Smartkarma Daily Briefs

• A double dose of StubWorld this week. Swire Pacific (A) (19 HK)‘s P/B is back down to 0.31x as Cathay Pacific (293 HK) tackles alleged language bias by flight attendants.
• Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Growatt Technology (1833969D CH), a leading PV inverters manufacturer, is pre-marketing a US$400 million HKEx IPO, according to press reports.  
• We previously discussed the IPO in Growatt Technology IPO: The Investment Case, Growatt Technology IPO: Growing Watts, Growatt Technology IPO: The Bear Case, Growatt Technology IPO: The Bull Case. 
• In this note, we outline our updated forecasts and present our updated look at Growatt’s potential valuation range.

The Asia HY Trade Book for May 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia (ex-Japan) HY and crossover credits.

• Hang Seng Index (HSI INDEX) Implieds are at Records Low, Cheap to Historic, Buy Options.
• Many Asian Indices have Tight Ranges, Flat Returns YTD,  Options Expensive to the Range.
• HSBC Holdings (5 HK) and  Citic Ltd (267 HK)  are up than 23% YTD, (with the Hang Sang flat), hedge them with cheap options

• In 1Q23, total revenues grew by 27% YoY with all business lines up by more than 10% YoY.
• The real operating profits turned positive after nine quarters’ losses.
• We believe the stock has an upside of 35% for yearend 2023. Buy.

• XPeng reported soft 1Q23 results, with topline of RMB 4.03bn, missing cons by (4.4%); GPM of 1.7% missing cons. and our est. by (4.5ppt)/(4.8ppt. 
• The 2Q23 guidance implies a QoQ recovery of 15.2%-20.7%, thanks to increasing order intake of the all-new P7i and recent channel transformation. 
• We maintain BUY. We cut TP to US$ 10 due to pressure amid intensified competition.

• VIPS reported C1Q23 top-line, GAAP operating profit, and non-GAAP net income 6.6%, 27%, and 31% vs. our est., and 5.6%, 20%, and 36% vs. cons.; 
• We expect VIPS profitability to remain steady given its relative immunity to competitor price competition, mainly due to its high apparel exposure, high member loyalty, and differentiated product sourcing strategy; 
• Given improving apparel demand and EPADS on share buy-backs, we maintain BUY and US$ 16.3 TP, implying 8.1x 2023 non-GAAP P/E.  

• Xiaomi reported C1Q23 top-line and non-IFRS net income (6.9%) and 20.7% vs. our est., and in-line and 39.9% vs. consensus; 
• We suggest that higher margins are transitory, as (1) key IC component prices may have bottomed, (2) EV spend is likely to ramp up further. 
• We maintain SELL and HK$ 8.2 TP, implying 26x FY23 PE.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess China Water Affairs’ ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

• BZ reported 1Q23 cash billing 2.9% higher than our est.; revenue in-line with our estimate and consensus;  and non-GAAP NI 36.3%/35.3% higher than our est. and cons.
• As BZ approaching the proxy of China’s labour market, its primary hurdle is the slow recovery of labour demand and mismatch of supply and demand.
• We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.