In today’s briefing:
- JD Industrials Pre-IPO – Peer Comparison
- Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV
- Meituan’s Recent Expansion in Hong Kong: A Review
- Alibaba Health: Healthy 2H but Margins Have Very Little Room for Improvement (Quantamental)
- Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)
- Pinduoduo(PDD US): The Worst Is yet to Come
- Xinhua Winshare (811 HK): We Love the Boredom
- JD Industrials Pre-IPO – Peer Comparison – Some Interesting Nuggets from Peer Filings
- Microport Cardiac Rhythm Management Pre-IPO Tearsheet
- Horizon Construction Dev IPO Trading – Subscription Rates Still Weak, Despite Cornerstone Support
JD Industrials Pre-IPO – Peer Comparison
- JD Industrials (JDI) is looking to raise about US$1bn in its upcoming HK IPO.
- JDI is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
- In this note, we will undertake a peer comparison versus domestic and international peers.
Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV
- Dickson Concepts Intl (113 HK), an HK distributor of luxury goods, is a classic example of a Graham net-net with a >40% discount to NCAV (Net Current Asset Value).
- The company has 4.7 bn HKD of cash against total liabilities of 2.3 bn HKD (on a market cap of 1.6 bn HKD), thus representing deep value.
- With an economic environment in HK for retail sales improving + an existing 8% dividend yield, we could make a case for higher dividend payments.
Meituan’s Recent Expansion in Hong Kong: A Review
- On May 22nd, Meituan launched its food delivery platform called KeeTa in Hong Kong SAR.
- KeeTa’s expansion stratgies include Collaboration with branded chain merchants,lower ASP, subsidy campaign, and launching “On-time Guarantee”.
- Sofar the initial results after launch seems to be in-line with expecation, while there will still be a lot of challenges, like small market size and stabilized competition landscape.
Alibaba Health: Healthy 2H but Margins Have Very Little Room for Improvement (Quantamental)
- Alibaba Health Information Technology (241 HK) ’s 2HFY03/2023 revenues beat consensus by 1.4% while adjusted operating losses of RMB1.74m (0.01% of revenue) is significantly lower compared to 2HFY03/2022 and consensus.
- Improvement in profitability was driven by improved GPM coupled with decrease in SG&A costs which helped offset increase in fulfilment costs as a result of the Covid-19 outbreak.
- Our quantamental analysis suggests that Ali Health’s margins have very little room for improvement unless the company cuts down SG&A significantly while improving revenue % from non-direct pharmaceutical businesses.
Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)
- Industry and company reports show ASP declines gained momentum in April
- April volume jumped 36% Y/Y on a weak comp from 2022 (Covid-19 lockdowns)
- Our thesis: pricing is getting weaker, and this trend will soon impact margins
Pinduoduo(PDD US): The Worst Is yet to Come
- The odds are high for PDD to miss consensus for 1Q results this Friday due to high base and deflating domestic growth drivers, despite TEMU’s momentum.
- Among major China tech companies, PDD is likely to be the only one to register stagnant or even negative earnings growth for FY23, which has not been in the price.
- A down cycle for PDD’s earnings growth leads us to assign 12x P/E to an estimated non-GAAP net profit of RMB39 billion for FY23, implying 15% downside.
Xinhua Winshare (811 HK): We Love the Boredom
- Despite solid outperformance, share price of Xinhua Winshare (811 HK) is more than 100% covered by net cash of Rmb7.6bn. DPS has also risen uninterruptedly in the last 3 years.
- 1Q23 result demonstrated operating resilience as recurring profit soared 48.5%. Its franchise in textbook publication and distribution stayed well protected, securing profitability outlook.
- We like XW’s boring businesses in the current depressed market. It trades on 4.5x PER with secured 6.6% dividend yield. The HA discount has widened to 10pp deeper than average.
JD Industrials Pre-IPO – Peer Comparison – Some Interesting Nuggets from Peer Filings
- JD Industrials is looking to raise about US$1bn in its upcoming HK IPO.
- JDI is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
- We undertook a peer comparison in our previous note, in this note we talk about some additional useful information that we found interesting from peer filings.
Microport Cardiac Rhythm Management Pre-IPO Tearsheet
- MicroPort Cardiac Rhythm Management (1813053D CH) is looking to raise about US$200m in its upcoming HK IPO. The deal will be run by Goldman Sachs and CICC.
- Microport Cardiac Rhythm Management (MCRM) is a R&D-driven, commercial-stage medical technology company specializing in active implantable medical devices for cardiac rhythm management (CRM).
- Its operations are dedicated to the design, development and commercialization of products and solutions to treat and manage arrhythmias and heart failure.
Horizon Construction Dev IPO Trading – Subscription Rates Still Weak, Despite Cornerstone Support
- Horizon Construction Development (1887128D HK) raised around US$210m in its Hong Kong IPO.
- HCD is an equipment operation service provider in China. It provides services covering the full cycle of projects.
- In this note, we will talk about the trading dynamics and valuation.
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