In today’s briefing:
- SHK 86_HK: Dividend Yield 8%, P/E 2.0x, P/B 0.27x
- Meituan Tactical Slide into Our Buy Zone
- Meituan (3690 HK) Earnings Preview: Less Loss in 4Q22 and to See Profit in 2023
- China Internet Weekly (20Mar2023): Baidu, Tencent, KE
- Megvii: An Artificial Intelligence Powerhouse in China
- Fu Shou Yuan (1448 HK): Key Takeaways from Post-FY22 Call
- Pinduoduo (PDD): 4Q22, Lower Than Consensus, But Higher Than Competitors
- Smartmore: Using AI to Implement Smart Manufacturing
- Morning Views Asia: Melco Resorts & Entertainment, Sunny Optical
- [XPeng (XPEV US) Earnings Review]: Facing Price War and Fiercer Competition in 2023
SHK 86_HK: Dividend Yield 8%, P/E 2.0x, P/B 0.27x
- For FY2022–Total Buyback of 5.9 million shares (HK$18.3 million) at average price of $3.10
- Funds Management Business – Extended Platform to provide Family Office Solutions
- Funds Management Unit – Total AUM increased 21% to US$975 million in 2022 with external capital accounting for 46.5%
Meituan Tactical Slide into Our Buy Zone
- Macro trend remains challenging for Meituan over the summer. We see a tactical short out of triangulation and view a new low as a turn and buy signal.
- RSI bull divergence support a series of tactical rally sequences off of a new low, but macro headwinds will cap over the summer.
- Bull set up at lower expanding wedge support with wedge resistance coming in near 140.
Meituan (3690 HK) Earnings Preview: Less Loss in 4Q22 and to See Profit in 2023
- We believe total revenue grew 18% in 4Q22 and 22% in 2023.
- We believe operating losses decreased YoY in 4Q22 and the company will report an operating profit in 2023.
- We expect the stock has an upside of 47% for year end 2023.
China Internet Weekly (20Mar2023): Baidu, Tencent, KE
- Baidu launched a beta test of a ChatGTP-like function, WXYY.
- Tencent announced it will close its digital collection platform, Huanhe, in June.
- KE’s revenue decreased by 25% and new losses were RMB1.4 billion.
Megvii: An Artificial Intelligence Powerhouse in China
- Megvii is a leading artificial intelligence company in China focusing on IoT scenarios for mainly three fields including Consumer IoT, City IoT and Supply Chain IoT.
- In June 2022, Megvii’s chief scientist Sun Jian passed away due to a sudden illness. His death was one of the key reasons why the company has postponed the IPO.
- Major investors in Megvii include Ant Group, Alibaba Group (9988 HK), Lenovo (992 HK), and Abu Dhabi Investment Authority.
Fu Shou Yuan (1448 HK): Key Takeaways from Post-FY22 Call
- After a dip in earnings in FY22, Fu Shou Yuan (1448 HK) guides for an encouraging rebound in FY23 with at least 35% revenue and 30-35% net profit growth.
- We think the 12.7% growth in earnings in 2H22, against -28.9% in 1H22, showed that pandemic impact has faded. It is still very well positioned to benefit from aging population.
- Net cash equals 19% of its share price and its 13.9x PER for FY23 is not expensive relative to peers. We estimate, ex-cash, ROE is at a high of 24%.
Pinduoduo (PDD): 4Q22, Lower Than Consensus, But Higher Than Competitors
- In 4Q22, revenue grew by 46% YoY, lower than consensus, but higher than competitors.
- The operating margin improved significantly from 7% in 2021 to 23% in 2022.
- We believe the stock has an upside of 31% and a price target of US$120.
Smartmore: Using AI to Implement Smart Manufacturing
- Established in 2019 and headquartered in Hong Kong, Smartmore is a technology company that focuses on the use of artificial intelligence to implement smart manufacturing and ultra-high definition videos.
- The company’s intelligent manufacturing technology helps detect malfunction at manufacturing lines in numerous industries such as autos and semiconductors.
- Since the inception of the company, Smartmore has raised nearly $300 million in funding. Its major investors include Hermitage Capital, IDG Capital, Sequoia Capital China, and Lenovo Capital.
Morning Views Asia: Melco Resorts & Entertainment, Sunny Optical
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.
[XPeng (XPEV US) Earnings Review]: Facing Price War and Fiercer Competition in 2023
- Xpeng reported soft 4Q22 results, with top line of RMB 5.14bn, missing our estimate/cons. by (5.6%)/(9.7%); GPM of 8.7%, missing our estimate/cons. by (1.6ppt)/(3.4ppt), primarily due to increased sales promotions.
- We maintain SELL, because 1) price war and intensified competition in 2023 are still key challenges facing its existing and new models;
- 2) margin pressure ahead amid the price war, while its cost reduction initiatives starting from 2H23 take time to verify effect.
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