In today’s briefing:
- China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com
- Meituan: Scaling Back Ride-Hailing Business to Maintain Margins
- JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy
- Fuji Oil: Probably The Last Chance For Itochu to Scoop Up Fuji Oil at a Bargain
- Shenzhen Mindray Bio-Medical Electronics (300760.CH) – Shareholders’ Stock Selling and the Outlook
- Monotaro (3064) | Pricing in Downside Risks
- Ricegrowers Limited (SunRice) – H1 FY23 Highlights Relative Freight Opportunity
- REIT Watch – Hospitality S-REITs’ DPU rebound 32% in 2022
- Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential
- Impressive Progress on Multiple Fronts to End the Year
China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com
- Grizzly Research LLC publishes a short selling report on ZTO.
- Meituan plans to shift car hailing from direct operation to a platform for third-party operators.
- Dada, which was acquired by JD.com last year, posts good 4Q22 results.
Meituan: Scaling Back Ride-Hailing Business to Maintain Margins
- Several news media outlets reported last week that Meituan (3690 HK) is restructuring its ride-hailing services business to cut down costs as top line growth is slowing down.
- Meituan launched ride-hailing services as a stand-alone app in 2017, it was merged into Meituan Super App in 2019. Relaunched as a stand-alone app in 2021 following Didi’s app removal.
- Meituan has increased its headcount to compete with Douyin while has started hiring riders to launch services in Hong Kong which would likely to further drag down margins.
JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy
- Total revenue increased by 41% YoY and revenue from external customers increased by 69% YoY in 4Q22.
- We believe total revenue will grow by 26% in 2023 and 17% in 2024.
- We also believe the stock has an upside of 58% and a price target of HK$20.
Fuji Oil: Probably The Last Chance For Itochu to Scoop Up Fuji Oil at a Bargain
- Having conducted several acquisitions and reinvested most of the operating cashflows into building its overseas business base, Fuji Oil Holdings (2607 JP) seems ready to unleash its earnings potential.
- There could be more than a 100% upside to Fuji Oil shares if ROE returns to the historical median of 9% in the next few years.
- Therefore, if Itochu Corp (8001 JP) has plans to takeover Fuji-Oil, the current price and the position in the business-cycle present the best opportunity to buy-out Fuji-Oil at a bargain.
Shenzhen Mindray Bio-Medical Electronics (300760.CH) – Shareholders’ Stock Selling and the Outlook
- Several original shareholders reduced their holdings of Mindray, which indicates that the senior executives and major shareholders aren’t optimistic about Mindray’s outlook, putting the Company’s long-term growth under scrutiny.
- Mindray’s performance in overseas markets could be under pressure, which is an uncertain factor to drag down this year’s performance growth. Supply chain issue would hinder Mindray’s breakthrough in high-end fields.
- Performance slowdown could continue if without breakthroughs in new growth points or internationalization. Our forecast on 2023 growth is about 15%-18%. Mindray’s valuation may fall back to 30-35 PE TTM.
Monotaro (3064) | Pricing in Downside Risks
- We reassess our long-term financial model for Monotaro following 2 consecutive months of weak monthly data
- Just two months into the new fiscal year, but YTD sales growth of 13% is far short of the full year target
- Our DCF valuation highlights further 21% downside assuming 10y CAGR of 10.5%
Ricegrowers Limited (SunRice) – H1 FY23 Highlights Relative Freight Opportunity
- We have compiled a summary of the results and outlook statements for our assessed peers of Ricegrowers Limited, trading as SunRice (ASX:SGLLV), with a particular focus on trading conditions, product pricing, freight costs, outlook statements and consensus earnings changes.
- The overwhelming summary of trading conditions over CY22 was ‘challenging’ outside of Treasury Wine Estates (ASX:TWE) and Ridley Corporation (ASX:RIC).
- The overwhelming outlook commentary assumes normalising weather conditions, price increases recouping cost inflation, lower freight costs, improved labour availability and higher earnings.
REIT Watch – Hospitality S-REITs’ DPU rebound 32% in 2022
- Of the 30 S-REITs which have declared full year 2022 distributions, median change in distribution per unit (DPU) increased marginally by 0.2 per cent year-on-year (y-o-y).
- The five trusts with the highest y-o-y DPU increments for FY22 are: ARA US Hospitality Trust (760 per cent), Paragon REIT (34 per cent), CDL Hospitality Trusts (32 per cent), CapitaLand Ascott Trust (31 per cent) and Far East Hospitality Trust (24 per cent).
- CDL Hospitality Trusts (CDLHT) declared a DPS of 5.63 Singapore cents for FY22, up 31.9 per cent y-o-y.
Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential
- Lutronic Corp (085370 KS) recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business, which contributed 88% of revenue and grew 62% YoY.
- Overall, business has recovered with the reopening of the dermatology clinics and resumption of elective procedures globally. In addition to product sales, sales of consumables and services are steadily increasing.
- Despite stellar performance in 2022, ongoing lawsuit against U.S.-based competitor remains an overhang on Lutronic’s overseas growth aspirations, especially in the U.S.
Impressive Progress on Multiple Fronts to End the Year
- WWR provided an investor update for 4Q22 and FY22 results, which included a full-year net loss of $11.1 million, compared with a $16.1 million loss in 2021, driven by lower product development costs, partially offset by higher general and administrative costs, as the company continues to add to its team.
- For the year, WWR spent $52.8 million in capex on Phase I of its Kellyton, AL graphite plant and has $75 million in cash remaining on its balance sheet as of the end of 2022, with no debt.
- Agreement with Tier I battery OEM. WWR has entered into an agreement with a Tier I EV battery manufacturer that can result in a finalized offtake agreement for potentially all graphite anode material from the plant.
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