and weather condition but current valuation of 12x FY2/24E and 6.2% yield are protective.

CMB International

ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share

Detractors will argue the offer is low due to ENM’s net cash (75% of the market cap). However, the offer is reasonable compared to historical...

Arun George

China Consumer Discretionary: Short-Term Tough Buying Long-Term Up

The increase in infections will drag on operating performance for China's consumer discretionary names in the near term. However, we should not...

Osbert Tang, CFA