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

Thematic (Sector/Industry)

<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

Equity Bottom-Up

Atour Lifestyle Holdings / Equity Bottom-Up

<ul>
<li>The strong travel demand in Jan. and Feb. had pushed up the industry-wide ADR nearing the 2019 level due the temporary hotel shortage, Atour especially benefited from the trend . </li>
<li>Except the positive industry trend, we think the releasing of requisitioned hotels and the expansion of Atour Light are the near-term catalyst for Atour. </li>
<li>We maintain the BUY rating and raise TP by US$1.5 to US$36.5</li>
</ul>


The strong travel demand in Jan. and Feb. had pushed up the industry-wide ADR nearing the 2019 level due the temporary hotel shortage, Atour especially benefited from the trend . 
Except the positive industry trend, we think the releasing of requisitioned hotels and the expansion of Atour Light are the near-term catalyst for Atour. 
We maintain the BUY rating and raise TP by US$1.5 to US$36.5


[Atour Lifestyle (ATAT US) Target Price Change]: Strong Recovery Bodes Well for 1Q23

<ul>
<li>(2821.SZ/6821.HK)/(1177.HK/SBHMY): F-Star cleared CFIUS investigation, suggesting US criteria on China investments (+) </li>
<li>ATAT: Corporate travel demand recover quickly in hotel sector (+)</li>
<li>BILI/1024.HK/Douyin: People's Daily criticizes vulgar internet slangs rampant in short videos. (-/-/-)</li>
</ul>


(2821.SZ/6821.HK)/(1177.HK/SBHMY): F-Star cleared CFIUS investigation, suggesting US criteria on China investments (+) 
ATAT: Corporate travel demand recover quickly in hotel sector (+)
BILI/1024.HK/Douyin: People's Daily criticizes vulgar internet slangs rampant in short videos. (-/-/-)


China TMT Update(Mar.9):ATAT /BILI/1024.HK/Douyin/(2821.SZ/6821.HK)/(1177.HK/SBHMY)

<ul>
<li>Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to stimulate hotel demands in 2023. </li>
<li>We expect Atour to report its 4Q22 revenue at RMB580mn and OPM at 8.2%, both in-line with consensus. We expect a strong revenue growth at 60% YoY in 2023.</li>
<li>We rate the stock as BUY and maintain the TP at US$35.</li>
</ul>


Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to stimulate hotel demands in 2023. 
We expect Atour to report its 4Q22 revenue at RMB580mn and OPM at 8.2%, both in-line with consensus. We expect a strong revenue growth at 60% YoY in 2023.
We rate the stock as BUY and maintain the TP at US$35.


Atour (ATAT.US) Preview: Expecting Weak 4Q22 and Strong 2023

<ul>
<li>We believe Atour’s near-term goal is to build a national hospitality group. We expect Atour’s network to expand to 2,500+ in 2025 from the current 900+.</li>
<li>The time window for chain hotel’s expansion is still open in China. Mobile-Internet-enabled business model changes will usher in new challengers like Atour to the industry’s Big Three.</li>
<li>We initiate Atour (ATAT US) with a BUY rating and target price of US$35 per ADS to ride on its first phase of network expansion.</li>
</ul>


We believe Atour’s near-term goal is to build a national hospitality group. We expect Atour’s network to expand to 2,500+ in 2025 from the current 900+.
The time window for chain hotel’s expansion is still open in China. Mobile-Internet-enabled business model changes will usher in new challengers like Atour to the industry’s Big Three.
We initiate Atour (ATAT US) with a BUY rating and target price of US$35 per ADS to ride on its first phase of network expansion.


Atour(ATAT.US) Initiation: Buy for First-Stage Single-Brand Network Expansion

China

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)

[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

[Atour Lifestyle (ATAT US) Target Price Change]: Strong Recovery Bodes Well for 1Q23

The strong travel demand in Jan. and Feb. had pushed up the industry-wide ADR nearing the 2019 level due the temporary hotel shortage, Atour...

Blue Lotus Research Institute

China TMT Update(Mar.9):ATAT /BILI/1024.HK/Douyin/(2821.SZ/6821.HK)/(1177.HK/SBHMY)

BILI/1024.HK/Douyin: People's Daily criticizes vulgar internet slangs (-/-/-); ATAT: Corporate travel demand recover(+); (2821.SZ/6821.HK)/(1177.HK...

Blue Lotus Research Institute

Atour (ATAT.US) Preview: Expecting Weak 4Q22 and Strong 2023

Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to...

Blue Lotus Research Institute

Atour(ATAT.US) Initiation: Buy for First-Stage Single-Brand Network Expansion

We expect Atour’s network to expand to 2,500+ in 2025 from the current 900+. We initiate Atour (ATAT US) with a BUY rating and target price of...

Blue Lotus Research Institute

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