Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

After moderating in August, headline express sector volume surged in September. Total parcel volume grew by 44.6% last month, and key inter-city volume was up almost 50%. 
Pricing remains weak, however. For all express shipments, ASPs fell by 12.2%, and the companies that report monthly numbers all reported YoY ASP declines of between 15% and 31%.
In other express sector news: <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a> pre-announced Q3 losses, we check on how <a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a>'s Hong Kong IPO has fared so far, and we note (again) <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> massive scale relative to its Chinese peers -- and it's incredible year of growth. 
We continue to rate SF Holding BUY as we expect it to continue to gain share from peers. We also recently upgraded <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US) </a>to BUY on our expectation that it could become an attractive target once sector M&amp;A takes off. Meanwhile, ZTO remains a SELL in our view.

After moderating in August, headline express sector volume surged in September. Total parcel volume grew by 44.6% last month, and key inter-city volume was up almost 50%. 
Pricing remains weak, however. For all express shipments, ASPs fell by 12.2%, and the companies that report monthly numbers all reported YoY ASP declines of between 15% and 31%.
In other express sector news: STO Express (002468 CH) pre-announced Q3 losses, we check on how ZTO Express (ZTO US)'s Hong Kong IPO has fared so far, and we note (again) S.F. Holding (002352 CH) massive scale relative to its Chinese peers -- and it's incredible year of growth. 
We continue to rate SF Holding BUY as we expect it to continue to gain share from peers. We also recently upgraded BEST Inc (BEST US) to BUY on our expectation that it could become an attractive target once sector M&amp;A takes off. Meanwhile, ZTO remains a SELL in our view. 

TRACKING TRAFFIC/Chinese Express: Pricing Still Weak | STO Q3 Profit Warning | ZTO HK IPO Update

Event-Driven

Last week <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a> warned investors that it lost money in Q3 2020, versus profits in the year-earlier period. It was the third profit warning issued by the company so far in 2020. 
STO Express appears to be retreating from its aggressive pursuit of volume share gains, but the company's new strategy remains unclear, in our view. 
We believe STO Express remains a potential acquisition target when Chinese express sector M&amp;A gains momentum, along with US-listed <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>.

Last week STO Express (002468 CH) warned investors that it lost money in Q3 2020, versus profits in the year-earlier period. It was the third profit warning issued by the company so far in 2020. 
STO Express appears to be retreating from its aggressive pursuit of volume share gains, but the company's new strategy remains unclear, in our view. 
We believe STO Express remains a potential acquisition target when Chinese express sector M&amp;A gains momentum, along with US-listed BEST Inc (BEST US). 

As Profits Turn to Losses, STO Express Retreats from Growth Strategy. Is M&A Next?

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

<ul class="">
<li>Tourist number in National Day holidays recovered to 80% of last year.</li>
<li>Food delivery orders increased significantly in scenic spots during National Day holidays.</li>
<li>Pinduoduo (PDD) is not in the list of e-commerce law drafters.</li>
<li>Chinese game developers earned 29% of global game revenue on App Store and Google Player.</li>
<li>iQiyi (IQ) denied a short-seller accusation.</li>
</ul>


Tourist number in National Day holidays recovered to 80% of last year.
Food delivery orders increased significantly in scenic spots during National Day holidays.
Pinduoduo (PDD) is not in the list of e-commerce law drafters.
Chinese game developers earned 29% of global game revenue on App Store and Google Player.
iQiyi (IQ) denied a short-seller accusation.


China Internet Weekly (12Oct2020): Tourist Number Recovered to 80% of Last National Day Holidays

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.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the global branded variety retail market in 2019, according to Frost &amp; Sullivan. Branded variety retailers of lifestyle products target young consumers and the lifestyle products have a fashionable design, great functionality and affordable prices. Miniso sells products cross 11 major categories which are home decor, small electronics, textile, accessories, beauty tools, toys, cosmetics, personal care, snacks, fragrance and perfumes, and stationery &amp; gifts. <div class="content-highlight">Miniso is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (5.4% shareholder) and Hillhouse Capital (5.4%). Miniso aims to raise $1 billion through an NYSE IPO, according to press reports. Overall, we believe that Miniso is well placed to capitalise on the post-COVID-19 recovery in retail consumption spend.</div>

MINISO Group Holdings (MNSO US) is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the global branded variety retail market in 2019, according to Frost &amp; Sullivan. Branded variety retailers of lifestyle products target young consumers and the lifestyle products have a fashionable design, great functionality and affordable prices. Miniso sells products cross 11 major categories which are home decor, small electronics, textile, accessories, beauty tools, toys, cosmetics, personal care, snacks, fragrance and perfumes, and stationery &amp; gifts. Miniso is backed by Tencent Holdings (700 HK) (5.4% shareholder) and Hillhouse Capital (5.4%). Miniso aims to raise $1 billion through an NYSE IPO, according to press reports. Overall, we believe that Miniso is well placed to capitalise on the post-COVID-19 recovery in retail consumption spend.

MINISO Group IPO Initiation: Chain Reaction

We are upgrading <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> from HOLD to BUY on the expectation of Chinese express sector consolidation in the coming 12-18 months. Note that we do not expect sector fundamentals to improve in the near-term, nor do we expect Best to erase its losses in the next few quarters. 
While we concede we may be early in rating Best BUY, we believe conditions are developing in ways that make sector M&amp;A more likely in the medium-term. Given its size, its depressed valuation and its relationship to <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>, Best could become an acquisition target. 
We view Best as a cheap option on sector consolidation. At a 20% discount to peers on [EV/Revenue] and [EV/Parcel], we believe Best's express operation alone is worth US$5.05 per ADS -- investors effectively get the rest of its businesses for free. BUY below US$3 for ~70% upside.

We are upgrading BEST Inc (BEST US) from HOLD to BUY on the expectation of Chinese express sector consolidation in the coming 12-18 months. Note that we do not expect sector fundamentals to improve in the near-term, nor do we expect Best to erase its losses in the next few quarters. 
While we concede we may be early in rating Best BUY, we believe conditions are developing in ways that make sector M&amp;A more likely in the medium-term. Given its size, its depressed valuation and its relationship to Alibaba Group (BABA US), Best could become an acquisition target. 
We view Best as a cheap option on sector consolidation. At a 20% discount to peers on [EV/Revenue] and [EV/Parcel], we believe Best's express operation alone is worth US$5.05 per ADS -- investors effectively get the rest of its businesses for free. BUY below US$3 for ~70% upside. 

Upgrading Best Inc To Speculative BUY on Expectation of Express Sector Consolidation

China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

PDD Holdings (PDD US)

TRACKING TRAFFIC/Chinese Express: Pricing Still Weak | STO Q3 Profit Warning | ZTO HK IPO Update

Although volumes bounced back in September, pricing remains weak. We retain our BUY ratings on SF Holding and Best Inc, while ZTO Express remains a...

Tracking Traffic

As Profits Turn to Losses, STO Express Retreats from Growth Strategy. Is M&A Next?

STO Express recently warned investors it would report a loss in Q3 2020. The company seems to be rethinking its aggressive pursuit of volume share,...

Tracking Traffic

China Internet Weekly (12Oct2020): Tourist Number Recovered to 80% of Last National Day Holidays

China's National Day tourists reflect how much the economy recovered. The holidays were from October 1 to 8. We believe people were willing to...

Ming Lu

MINISO Group IPO Initiation: Chain Reaction

MINISO Group Holdings (MNSO US) is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the...

Arun George

Upgrading Best Inc To Speculative BUY on Expectation of Express Sector Consolidation

What is rationale? What are catalysts? Why Best and not other potential targets? Price target?

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)