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

Equity Bottom-Up

<ul>
<li>In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.</li>
<li>We prepared high beta and low risk recommendations for 2024</li>
<li>For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.</li>
</ul>


In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.
We prepared high beta and low risk recommendations for 2024
For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.


[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>YSB would be added to KraneShares CSI China Internet ETF.Cornerstone investors could opt to cash out directly,taking advantage of improved liquidity, which means even they’re not optimistic about YSB's prospects.</li>
<li>YSB's profit margin is disappointing. It would be hard for YSB to deliver decent profits in the end. This business does not make money. YSB is also short of money.</li>
<li>Since going public, YSB's share price has been on a rollercoaster, which has deviated from the fundamentals, but it should be pointed out eventually stock prices will return to fundamentals.</li>
</ul>


YSB would be added to KraneShares CSI China Internet ETF.Cornerstone investors could opt to cash out directly,taking advantage of improved liquidity, which means even they’re not optimistic about YSB's prospects.
YSB's profit margin is disappointing. It would be hard for YSB to deliver decent profits in the end. This business does not make money. YSB is also short of money.
Since going public, YSB's share price has been on a rollercoaster, which has deviated from the fundamentals, but it should be pointed out eventually stock prices will return to fundamentals.


YSB (9885.HK) - Being Included in ETF Offers a Great Escape Opportunity

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 November 24th.</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 highlight flows for Xpeng, Tencent, Meituan and Li Auto.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of November 24th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Xpeng, Tencent, Meituan and Li Auto.


Hong Kong Connect Flows (Nov 24th): Xpeng, Tencent, Meituan, Li Auto

JD Health International  / Equity Bottom-Up

<ul>
<li>JD Health's 23Q3 results were below expectations. Due to the high base of 22H2 (especially 22Q4), revenue growth could become negative in 23Q4, thus dragging down 2023 full year growth.</li>
<li>Considering the high base in 23H1, performance pressure could continue until 24H1. JD Health’s past high growth will be gone. Investors may need to get used to the lower-than-expected growth.</li>
<li>Share price of JD Health is now in the bottom range. Current valuation is attractive. Despite the performance headwind, P/S is expected to return to about 3 to 4.</li>
</ul>


JD Health's 23Q3 results were below expectations. Due to the high base of 22H2 (especially 22Q4), revenue growth could become negative in 23Q4, thus dragging down 2023 full year growth.
Considering the high base in 23H1, performance pressure could continue until 24H1. JD Health’s past high growth will be gone. Investors may need to get used to the lower-than-expected growth.
Share price of JD Health is now in the bottom range. Current valuation is attractive. Despite the performance headwind, P/S is expected to return to about 3 to 4.


JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

<ul>
<li>JDH reported C3Q23 top line and non-IFRS operating profit that are 39% and 34% of our C2H23 estimates. We cut C2H23 top line, non-IFRS operating profit and IFRS net income.</li>
<li>We keep 2024 top line unchanged but cut non-IFRS operating profit by 31% as we believe JDH might need to invest to explore new growth opportunities;</li>
<li>We cut TP from US$65 to US$52 but maintain BUY.</li>
</ul>


JDH reported C3Q23 top line and non-IFRS operating profit that are 39% and 34% of our C2H23 estimates. We cut C2H23 top line, non-IFRS operating profit and IFRS net income.
We keep 2024 top line unchanged but cut non-IFRS operating profit by 31% as we believe JDH might need to invest to explore new growth opportunities;
We cut TP from US$65 to US$52 but maintain BUY.


[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

Blue Lotus Research Institute

YSB (9885.HK) - Being Included in ETF Offers a Great Escape Opportunity

YSB's being added to KWEB offers a golden opportunity for cornerstone investors to cash out. If these people choose to escape, it's time to...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Nov 24th): Xpeng, Tencent, Meituan, Li Auto

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Xpeng, Tencent, Meituan, Li Auto.

Ke Yan, CFA, FRM

JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

JD Health's 23H2 results won't be satisfactory, dragging down full year growth, which may not recover until 24H2. But stock price has priced in...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

​China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

Blue Lotus Research Institute

YSB (9885.HK) - Being Included in ETF Offers a Great Escape Opportunity

YSB's being added to KWEB offers a golden opportunity for cornerstone investors to cash out. If these people choose to escape, it's time to...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Nov 24th): Xpeng, Tencent, Meituan, Li Auto

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Xpeng, Tencent, Meituan, Li Auto.

Ke Yan, CFA, FRM

JD Health (6618.HK) 23Q3 - Performance Decline Is Inevitable, but There Is Upside Room for Valuation

JD Health's 23H2 results won't be satisfactory, dragging down full year growth, which may not recover until 24H2. But stock price has priced in...

Xinyao (Criss) Wang

[JD Health (6618 HK, BUY, TP HK$52) TP Change]: A COVID Hiccup but Environment Is Turning Positive

​JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...

Blue Lotus Research Institute

China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

JDH reported lower-than-expected Q3 results, leading to reductions in profit estimates and target price, but we maintain a buy rating due to...