Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

Perfect Medical Health / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">Perfect Medical Health (1830 HK)</a>, post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.</li>
<li>HK is experiencing a dip in consumer sentiment, and <a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">t</a>he company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.</li>
<li>The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.</li>
</ul>



Perfect Medical Health (1830 HK), post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.
HK is experiencing a dip in consumer sentiment, and the company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.
The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.


Perfect Medical: Post Card From HK, Yield of 11.5%

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.</li>
<li>
<a href="https://www.smartkarma.com/entities/luk-fook-holdings-intl-ltd" target="_blank" data-smartkarma-citation="entities:19054:1" rel="noopener">Luk Fook Holdings (590 HK)</a> is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International (178 HK)</a> is the cosmetics play.</li>
<li>Property investors including <a href="https://www.smartkarma.com/entities/wharf-holdings-ltd" target="_blank" data-smartkarma-citation="entities:51:1" rel="noopener">Wharf Holdings (4 HK)</a> and <a href="https://www.smartkarma.com/entities/hysan-development-co" target="_blank" data-smartkarma-citation="entities:14169:1" rel="noopener">Hysan Development Co (14 HK)</a> will gain from the shopping malls in major tourist areas in Hong Kong.</li>
</ul>


There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.

Luk Fook Holdings (590 HK) is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. Sa Sa International (178 HK) is the cosmetics play.
Property investors including Wharf Holdings (4 HK) and Hysan Development Co (14 HK) will gain from the shopping malls in major tourist areas in Hong Kong.


Increasing HK Duty Free Quota: The Beneficaries

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/dickson-concepts-intl-ltd" target="_blank" data-smartkarma-citation="entities:5052:1" rel="noopener">Dickson Concepts Intl (113 HK)</a>’s IFA opines that the controlling shareholder (Sir Poon) at HK$7.20 to be fair and reasonable. The vote is on 18 July. </li>
<li>A low AGM minority participation rate and quiet retail forums are helpful. However, the offer is below the net cash, and Dickson is cash generative on an underlying basis. </li>
<li>Dickson shares traits similar to those of the Goldlion and Soundwill deal breaks, which showed that low-ball offers can be blocked. This situation warrants a safety-first approach.</li>
</ul>



Dickson Concepts Intl (113 HK)’s IFA opines that the controlling shareholder (Sir Poon) at HK$7.20 to be fair and reasonable. The vote is on 18 July. 
A low AGM minority participation rate and quiet retail forums are helpful. However, the offer is below the net cash, and Dickson is cash generative on an underlying basis. 
Dickson shares traits similar to those of the Goldlion and Soundwill deal breaks, which showed that low-ball offers can be blocked. This situation warrants a safety-first approach.


Dickson Concepts (113 HK): Scheme Vote on 18 July for a Below Net Cash Offer

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Eternal Beauty Holdings / Equity Capital Markets

<ul>
<li>Given that leading luxury groups are inclined to abandon agency and "get involved directly" in the beauty/fragrance category, such trend implies the risk of losing key suppliers in the future</li>
<li>Although there're "reusable aspects" in management, expenses spent on brand channel are big, which makes it impossible for profits to benefit from "scale effect".So, low profit margin is the norm.</li>
<li>Considering the risk of economic recession/sluggish consumption, Eternal Beauty's net profit may experience negative growth in FY2025. It would gradually recover in FY2026-2027. Valuation could be lower than peers.</li>
</ul>


Given that leading luxury groups are inclined to abandon agency and "get involved directly" in the beauty/fragrance category, such trend implies the risk of losing key suppliers in the future
Although there're "reusable aspects" in management, expenses spent on brand channel are big, which makes it impossible for profits to benefit from "scale effect".So, low profit margin is the norm.
Considering the risk of economic recession/sluggish consumption, Eternal Beauty's net profit may experience negative growth in FY2025. It would gradually recover in FY2026-2027. Valuation could be lower than peers.


Pre-IPO Eternal Beauty Holdings (PHIP Updates) - The Outlook Has Changed

<ul>
<li>The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.</li>
<li>The situation and prospects of China's perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.</li>
<li>Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China's domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.</li>
</ul>


The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.
The situation and prospects of China's perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.
Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China's domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.


Pre-IPO Eternal Beauty Holdings - The Perfume Business in China May Not Be as Good as Expected

Hong Kong

Sa Sa International Holdings Limited, through its subsidiaries, retails and wholesales cosmetics. The Company also provides beauty and health club services to members.

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Sa Sa International Hldgs (178 HK)

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

Increasing HK Duty Free Quota: The Beneficaries

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

Dickson Concepts (113 HK): Scheme Vote on 18 July for a Below Net Cash Offer

The scheme failed as it marginally failed the value test – 10.16% of disinterested shareholders voted NO vs <10% of all disinterested shareholders'...

Arun George

Pre-IPO Eternal Beauty Holdings (PHIP Updates) - The Outlook Has Changed

Luxury groups' direct involvement in beauty/fragrance management is the trend, leading to the loss of suppliers of Eternal Beauty.Low profit...

Xinyao (Criss) Wang

Pre-IPO Eternal Beauty Holdings - The Perfume Business in China May Not Be as Good as Expected

Eternal Beauty's business model struggles to generate high profits in a changing China perfume market, facing challenges from the shifts of...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

Increasing HK Duty Free Quota: The Beneficaries

​Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

Dickson Concepts (113 HK): Scheme Vote on 18 July for a Below Net Cash Offer

The scheme failed as it marginally failed the value test – 10.16% of disinterested shareholders voted NO vs <10% of all disinterested shareholders'...

Arun George

Pre-IPO Eternal Beauty Holdings (PHIP Updates) - The Outlook Has Changed

​Luxury groups' direct involvement in beauty/fragrance management is the trend, leading to the loss of suppliers of Eternal Beauty.Low profit...

Xinyao (Criss) Wang

Pre-IPO Eternal Beauty Holdings - The Perfume Business in China May Not Be as Good as Expected

​Eternal Beauty's business model struggles to generate high profits in a changing China perfume market, facing challenges from the shifts of...

Xinyao (Criss) Wang

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Luxury groups' direct involvement in beauty/fragrance management is the trend, leading to the loss of suppliers of Eternal Beauty.Low profit...

Eternal Beauty's business model struggles to generate high profits in a changing China perfume market, facing challenges from the shifts of...