HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewellery (6168 HK)</a>'s 1H25 results are healthy, but there are challenges, including weak revenue growth and higher R&amp;D costs.  </li>
<li>Growth is almost entirely driven by online sales, but its plan to expand offline stores rapidly may erode net profit in the near term. </li>
<li>The stock has become the most expensive one in the sector, based on its PERs of 22.4x CY25F and 21.4x CY26F. Its 3-year EPS CAGR of 6.8% is uninspiring.</li>
</ul>



Zhou Liu Fu Jewellery (6168 HK)'s 1H25 results are healthy, but there are challenges, including weak revenue growth and higher R&amp;D costs.  
Growth is almost entirely driven by online sales, but its plan to expand offline stores rapidly may erode net profit in the near term. 
The stock has become the most expensive one in the sector, based on its PERs of 22.4x CY25F and 21.4x CY26F. Its 3-year EPS CAGR of 6.8% is uninspiring.


Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewellery (6168 HK)</a> has an impressive debut, but it is currently expensive, at 4.33x PEG with just a 3-year EPS CAGR of 4.7%.</li>
<li>It is overpriced by ROE vs. P/B, given it stands higher than the best-fit line. Its inferior market position in the industry makes it deserve to trade below.</li>
<li>At 20% discount to <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>, it should value at HK$27.80. Even at par, it still implies an 8.5% downside. </li>
</ul>



Zhou Liu Fu Jewellery (6168 HK) has an impressive debut, but it is currently expensive, at 4.33x PEG with just a 3-year EPS CAGR of 4.7%.
It is overpriced by ROE vs. P/B, given it stands higher than the best-fit line. Its inferior market position in the industry makes it deserve to trade below.
At 20% discount to Chow Tai Fook Jewellery (1929 HK), it should value at HK$27.80. Even at par, it still implies an 8.5% downside. 


Zhou Liu Fu (6168 HK): Are We or the Market Wrong?

APAC IPOs & Placements, Aequitas Research

Nicholas Tan

APAC 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

Zhou Liu Fu Jewellery / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH)</a> is looking to raise up to $143m in its upcoming Hong Kong IPO</li>
<li>It is a leading and fast growing jewellery franchise in China offering a diverse range of products through offline and online sales channels.</li>
<li>We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.</li>
</ul>



Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH) is looking to raise up to $143m in its upcoming Hong Kong IPO
It is a leading and fast growing jewellery franchise in China offering a diverse range of products through offline and online sales channels.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.


Zhou Liu Fu IPO Trading: Fundamentally Weak but Oversubscribed

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>The 2024 China Hospital Medication Market Pattern Report has been released, and we have found some interesting points worth the attention.</li>
<li>CNPGC plans to acquire 21.03% of Pacific Shuanglin's shares at a premium of over 30% and become the actual controller. Due to horizontal competition issue, there’s potential M&amp;A/privatization opportunities here.</li>
<li>The IPO of Zhou Liu Fu is fairly priced. But fundamentals would not improve due to high gold prices and would deteriorate instead. Share price upside potential could be lower-than-expected.</li>
</ul>


The 2024 China Hospital Medication Market Pattern Report has been released, and we have found some interesting points worth the attention.
CNPGC plans to acquire 21.03% of Pacific Shuanglin's shares at a premium of over 30% and become the actual controller. Due to horizontal competition issue, there’s potential M&amp;A/privatization opportunities here.
The IPO of Zhou Liu Fu is fairly priced. But fundamentals would not improve due to high gold prices and would deteriorate instead. Share price upside potential could be lower-than-expected.


China Healthcare Weekly (Jun.22) - CNPGC to Acquire Shuanglin, Thoughts on Zhou Liu Fu's IPO Pricing

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewelery Co., Ltd. (6168 HK)</a>'s IPO does not appeal to us, given deteriorating profitability, smaller size, and inferior financials. </li>
<li>Its IPO price of HK$24.0 appears to be fair relative to the peers' valuation, leaving limited upside and downside in the secondary market. </li>
<li>We value the stock at HK$22.5-25.7, based on 20-30% discount to <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>. It is not another <a href="https://www.smartkarma.com/entities/laopu-gold-co-ltd" target="_blank" data-smartkarma-citation="entities:44036:1" rel="noopener">Laopu Gold (6181 HK)</a>. </li>
</ul>



Zhou Liu Fu Jewelery Co., Ltd. (6168 HK)'s IPO does not appeal to us, given deteriorating profitability, smaller size, and inferior financials. 
Its IPO price of HK$24.0 appears to be fair relative to the peers' valuation, leaving limited upside and downside in the secondary market. 
We value the stock at HK$22.5-25.7, based on 20-30% discount to Chow Tai Fook Jewellery (1929 HK). It is not another Laopu Gold (6181 HK). 


Zhou Liu Fu (6168 HK) IPO: Not Our Cup of Tea

China

Zhou Liu Fu Jewellery Co., Ltd. manufactures jewelry products. The Company designs and sells gold jewelry, platinum jewelry, jewelry jade, crafts, watches, gold and silver coins, and other products. Zhou Liu Fu Jewellery markets its products throughout China.

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Zhou Liu Fu Jewellery (6168 HK)

Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Osbert Tang, CFA

Zhou Liu Fu (6168 HK): Are We or the Market Wrong?

Zhou Liu Fu's impressive debut is overshadowed by its expensive valuation of 4.33x PEG with a low EPS CAGR. Comparisons to Chow Tai Fook suggest...

Osbert Tang, CFA

Zhou Liu Fu IPO Trading: Fundamentally Weak but Oversubscribed

Zhou Liu Fu is looking to raise up to $143m in its upcoming Hong Kong IPO. We have covered aspects of the deal in our previous note. In this note,...

Nicholas Tan

China Healthcare Weekly (Jun.22) - CNPGC to Acquire Shuanglin, Thoughts on Zhou Liu Fu's IPO Pricing

CNPGC plan to acquire Pacific Shuanglin, bringing new M&A/privatization due to horizontal competition. Zhou Liu Fu's IPO is fairly priced, but...

Xinyao (Criss) Wang

Zhou Liu Fu (6168 HK) IPO: Not Our Cup of Tea

Zhou Liu Fu Jewelery's IPO lacks appeal due to declining profitability, smaller size, and weaker financials, with limited upside and downside in...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

​Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Osbert Tang, CFA

Zhou Liu Fu (6168 HK): Are We or the Market Wrong?

​Zhou Liu Fu's impressive debut is overshadowed by its expensive valuation of 4.33x PEG with a low EPS CAGR. Comparisons to Chow Tai Fook suggest...

Osbert Tang, CFA

Zhou Liu Fu IPO Trading: Fundamentally Weak but Oversubscribed

Zhou Liu Fu is looking to raise up to $143m in its upcoming Hong Kong IPO. We have covered aspects of the deal in our previous note. In this note,...

Nicholas Tan

China Healthcare Weekly (Jun.22) - CNPGC to Acquire Shuanglin, Thoughts on Zhou Liu Fu's IPO Pricing

CNPGC plan to acquire Pacific Shuanglin, bringing new M&A/privatization due to horizontal competition. Zhou Liu Fu's IPO is fairly priced, but...

Xinyao (Criss) Wang

Zhou Liu Fu (6168 HK) IPO: Not Our Cup of Tea

​Zhou Liu Fu Jewelery's IPO lacks appeal due to declining profitability, smaller size, and weaker financials, with limited upside and downside in...

Osbert Tang, CFA

Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Zhou Liu Fu's impressive debut is overshadowed by its expensive valuation of 4.33x PEG with a low EPS CAGR. Comparisons to Chow Tai Fook suggest...

Zhou Liu Fu Jewelery's IPO lacks appeal due to declining profitability, smaller size, and weaker financials, with limited upside and downside in...