HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

AviChina Industry & Technology H / Equity Bottom-Up

AviChina Industry & Technology Co Ltd manufactures and sells aviation tools and aero-parts. The Company's main products include helicopters, regional aircrafts, trainers, general aircrafts, aero-parts and components and aero-electrical products.

AviChina Industry & Technology H (2357 HK)

<ul>
<li>Given its holdings in four A-share subsidiaries, <a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> will benefit from the surge in their share prices as mainland markets re-open.</li>
<li>These A-share all lagged benchmark Indices YTD. Avichina's holdings in them are already valued at 2.23x its own market capitalisation. </li>
<li>The historical discount range is 51-70% and currently stands at 55%, suggesting AviChina's share price has not yet excessively priced in the post-Golden Week rally.</li>
</ul>


Given its holdings in four A-share subsidiaries, AviChina Industry &amp; Technology H (2357 HK) will benefit from the surge in their share prices as mainland markets re-open.
These A-share all lagged benchmark Indices YTD. Avichina's holdings in them are already valued at 2.23x its own market capitalisation. 
The historical discount range is 51-70% and currently stands at 55%, suggesting AviChina's share price has not yet excessively priced in the post-Golden Week rally.


AviChina Industry (2357 HK): Excellent Exposure to A-Share Surge

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)</li>
<li>1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）</li>
<li>XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)</li>
</ul>


LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)
1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）
XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)


[Blue Lotus Daily]:LKNCY US/1810 HK/NIO US/XPEV US/1211 HK/MNSO US/3690 HK/981 HK/AAPL US/700 HK

MINISO Group Holding is a value retailer with a focus on offering products that are aesthetically pleasing, good-quality, and affordable.

<ul>
<li>Miniso report C4Q23 revenue in-line/7.9% vs. our estimate/consensus, non-GAAP NI is 5.1%/10.5% higher than our estimate/consensus on strong overseas sales from North and Latin Americas. </li>
<li>Company guided for soft operating margin thanks to robust new store openings, which we believe to be accretive to earnings in the long run</li>
<li>We maintain the stock as BUY and but cut TP by US$2 to US$31/ADS</li>
</ul>


Miniso report C4Q23 revenue in-line/7.9% vs. our estimate/consensus, non-GAAP NI is 5.1%/10.5% higher than our estimate/consensus on strong overseas sales from North and Latin Americas. 
Company guided for soft operating margin thanks to robust new store openings, which we believe to be accretive to earnings in the long run
We maintain the stock as BUY and but cut TP by US$2 to US$31/ADS


[Miniso Group (MNSO US, BUY, TP US$31) Target Price Change]: Near Term Story Is Still the Americas

<ul>
<li>We attended Miniso’s Investor Day on January 18-19 and came away positively. Management outlined growth strategy of fostering strong connection with Chinese supply chain to achieve fast turnaround of...</li>
<li>We expect MNSO to report C4Q23 revenue and non-GAAP NI at 2.9% and 4.0% higher than consensus mainly due to new store openings;</li>
<li>We maintain the stock as BUY and raise TP by US$2 to US$33/ADS to reflect our endorsement of the growth strategy.</li>
</ul>


We attended Miniso’s Investor Day on January 18-19 and came away positively. Management outlined growth strategy of fostering strong connection with Chinese supply chain to achieve fast turnaround of...
We expect MNSO to report C4Q23 revenue and non-GAAP NI at 2.9% and 4.0% higher than consensus mainly due to new store openings;
We maintain the stock as BUY and raise TP by US$2 to US$33/ADS to reflect our endorsement of the growth strategy.


[Miniso Group(MNSO US,BUY,TP US$33)TP Change]:Investor Day Called for Growth on Supply Chain and IP

<ul>
<li>China hotel supply shortage haven’t fully recovered from Covid, the total hotel volume is still 11% lower than pre-Covid level in 2023, we expect a full recovery in 2024.</li>
<li>Due to the continue of hotel supply shortage, we think hotel groups in China can still enjoy the premium pricing in the next 6-12 months.</li>
<li>We think Atour has better fundamentals than Huazhu/Jinjiang/BTG, in terms of 1) hotel room scale leverage; 2) RevPAR quality; 3) upper midscale class positioning and less burden in legacy brands.</li>
</ul>


China hotel supply shortage haven’t fully recovered from Covid, the total hotel volume is still 11% lower than pre-Covid level in 2023, we expect a full recovery in 2024.
Due to the continue of hotel supply shortage, we think hotel groups in China can still enjoy the premium pricing in the next 6-12 months.
We think Atour has better fundamentals than Huazhu/Jinjiang/BTG, in terms of 1) hotel room scale leverage; 2) RevPAR quality; 3) upper midscale class positioning and less burden in legacy brands.


[Blue Lotus Lodging Sector Update]: Dividend from Supply Shortage Can Continue into 2024

Opportunities and Impact of China's Reopening