ChinaDaily Briefs

China: China Mobile, NIO Inc, Yangzijiang Shipbuilding, RLX Technology Inc, CPMC Holdings, Bank of Chongqing Co Ltd H, Beijing Kuaishou Technology Co Ltd, Shui On Land, New Horizon Health and more

In today’s briefing:

  • China Mobile Low as Divergence Builds
  • NIO: NIO Day Unveils Downside Risks
  • Yangzijiang – Happy New Year: Give Us Back Our Stock Or We Will Pay You A Dividend
  • RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
  • CPMC Holdings (906 HK): An Attractive Inexpensive Alternative Consumption Play
  • Bank of Chongqing: Robust Trends and Cheap Valuation Characterise Chongqing
  • Kuaishou Technology Pre-IPO – Peer Comparison and Thoughts on Valuation
  • Morning Views Asia: CIFI Holdings, Seazen (Formerly Future Land), Shui On Land, Tata Motors Ltd
  • New Horizon Health (诺辉健康) Pre-IPO: Comparison with Exact Sciences

China Mobile Low as Divergence Builds

By Thomas Schroeder

China Mobile (941 HK) flip flops are challenging with base line support beginning to develop. We outline our preferred buy zone along with pivotal trendline resistance that will act as a tactical cap but once cleared will open the way higher. Underlying bull tone stems from RSI not confirming recent lows for a case of bull divergence.

The next washout is viewed as a buying opportunity near 40.


NIO: NIO Day Unveils Downside Risks

By Victoria Li

We see more risks to the NIO story from the information given NIO Day on 9th Jan. Sooner rather than later, NIO’s monthly car delivery would be overtaken by Xpeng and Li Auto – and that would be the start point of its share performance weakness.

NIO has no new car model this year. This would be a risk to the company’s market share, while Tesla Shanghai’s Model Y and Xpeng P5 would definitely gain market share.

eT7, the first sedan of NIO to be delivered in 1Q2021, is almost twice as expensive as Xpeng P7, with very close performance and looks. This makes eT7 difficult to have big sales volume.

Promised solid-state battery with1000km NEDC range is still under R&D and  would not come until 4Q2020. NIO cars NEDC range would remain shorter than its peers for at least another two years.

What exactly NAD could do is unclear. Only information about NAD is that the hardware employed would have 7 times TOPs as Tesla’s. While Xpeng’s navigated autopilot (NGP) is coming in 1Q2021 with great feedback on its trial version.

Second generation battery swap station doubled battery capacity, but the overall station network build-up would remain behind original schedule.



RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors

By Ming Lu

Relx Technology aims to raise around US$1bn in its US IPO.

  • We visited electronic cigarette (e-cig) stores of Relx, Vazo, Yooz, and Moti.
  • We conclude that the price of Relx-Classic, RMB299, is the benchmark of the e-cig market.
  • Relx has the largest market share because of its store number.
  • Vazo discounts its prices to be closer to Relx-Classic.
  • Yooz and Moti keep about RMB50~60 below Relx-Classic.

We have covered the basic background of the company in our earlier insights:


CPMC Holdings (906 HK): An Attractive Inexpensive Alternative Consumption Play

By Osbert Tang, CFA

We believe CPMC Holdings (906 HK) is an attractive alternative consumption play given its exposure to the rise in demand for food, beverages and household chemical product packaging in China. It is among the top player in China’s packaging manufacturing (1-piece cans, 2-piece cans, tinplate packaging and plastic containers) with prominent customer profile including Coca-Cola, Tsingtao, Carlsberg, Blue Moon, Feihe, Yili and Jiaduobao etc. 

The combination of margin expansion, capacity growth and surging consumption demand, we expect CPMC to post a steady rising ROE. We expect special DPS payout on the receipt of Rmb1.5bn repurchase consideration from JDB settlement, and this will place its dividend yield at least at 7.8%. Its 8.9x PER and 0.69x P/B represent deep discounts to its customers (40x PER) and packaging peers (23.4x) which are unjustified in our view.


Bank of Chongqing: Robust Trends and Cheap Valuation Characterise Chongqing

By Paul Hollingworth

As is often cited, China maintains certain advantages over other parts of the world regarding the terrible weight of C19 that is so devastating other parts of the globe and in relation to the interrelated current macro picture.

Bank Of Chongqing Co Ltd H (1963 HK)has been expanding its business well in recent years, whether it be Corporate, SME, Consumer, Trade Finance, Capital Markets, or Financial Leasing. Management is fortifying the application of financial technologies, with the online loan business growing fast, while deposits are growing forcefully. Balance Sheet expansion is broadly in line with the System. In addition, the Bank has strengthened governance, and put in place a mechanism for online tracking of asset quality and a risk monitoring system that combines micro and macro aspects. Management has beefed up risk control tools, advanced post-loan online service and the online management of credit authorisation and inquiry, and promoted the tools used to expand the credit business. Fintech innovation is centred on 5G, AI, blockchain and other technologies through lean management robots, remote banks, intelligent WAN and integrated operation and maintenance projects.

Recent results show positive fundamental momentum and trends with clear improvement in Efficiency, NIM and Spread, as well as better headline Asset Quality, Liquidity and Provisioning. Given the increase in LLPs, Profitability though eroded slightly while Capital Adequacy deteriorated somewhat. Growth in “Core Income” was robust, especially in Net Interest Income, spurred by lower Funding Costs and System-like credit expansion of 13% YoY.

A FV of 4%, a PBV of 0.37x, an Earnings Yield of 30.7%, a Dividend Yield of 5.3%, and a Total Return Ratio of 6x are highly attractive. The bank commands both a top quartile PH Score™ and VFM ranking. Chongqing is also a “3 year off, 1 year on” stock.


Kuaishou Technology Pre-IPO – Peer Comparison and Thoughts on Valuation

By Sumeet Singh

Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.

As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20.

As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.

I have covered various aspects of the company’s performance in my previous notes: 

In this note, I’ll undertake a peer comparison, provide earnings forecasts and talk about valuations. 


Morning Views Asia: CIFI Holdings, Seazen (Formerly Future Land), Shui On Land, Tata Motors Ltd

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


New Horizon Health (诺辉健康) Pre-IPO: Comparison with Exact Sciences

By Ke Yan, CFA, FRM

New Horizon Health, a pioneer in the colorectal cancer screening market in China, is looking to raise up to USD 300m to list via a Hong Kong listing.  

In our previous note (A hot medical device deal in making), we discussed that NH Health provides cancer screen kits for convenient early screening targeting populations recommended for regular cancer screening. The company’s approved product ColoClear has an impressive accuracy compared with peer products for colorectal cancer. In addition to ColoClear, it also offers a more mass-market product, Pupu Tube for home-based testing. The company’s products have a huge unmet market and a high barrier to entry. We believe its uniqueness as the only investable stock in the segment will make the deal interesting for investors. The company’s management has good prior working experience and is backed by a strong line up of international and domestic investors. 

In this note, we compare the company’s product with the benchmark product, Exact Sciences’ Cologuard. We think the company’s ColoClear is ahead of the Cologuard with improvement in clinical reading and the technology used. 


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