Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

Haidilao International Holding / Equity Bottom-Up

<ul>
<li>Positive profit alerts from both Jiumaojiu and Haidilao reflect strong gain in operating efficiency but also point to looming growth deceleration as brands mature.</li>
<li>We see valuation more reasonable due to a combination of sector de-rating in 1H23 and higher visibility into earnings recovery post these profit alerts.</li>
<li>Yum China remains best long-term play in China catering sector in our view. While both Haidilao and Xiabuxiabu present trading opportunity, we are still cautious about Jiumaojiu.</li>
</ul>


Positive profit alerts from both Jiumaojiu and Haidilao reflect strong gain in operating efficiency but also point to looming growth deceleration as brands mature.
We see valuation more reasonable due to a combination of sector de-rating in 1H23 and higher visibility into earnings recovery post these profit alerts.
Yum China remains best long-term play in China catering sector in our view. While both Haidilao and Xiabuxiabu present trading opportunity, we are still cautious about Jiumaojiu.


China Catering Sector: Positioning for Interim Results

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was massive in 1H23E.</li><li>After a disappointing 2Q23 plus worrying macro outlook, we downgrade the sector to MARKET-PERFORM as we see more downside in earnings.</li><li>However, as valuation turned more attractive, we can start to accumulate industry leaders. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was massive in 1H23E.After a disappointing 2Q23 plus worrying macro outlook, we downgrade the sector to MARKET-PERFORM as we see more downside in earnings.However, as valuation turned more attractive, we can start to accumulate industry leaders. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Catering Sector – Staying cautious after a disappointing 2Q23E

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 21st.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the inflows to be USD 2.1billion and highlight flows for Tencent, Hsbc.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 21st.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the inflows to be USD 2.1billion and highlight flows for Tencent, Hsbc.


Hong Kong Connect Flows (Jul 21st): Tencent, HSBC

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Jul 7th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight changes of short interests in ABC, ICBC, Li Ning.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Jul 7th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight changes of short interests in ABC, ICBC, Li Ning.


HK Short Interest Weekly: ABC, ICBC, Li Ning

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 16th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the inflows to be USD 1.5bn and highlight flows for CCB.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 16th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the inflows to be USD 1.5bn and highlight flows for CCB.


China

Haidilao International Holding Ltd. operates Chinese cuisine restaurant brand focusing on hot pot cuisine. The Company provides hot pots, soup bases, dipping sauces, drinks, prepared food, and other products. Haidilao International Holding opens restaurants in Taiwan, Hong Kong, Singapore, South Korea, Japan, and the United States.

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Haidilao International Holding (6862 HK)

China Catering Sector: Positioning for Interim Results

Positive profit alerts from both Jiumaojiu and Haidilao highlights both efficiency improvement and growth concerns. We discuss our thoughts about...

Eric Chen

China Catering Sector – Staying cautious after a disappointing 2Q23E

Numbers for catering sector did rebound strongly YoY, but since SSS/ table turnover recovery rate were not as good as expected, de-rating was...

CMB International

Hong Kong Connect Flows (Jul 21st): Tencent, HSBC

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Tencent Holdings Limited and, HSBC.

Ke Yan, CFA, FRM

HK Short Interest Weekly: ABC, ICBC, Li Ning

We analyzed the latest HK SFC report for aggregate short position as of Jul 7th and highlight short interest changes in ABC, ICBC, Li Ning.

Ke Yan, CFA, FRM

Hong Kong Connect Flows (Jun 16th): CCB

We analyzed the Hong Kong Connect Scheme for last week. We estimate the inflows to be USD 1.5bn and highlight flows for China Construction Bank.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)