ChinaDaily Briefs

Daily Brief China: Sun Hung Kai &, Meituan, Tencent, Megvii Technology, Fu Shou Yuan, Pinduoduo, SmartMore Technology, Melco Resorts & Entertainment, Xpeng and more

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

By Evaluate Research

  • 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

By Thomas Schroeder

  • 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

By Ming Lu

  • 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

By Ming Lu

  • 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

By Douglas Kim

  • 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

By Osbert Tang, CFA

  • 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

By Ming Lu

  • 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

By Douglas Kim

  • 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

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.


[XPeng (XPEV US) Earnings Review]: Facing Price War and Fiercer Competition in 2023

By Shawn Yang

  • 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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