In today’s briefing:
- Haier Smart Home (6690 HK): Smart Moves
- Yunkang Group IPO Trading – Subdued Subscription Rates Combined with Uncertain Future Profitability
- JD.com (9618 HK): 1Q22 Result, Undervalued Despite of Weak Revenue
- SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.
- TME – Miss on Revenue and Margins; Earnings Continue to Remain Under Pressure
- Aier Eye Hospital Group (300015.CH) 2021/2022Q1 Results – Overvaluation and a Risky Outlook
- China A and HSI Re Short Levels
- Morning Views Asia: AAC Technologies Holdings, Greenko Energy Holdings, Yuzhou Group
Haier Smart Home (6690 HK): Smart Moves
- Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
- The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH’s business in 4M22 while it will also reap benefits from Rmb depreciation.
- The government’s support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position.
Yunkang Group IPO Trading – Subdued Subscription Rates Combined with Uncertain Future Profitability
- Yunkang Group (2325 HK) raised around US$139m in its Hong Kong IPO.
- On its bookbuild, subscription rates were lackluster and market sentiment hasn’t been the greatest.
- Similar recent deals with weak subscription rates had seen subdued listing performances by the end of their respective first weeks.
JD.com (9618 HK): 1Q22 Result, Undervalued Despite of Weak Revenue
- JD will continue to close its unprofitable minor businesses in following quarters.
- The growth rate of total revenue slowed down in 1Q21 due to weak demand of home appliance.
- We believe JD has a significant upside despite that the revenue growth will continue to slow down.
SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.
- SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.
- The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.
- The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect.
TME – Miss on Revenue and Margins; Earnings Continue to Remain Under Pressure
- Tencent Music (TME US) reported 1Q2022 results today. Revenue declined 15% YoY to RMB6.64bn (vs consensus RMB6.69n) while reported OP dropped 35.7% YoY to RMB749m (vs consensus RMB817m).
- Revenue from Online music services declined YoY for the first time since 2017 while revenue from Social Entertainment services further declined during the quarter.
- We expect TME’s earnings to remain under pressure with increased competition and regulatory restrictions on livestreaming sector.
Aier Eye Hospital Group (300015.CH) 2021/2022Q1 Results – Overvaluation and a Risky Outlook
- Aier’s private placement was approved by the Shenzhen Stock Exchange, but we don’t think it signals a complete policy shift that private medical institutions are welcomed by capital markets.
- The high goodwill impairment risk and medical disputes are great concerns. However, if Aier changes its development mode, its performance growth would probably slow down or becomes uncertain.
- Aier’s Q2 performance could be affected by pandemic/lockdown. Even after continuous corrections, Aier is still overvalued based on current valuation, which has not priced in all the concerns and risks.
China A and HSI Re Short Levels
- A50 faces key trendline sell/pivot resistance that will cap the rise with HSI nudging back to sell territory with fresh chart lows expected.
- A50 trendline resistance is the bull/bear inflection point. We look for a sell or rejection near 13,700 if not just under this level for a test on the 12,400.
- HSI 21k sell barrier while watching for HK tech rise to run out of steam near 4,500 resistance.
Morning Views Asia: AAC Technologies Holdings, Greenko Energy Holdings, Yuzhou Group
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.
Before it’s here, it’s on Smartkarma