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

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Shanghai Chicmax Cosmetic / Equity Capital Markets

<ul>
<li>According to the PHIP, Chicmax’s performance growth showed a downward trend. Due to consumption downgrade and weak economic situation, the Company's short-term performance could continue to be under pressure.</li>
<li>If the top three brands fail to performance well, Chicmax has no other blockbuster brands to make up for it afterwards. We have concerns on Chicmax’s competitiveness in the industry.</li>
<li>If the total retail sales of consumer goods don’t maintain well, the probability of endogenous growth problems is high, which would finally be reflected in the decline of share price.</li>
</ul>


According to the PHIP, Chicmax’s performance growth showed a downward trend. Due to consumption downgrade and weak economic situation, the Company's short-term performance could continue to be under pressure.
If the top three brands fail to performance well, Chicmax has no other blockbuster brands to make up for it afterwards. We have concerns on Chicmax’s competitiveness in the industry.
If the total retail sales of consumer goods don’t maintain well, the probability of endogenous growth problems is high, which would finally be reflected in the decline of share price.


Pre-IPO Shanghai Chicmax Cosmetic - PHIP Updates: Declining Performance and Challenging Outlook

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.

<ul><li>3Q wrapped up with 2 beats, 2 in-lines and 2 misses. We revised our 2022E earnings forecasts by -1 to -23%, and that put us roughly 5-25% below consensus.</li><li>In our view, risks are still skewed to the downside, barring any sporadic lockdowns.</li><li>When policy rhetoric is not turning, we again see grounds on the enforcement of “stay put for the holiday” for the coming CNY holiday.</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>

3Q wrapped up with 2 beats, 2 in-lines and 2 misses. We revised our 2022E earnings forecasts by -1 to -23%, and that put us roughly 5-25% below consensus.In our view, risks are still skewed to the downside, barring any sporadic lockdowns.When policy rhetoric is not turning, we again see grounds on the enforcement of “stay put for the holiday” for the coming CNY holiday.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 Consumer – Lacklustre 4Q22E Outlook Despite Any Short-Lived Rally; Top Buy CRB/ Proya/ CTGDF

Equity Bottom-Up

Shanghai Jahwa United Co A / Equity Bottom-Up

<div><div><div><div><ul><li>3Q results largely in line, with revenue and net profits standing at RMB1.6bn (+1.2% YoY) and RMB156mn (+15.5% YoY).</li><li>Consider a 4% YoY domestic revenue growth, total revenue increased by 3.5% YoY at constant exchange rate.</li><li>The growth (vs a 23.8% decline for 2Q) was much underpinned by a 30% YoY growth in HPC revenue, which mitigated a 15%/ 5% decline in skincare/ Babycare revenue. </li></ul></div></div></div></div><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>

3Q results largely in line, with revenue and net profits standing at RMB1.6bn (+1.2% YoY) and RMB156mn (+15.5% YoY).Consider a 4% YoY domestic revenue growth, total revenue increased by 3.5% YoY at constant exchange rate.The growth (vs a 23.8% decline for 2Q) was much underpinned by a 30% YoY growth in HPC revenue, which mitigated a 15%/ 5% decline in skincare/ Babycare revenue. 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.

Shanghai Jahwa (600315 CH) – 3Q Largely In-Line

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a> has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.</li>
<li>We previously discussed the IPO in <em><strong><a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:81963" rel="noopener">Giant Biogene IPO: The Bull Case</a>, <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:82037" rel="noopener">Giant Biogene IPO: The Bear Case</a></strong></em> and<em><strong><a href="https://www.smartkarma.com/insights/giant-biogene-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:82648" rel="noopener">Giant Biogene IPO: Valuation First Look</a></strong></em>.</li>
<li>The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. </li>
</ul>



Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. 


China

Shanghai Jahwa United Co., Ltd. develops, manufactures and wholesales skin care and hair care products, cosmetics, perfumes, detergents, and other household chemical products.  The Company also provides technical and food services.

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Shanghai Jahwa United Co A (600315 CH)

[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

Pre-IPO Shanghai Chicmax Cosmetic - PHIP Updates: Declining Performance and Challenging Outlook

Chicmax’s performance showed a downward trend in 22H1 and could continue to be under pressure due to consumption downgrade. We've concerns on...

Xinyao (Criss) Wang

China Consumer – Lacklustre 4Q22E Outlook Despite Any Short-Lived Rally; Top Buy CRB/ Proya/ CTGDF

3Q wrapped up with 2 beats, 2 in-lines and 2 misses. We revised our 2022E earnings forecasts by -1 to -23%, and that put us roughly 5-25% below...

CMB International

Shanghai Jahwa (600315 CH) – 3Q Largely In-Line

The growth (vs a 23.8% decline for 2Q) was much underpinned by a 30% YoY growth in HPC revenue, which mitigated a 15%/ 5% decline in skincare/...

CMB International

Giant Biogene IPO: Valuation Insights

The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price...

Arun George

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