HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (2097 HK)</a> has a successful IPO in Hong Kong, with share price surged 43.2%. We will trim from here and will not buy at the current level.  </li>
<li>Our forecasts call for a decent 20.8% and 17.6% earnings growth for FY25 and FY26, putting it on RICH PERs of 19.1x for FY25 and 16.3x for FY26.</li>
<li>The Chinese tea sector has average PERs of 12.4x and 10.5x, suggesting MIXUE's leadership is well reflected in the over 50% premium, and the safety margin has significantly narrowed. </li>
</ul>



Mixue Group (2097 HK) has a successful IPO in Hong Kong, with share price surged 43.2%. We will trim from here and will not buy at the current level.  
Our forecasts call for a decent 20.8% and 17.6% earnings growth for FY25 and FY26, putting it on RICH PERs of 19.1x for FY25 and 16.3x for FY26.
The Chinese tea sector has average PERs of 12.4x and 10.5x, suggesting MIXUE's leadership is well reflected in the over 50% premium, and the safety margin has significantly narrowed. 


Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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

Thematic (Sector/Industry)

<ul>
<li>Following existing home last week, new home sales also posted positive YoY growth. </li>
<li>LI is getting ready for its major battle of the year with BEV launch. It is focused, but we doubt it is enough;</li>
<li>MNSO guided down its C4Q24 and we believe it will miss 2025 as well. Offline grocery is under constant assault by O2O and online e-commerce. </li>
</ul>


Following existing home last week, new home sales also posted positive YoY growth. 
LI is getting ready for its major battle of the year with BEV launch. It is focused, but we doubt it is enough;
MNSO guided down its C4Q24 and we believe it will miss 2025 as well. Offline grocery is under constant assault by O2O and online e-commerce. 


[Blue Lotus China New Consumer Weekly, 9/52] New Home Sales Also Turned Positive YoY

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (MIX HK)</a>'s IPO price of HK$202.5 looks attractive, as it is priced at 16.6x FY24 and 13.5x FY25 PER, below the mainland China peer average. </li>
<li>We estimate a P/B of 4.6x, putting it marginally lower than the sector best-fit line. We think there is potential for at least a 20-30% upside after the IPO. </li>
<li>MIXUE offers the possibility to participate in the spin-off of its overseas businesses in the medium term, which is explicitly spelt out as a plan.</li>
</ul>



Mixue Group (MIX HK)'s IPO price of HK$202.5 looks attractive, as it is priced at 16.6x FY24 and 13.5x FY25 PER, below the mainland China peer average. 
We estimate a P/B of 4.6x, putting it marginally lower than the sector best-fit line. We think there is potential for at least a 20-30% upside after the IPO. 
MIXUE offers the possibility to participate in the spin-off of its overseas businesses in the medium term, which is explicitly spelt out as a plan.


MIXUE Group (2097 HK) IPO: Reasonably Attractive Pricing

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our outlook remains bullish on global equities (MSCI ACWI). We've been bullish since early-November 2023, save for a two month period from late-July to late-September 2024 when we were neutral.</li>
<li>We also believe the U.S. dollar (DXY) and Treasury yields have put in major tops, which is a crucial risk-on signal for global equities.</li>
<li>With more and more countries breaking out, we remain bullish as long as ACWI-US is above $116, S&amp;P 500 is above 5770-5850, and EURO STOXX 50 is above 5030.</li>
</ul>


Our outlook remains bullish on global equities (MSCI ACWI). We've been bullish since early-November 2023, save for a two month period from late-July to late-September 2024 when we were neutral.
We also believe the U.S. dollar (DXY) and Treasury yields have put in major tops, which is a crucial risk-on signal for global equities.
With more and more countries breaking out, we remain bullish as long as ACWI-US is above $116, S&amp;P 500 is above 5770-5850, and EURO STOXX 50 is above 5030.


Major Top for the U.S. Dollar (DXY) = Risk-On; Bullish Outlook Despite Near-Term Downside Risk

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (MIX HK)</a> has a whopping market share of 32.7% in 2023, based on number of cups sold. It also has the highest profit in the sector.</li>
<li>With a strong profit record and net cash, it is a leader that captures industry growth. Its extensive network targets low-tier cities' potential and the franchise model drives expansion.  </li>
<li>It justifies trading on a premium to sector average PER of 19.6x for FY25. If aligning P/B with ROE on the best-fit line, it should be priced at 5.1x pre-money.</li>
</ul>



Mixue Group (MIX HK) has a whopping market share of 32.7% in 2023, based on number of cups sold. It also has the highest profit in the sector.
With a strong profit record and net cash, it is a leader that captures industry growth. Its extensive network targets low-tier cities' potential and the franchise model drives expansion.  
It justifies trading on a premium to sector average PER of 19.6x for FY25. If aligning P/B with ROE on the best-fit line, it should be priced at 5.1x pre-money.


MIXUE Group IPO: The Leading Player that Justifies a Premium

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)

MIXUE Group (2097 HK): What to Do Now?

MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...

Osbert Tang, CFA

[Blue Lotus China New Consumer Weekly, 9/52] New Home Sales Also Turned Positive YoY

Latest week saw positive YoY growth in new home sales, LI prepares for major battle with BEV launch, MNSO guidance down for C4Q24 and likely to...

Blue Lotus Research Institute

MIXUE Group (2097 HK) IPO: Reasonably Attractive Pricing

MIXUE's IPO is attractive, priced below China's peer average with a potential for at least 20-30% upside post-IPO. Opportunity to participate in...

Osbert Tang, CFA

Major Top for the U.S. Dollar (DXY) = Risk-On; Bullish Outlook Despite Near-Term Downside Risk

Major Top for the U.S. Dollar $DXY = Risk-On; Bullish Outlook Intact on $ACWI despite near-term downside risk. We remain bullish if $ACWI > $116,...

Vermilion Research

MIXUE Group IPO: The Leading Player that Justifies a Premium

Mixue has a 32.7% share in the freshly-made drinks market and the highest profit, poised for growth in low-tier cities with the franchise model....

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

MIXUE Group (2097 HK): What to Do Now?

​MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...

Osbert Tang, CFA

[Blue Lotus China New Consumer Weekly, 9/52] New Home Sales Also Turned Positive YoY

​Latest week saw positive YoY growth in new home sales, LI prepares for major battle with BEV launch, MNSO guidance down for C4Q24 and likely to...

Blue Lotus Research Institute

MIXUE Group (2097 HK) IPO: Reasonably Attractive Pricing

​MIXUE's IPO is attractive, priced below China's peer average with a potential for at least 20-30% upside post-IPO. Opportunity to participate in...

Osbert Tang, CFA

Major Top for the U.S. Dollar (DXY) = Risk-On; Bullish Outlook Despite Near-Term Downside Risk

Major Top for the U.S. Dollar $DXY = Risk-On; Bullish Outlook Intact on $ACWI despite near-term downside risk. We remain bullish if $ACWI > $116,...

Vermilion Research

MIXUE Group IPO: The Leading Player that Justifies a Premium

​Mixue has a 32.7% share in the freshly-made drinks market and the highest profit, poised for growth in low-tier cities with the franchise model....

Osbert Tang, CFA

MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...

Latest week saw positive YoY growth in new home sales, LI prepares for major battle with BEV launch, MNSO guidance down for C4Q24 and likely to...

MIXUE's IPO is attractive, priced below China's peer average with a potential for at least 20-30% upside post-IPO. Opportunity to participate in...

Mixue has a 32.7% share in the freshly-made drinks market and the highest profit, poised for growth in low-tier cities with the franchise model....