Blue Lotus Research Institute

Andy Fu

China growth and global non-US Internet equities

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

Thematic (Sector/Industry)

<ul>
<li>Counting of consumption differs among different countries. Chinese definition of consumption (social retail sales) leave out many categories that are included in the definition of consumption of Japan and US;</li>
<li>If we trim the consumption of Japan and US by adopting China's definition, China actually <strong>over-consumes</strong>, both by GDP and by individual categories;</li>
<li>If we expand and align China, Japan and US to consist the same categories, the conclusion of China <strong>underconsumption</strong> becomes true. The categories belong to an older and wealthy society. </li>
</ul>


Counting of consumption differs among different countries. Chinese definition of consumption (social retail sales) leave out many categories that are included in the definition of consumption of Japan and US;
If we trim the consumption of Japan and US by adopting China's definition, China actually over-consumes, both by GDP and by individual categories;
If we expand and align China, Japan and US to consist the same categories, the conclusion of China underconsumption becomes true. The categories belong to an older and wealthy society. 


How to Stimulate China's Consumption? Part I

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

<ul>
<li>1810 HK/ZK US/NIO US/TSLA US/XPEV US/600104 SH: Xiaomi to start double-shift production of the SU7 in June （+/-/-/-/-）</li>
<li>1810 HK/1211 HK/ LI US/ NIO US/ XPEV US: The data shows that only 2% of FSD12 users are converted to paying users, which is good for China's automatic driving(//////////)</li>
<li>LI US / NIO US/1810 HK :Li Auto takes the lead in sales in the 18th week of 2024, while Xiaomi continues to lag behind（/////）</li>
</ul>


1810 HK/ZK US/NIO US/TSLA US/XPEV US/600104 SH: Xiaomi to start double-shift production of the SU7 in June （+/-/-/-/-）
1810 HK/1211 HK/ LI US/ NIO US/ XPEV US: The data shows that only 2% of FSD12 users are converted to paying users, which is good for China's automatic driving(//////////)
LI US / NIO US/1810 HK :Li Auto takes the lead in sales in the 18th week of 2024, while Xiaomi continues to lag behind（/////）


[Blue Lotus Daily]:1810 HK/ZK US/NIO US/TSLA US/XPEV US/600104 SH/1211 HK/ LI US/LKNCY US

Equity Bottom-Up

<ul>
<li>Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.</li>
<li>We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion</li>
<li>We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.</li>
</ul>


Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.
We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion
We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.


[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use

<ul>
<li>1810HK/LI:Tesla cuts prices of all series by 14,000yuan to compete with Xiaomi SU7 and LI L6,with the fomer facing long time of delivery and the latter had a mediocre start(//-)</li>
<li>LI US: LI cuts price for all series, might be due to difficulty to achieve delivery targets (/)</li>
<li>LKNCY US: New products fail to bring meaningful incremental DAU growth, bodes ill for 2Q24 sales(-)</li>
</ul>


1810HK/LI:Tesla cuts prices of all series by 14,000yuan to compete with Xiaomi SU7 and LI L6,with the fomer facing long time of delivery and the latter had a mediocre start(//-)
LI US: LI cuts price for all series, might be due to difficulty to achieve delivery targets (/)
LKNCY US: New products fail to bring meaningful incremental DAU growth, bodes ill for 2Q24 sales(-)


[Blue Lotus Daily]:1810HK/LI US/LKNCY US/AAPL/TSM/1810 HK

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Sichuan Baicha Baidao Industrial / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sichuan-baicha-baidao-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:40029:1" rel="noopener">Sichuan Baicha Baidao Industrial (2555 HK)</a> (SBBI) raised around US$330m in its HK IPO.</li>
<li>SBBI sells new-style tea drinks through its ChaPanda stores. According to F&amp;S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.</li>
<li>We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.</li>
</ul>



Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&amp;S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.


Sichuan Baicha Baidao IPO Trading - Tepid Demand, While Peers Have Corrected

China

Luckin Coffee Inc. provides non-alcoholic beverages. The Company offers various types of coffee. Luckin Coffee serves customers in China.

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Luckin Coffee (LKNCY US)

How to Stimulate China's Consumption? Part I

The myth of China underconsumption depends on how you count it. China under-consumes in certain consumption categories associated with an older and...

Blue Lotus Research Institute

[Blue Lotus Daily]:1810 HK/ZK US/NIO US/TSLA US/XPEV US/600104 SH/1211 HK/ LI US/LKNCY US

Xiaomi to start double-shift production of SU7, FSD12 users conversion rate low, Li Auto leads in sales in 18th week of 2024.

Blue Lotus Research Institute

[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use

To make things worse, we see Luckin at losing its coffee differentiation. We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.

Blue Lotus Research Institute

[Blue Lotus Daily]:1810HK/LI US/LKNCY US/AAPL/TSM/1810 HK

Tesla cuts prices of all series to compete with XiaomiSU7 and LI L6.Huawei launches new flagship featuring upgrading processors.LI cuts price,...

Blue Lotus Research Institute

Sichuan Baicha Baidao IPO Trading - Tepid Demand, While Peers Have Corrected

Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO. In this note, we talk about the trading dynamics.

Sumeet Singh

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52-week Range

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How to Stimulate China's Consumption? Part I

The myth of China underconsumption depends on how you count it. China under-consumes in certain consumption categories associated with an older and...

Blue Lotus Research Institute

[Blue Lotus Daily]:1810 HK/ZK US/NIO US/TSLA US/XPEV US/600104 SH/1211 HK/ LI US/LKNCY US

​Xiaomi to start double-shift production of SU7, FSD12 users conversion rate low, Li Auto leads in sales in 18th week of 2024.

Blue Lotus Research Institute

[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use

To make things worse, we see Luckin at losing its coffee differentiation. We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.

Blue Lotus Research Institute

[Blue Lotus Daily]:1810HK/LI US/LKNCY US/AAPL/TSM/1810 HK

​Tesla cuts prices of all series to compete with XiaomiSU7 and LI L6.Huawei launches new flagship featuring upgrading processors.LI cuts price,...

Blue Lotus Research Institute

Sichuan Baicha Baidao IPO Trading - Tepid Demand, While Peers Have Corrected

Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO. In this note, we talk about the trading dynamics.

Sumeet Singh

Xiaomi to start double-shift production of SU7, FSD12 users conversion rate low, Li Auto leads in sales in 18th week of 2024.

Tesla cuts prices of all series to compete with XiaomiSU7 and LI L6.Huawei launches new flagship featuring upgrading processors.LI cuts price,...