Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Thematic (Sector/Industry)

<ul>
<li>Chinese outbound air travel in the region surged in March, up 50%+ versus February</li>
<li>Domestic improvement more muted, but still up about 75% Y/Y in Q123</li>
<li>Is the expected recovery on track? Sure, but so far no upside surprises for investors</li>
</ul>


Chinese outbound air travel in the region surged in March, up 50%+ versus February
Domestic improvement more muted, but still up about 75% Y/Y in Q123
Is the expected recovery on track? Sure, but so far no upside surprises for investors


Chinese Outbound Tourism Recovery Accelerates, But Still a Fraction of Pre-Covid Level

China/Asia TMT

Shawn Yang

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

Equity Bottom-Up

Atour Lifestyle Holdings / Equity Bottom-Up

<ul>
<li>Atour reported its 4Q22 revenue/non-GAAP operating profit/non-GAAP net income 8.0%/78.3%/114.6% higher than our estimate. </li>
<li>We adjust Atour’s hotel expansion estimate from 2.4k to 1.9k until 2025 due to its low appetite in expanding midscale segment.</li>
<li>We raise our 2023 earnings estimate due to better operating efficiency, but trimmed its hotel network expanding pace in 2023-2025, leading to TP cut by US$2.5 to US$34.</li>
</ul>


Atour reported its 4Q22 revenue/non-GAAP operating profit/non-GAAP net income 8.0%/78.3%/114.6% higher than our estimate. 
We adjust Atour’s hotel expansion estimate from 2.4k to 1.9k until 2025 due to its low appetite in expanding midscale segment.
We raise our 2023 earnings estimate due to better operating efficiency, but trimmed its hotel network expanding pace in 2023-2025, leading to TP cut by US$2.5 to US$34.


[Atour Lifestyle (ATAT US, BUY, TP US$34) Target Price Change]: A Steady Expanding Year in 2023

<ul>
<li>Baba: Baba management holds a call with investors to explain recent movements. </li>
<li>700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）</li>
<li>ATAT：Accor formed alliance with Douyin to further explore independent growth (+)</li>
</ul>


Baba: Baba management holds a call with investors to explain recent movements. 
700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）
ATAT：Accor formed alliance with Douyin to further explore independent growth (+)


China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

<ul>
<li>Baba： Alibaba is to establish 6 business units and could pursue independent listings（+）</li>
<li>BIDU： Baidu release large-scale model "Wen Xin Qian Fan” for enterprise（+）</li>
<li>ATAT： Atour Lifestyle: Huazhu reported 4Q22 financial results and operating performance（+）； Accor striking on its own following departure from Huazhu and Jinjiang, opening new possiblities for collaboration（+）</li>
</ul>


Baba： Alibaba is to establish 6 business units and could pursue independent listings（+）
BIDU： Baidu release large-scale model "Wen Xin Qian Fan” for enterprise（+）
ATAT： Atour Lifestyle: Huazhu reported 4Q22 financial results and operating performance（+）； Accor striking on its own following departure from Huazhu and Jinjiang, opening new possiblities for collaboration（+）


China TMT Update (Mar.29): Baba/BIDU/ATAT: Alibaba Is to Establish 6 Business Units

<ul>
<li>Even though we are long-term optimistic on the rise of Chinese consumer brands, we believe short-term optimism is misplaced. </li>
<li>Two themes: (1) structural changes led by China’s transition to an older and more affluent society, (2) substitution and globalization that can break the ceiling for valuation;</li>
<li>Our TOP PICKS are Li Auto, Atour, Luckin, FUTU, BEKE and Miniso</li>
</ul>


Even though we are long-term optimistic on the rise of Chinese consumer brands, we believe short-term optimism is misplaced. 
Two themes: (1) structural changes led by China’s transition to an older and more affluent society, (2) substitution and globalization that can break the ceiling for valuation;
Our TOP PICKS are Li Auto, Atour, Luckin, FUTU, BEKE and Miniso


[Consumer Brands Deep Dive]:Structural and Substitution Drive Chinese Consumer

China

Xinhu Zhongbao Co., Ltd. provides development and sale of residential properties.  The Company operates in import and export trading, hotel management, and construction materials manufacturing.

Chengdu Hi-tech Development Co., Ltd. develops and sells real estate properties.  The Company also designs and produces kitchen cabinets, produces pharmaceuticals, and develops taxation software.

Chengdu Hi Tech Development Co Ltd. (000628 CH)

Greentown China Holdings Ltd. develops real estate.  The Company builds residential villas, low-rise apartment buildings, and high-rise apartment buildings for middle and high-income people.

Shanghai Chinafortune Co Ltd manufactures and markets electrical products and instruments, including electric meters, printed circuit boards, and electric motors. The Company, through its subsidiaries, also operates in network engineering, taxi services, import/export trading, and property management.

Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. operates in land development, property management, and infrastructure facilities construction within the Lujiazui Finance and Trade Zone.  The Company also undertakes building and renovation projects.

Shanghai Lujiazui Finance & Trade Zone (600663 CH)

Gemdale Corporation develops residential buildings and operates in property rental and management. The Company also invests in commercial trading businesses.

China Overseas Property Holdings Limited operates as a property management firm. The Company manages residential communities, commercial properties and government properties in Hong Kong and Macau.

Country Garden Services Holdings Company Limited provides real estate development services. The Company develops residential apartments, multi-functional complex buildings, government and public facilities, industrial parks, highway service stations, and schools. Country Garden Services Holdings serves clients in China.

Poly Property Services Co., Ltd. provides property services. The Company offers property management, property projects pre-consultation, post-delivery evaluation and analysis, professional equipment and facilities maintenance, housekeeping, and other services. Poly Property Services provides services in China.

Hainan Haide Industry Co., Ltd. develops residential properties and operates a hotel.

Asset World Corp Public Company Limited focuses on real estate development and investment services. The Company offers property management. Asset World Corp serves customers in Thailand.

WHA Corp PCL is a built-to-suit distribution center and factory developer in Thailand.

Land and Houses Public Company Limited develops real estate projects including single-detached homes, townhouses, and condominiums. The Company builds single and attached homes, primarily on land that it develops and improves. Land and Houses also operates its own architectural, engineering, design and construction teams for customer's specific designs and orders.

Japan Prime Realty Investment Corporation is a real estate investment trust (REIT) which mainly invests in office buildings and commercial-use facilities nationwide.

Retail Opportunity Investments Corp. is a fully integrated and self-managed real estate investment trust ("REIT").  The Company specializes in the acquisition, ownership and management of necessity-based community, and neighborhood shopping centers in the western and eastern regions of the United States anchored by national and regional supermarkets and drugstores.

Retail Opportunity Investments Corp. (ROIC US)

Industrial & Infrastructure Fund Investment Corporation is a a real estate investment trust (REIT). The Company invests in real estate properties such as facilities for industry and infrastructure institution.

Industrial & Infrastructure Fund Investment (3249 JP)

Industrial & Infrastructure Fund Investment

Nippon Accommodations Fund Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company invests in residential buildings.

SPH REIT is a Singapore-based REIT established principally to invest, directly or indirectly, in a portfolio of income-producing real estate which is used primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

Equity Commonwealth is a real estate investment trust, or REIT. The Company primarily owns office buildings located in Central Business District and suburban areas of major metropolitan markets in the United States, and has a large concentration of properties leased to the U.S. Government and medical related tenants. Equity CommonWealth also owns industrial lands in Hawaii.

Getty Realty Corporation owns and leases properties in the Northeastern and Middle Atlantic states. These properties, consisting of service stations, convenience stores and petroleum marketing terminals are leased to Getty Petroleum Marketing Inc. Getty Realty Holding is also a marketer of heating oil in Pennsylvania and Maryland.

Atour Lifestyle Holdings Limited operates as a holding company. The Company, through its subsidiaries, owns and manages midscale hotel chain through offline and online channels, including mobile application and weixin-wechat mini program. Atour Lifestyle Holdings serves customers in China.

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Atour Lifestyle Holdings (ATAT US)

Chinese Outbound Tourism Recovery Accelerates, But Still a Fraction of Pre-Covid Level

Chinese tourism activity accelerated last month (particularly outbound travel), but it remains at a fraction of pre-Covid levels -- we see no...

Tracking Traffic

[Atour Lifestyle (ATAT US, BUY, TP US$34) Target Price Change]: A Steady Expanding Year in 2023

We maintain the BUY rating, we raise our 2023 earnings estimate due to better operating efficiency, but trimmed its hotel network expanding pace in...

Blue Lotus Research Institute

China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

700HK/1024HK/BILI/BIDU：Wechat Open Class is held; ATAT：Accor formed alliance with Douyin to further explore independent growth in China ; key...

Blue Lotus Research Institute

China TMT Update (Mar.29): Baba/BIDU/ATAT: Alibaba Is to Establish 6 Business Units

Alibaba is to establish 6 business units and could pursue independent listings; BIDU： Baidu release large-scale model "Wen Xin Qian Fan” for...

Blue Lotus Research Institute

[Consumer Brands Deep Dive]:Structural and Substitution Drive Chinese Consumer

Chinese underconsumption is only half true. It only occurs in categories associated with development stages; Our TOP PICKS are Li Auto, Atour,...

Blue Lotus Research Institute

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