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>Remarkable recovery vs 4Q22, improving spending power and excellent sustainability.</li><li>We believe the data points during the 2023 Chinese New Year are better than our expectation and meaningfully encouraging for the consumer sector, because: 1) the base was high in 2022, as the number of COVID-19 cases were very limited during Jan-Feb 2022 and the number of passenger journeys already grew by 31% YoY</li><li>2) the improvement is significant vs 4Q22, supported by the 89%/ 73% recovery rate of domestic tourism volume/ spending during this CNY, better than 61%/ 44% in the 10-1 holidays and any level in the entire 2022 year,</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>

Remarkable recovery vs 4Q22, improving spending power and excellent sustainability.We believe the data points during the 2023 Chinese New Year are better than our expectation and meaningfully encouraging for the consumer sector, because: 1) the base was high in 2022, as the number of COVID-19 cases were very limited during Jan-Feb 2022 and the number of passenger journeys already grew by 31% YoY2) the improvement is significant vs 4Q22, supported by the 89%/ 73% recovery rate of domestic tourism volume/ spending during this CNY, better than 61%/ 44% in the 10-1 holidays and any level in the entire 2022 year,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 Sector – Strong recovery and sustainability during CNY

Equity Bottom-Up

<ul><li>We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year.</li><li>Moreover, we do find FY23E guidance encouraging, hence we maintain BUY and revise up our TP to HK$11.52, based on a 21x FY23E P/E (which is 1 s.d. higher than the 5 years average of 15x, up from 19x given the turnaround) and its valuation is not too demanding at 17x FY23E P/E.</li><li>After the improvement in Dec 2022, a HSD drop vs mid-teen decline in Nov 2022, retail sales growth had further accelerated to 20%+ during the first 10 days of 2023 CNY season (vs same season last year), and the retail discounts also improved to just 25% to 30% off (about 1-2ppt better than last year).</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>

We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year.Moreover, we do find FY23E guidance encouraging, hence we maintain BUY and revise up our TP to HK$11.52, based on a 21x FY23E P/E (which is 1 s.d. higher than the 5 years average of 15x, up from 19x given the turnaround) and its valuation is not too demanding at 17x FY23E P/E.After the improvement in Dec 2022, a HSD drop vs mid-teen decline in Nov 2022, retail sales growth had further accelerated to 20%+ during the first 10 days of 2023 CNY season (vs same season last year), and the retail discounts also improved to just 25% to 30% off (about 1-2ppt better than last year).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.

Xtep (1368 HK) – Speedy recovery in CNY and robust guidance

<ul><li>Resilient online sales growth during double 11, where Tik Tok, PDD and JD platforms continued to outperform.</li><li>Based on our channel check and CMBI est., the online GMV growth during 2022’s double 11 was at ~14% YoY, inline with CMBI est. and beat market expectation, similar to online sales growth in Sep 2022 and had picked up vs Oct 2022.</li><li>In terms of platforms, YoY growth for Alibaba (Tmall + Tao Bao)/ JD/ PDD/ TikTok increased by ~flattish/ ~teens/ 27%/ 38%.</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>

Resilient online sales growth during double 11, where Tik Tok, PDD and JD platforms continued to outperform.Based on our channel check and CMBI est., the online GMV growth during 2022’s double 11 was at ~14% YoY, inline with CMBI est. and beat market expectation, similar to online sales growth in Sep 2022 and had picked up vs Oct 2022.In terms of platforms, YoY growth for Alibaba (Tmall + Tao Bao)/ JD/ PDD/ TikTok increased by ~flattish/ ~teens/ 27%/ 38%.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 Sportswear Sector – Sequential improvements during double 11

<ul><li>Xtep has become more cautious about 4Q22E and FY23E, due to weaken <span style="font-size: var(--content-font-size);">demand and mounting pressure on its inventory. </span></li><li><span style="font-size: var(--content-font-size);">But we maintain BUY and revise </span><span style="font-size: var(--content-font-size);">down its TP to HK$10.52, implying a 19x FY23E P/E (from SOTP valuation </span><span style="font-size: var(--content-font-size);">method), just because its valuation is not too demanding, at 15x FY23E P/E.</span></li><li><div><div><div><p>3Q22 was roughly inline, but slightly softened in Sep 2022.</p></div></div></div></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>

Xtep has become more cautious about 4Q22E and FY23E, due to weaken demand and mounting pressure on its inventory. But we maintain BUY and revise down its TP to HK$10.52, implying a 19x FY23E P/E (from SOTP valuation method), just because its valuation is not too demanding, at 15x FY23E P/E.3Q22 was roughly inline, but slightly softened in Sep 2022.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.

Xtep (1368 HK) – Guidance softens with mounting inventory risks

<div><ul><li>Xtep roughly maintained its FY22E guidance, which consists of faster sales growth but a slightly higher opex for Xtep kids’ brand building.</li><li>Due to likely turnaround, its industry leading growth and attractive valuation (21x), we maintain <span style="font-size: var(--content-font-size);">BUY and kept our SOTP-based TP at HK$17.04, implying ~27x FY23E P/E.</span></li><li><div><div><div><p><strong>1H22E result roughly inline</strong>. Sales increased by 37% YoY to RMB 5.68bn, 2% above CMBI est., still strong after some trade fair order cuts for its distributors in North East China.</p></div></div></div></li></ul></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>

Xtep roughly maintained its FY22E guidance, which consists of faster sales growth but a slightly higher opex for Xtep kids’ brand building.Due to likely turnaround, its industry leading growth and attractive valuation (21x), we maintain BUY and kept our SOTP-based TP at HK$17.04, implying ~27x FY23E P/E.1H22E result roughly inline. Sales increased by 37% YoY to RMB 5.68bn, 2% above CMBI est., still strong after some trade fair order cuts for its distributors in North East China.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.

Xtep (1368 HK) – Inventory Not a Worry and Guidance Maintained

China

Xtep International Holdings Ltd. designs, manufactures, and markets sportwear. The Company produces footwear, apparel, and accessories.

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Xtep International (1368 HK)

China Consumer Sector – Strong recovery and sustainability during CNY

We believe the data points during the 2023 Chinese New Year are better than our expectation and meaningfully encouraging for the consumer sector

CMB International

Xtep (1368 HK) – Speedy recovery in CNY and robust guidance

We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year. Moreover, we do find FY23E guidance...

CMB International

China Sportswear Sector – Sequential improvements during double 11

Based on our channel check and CMBI est., the online GMV growth during 2022’s double 11 was at ~14% YoY, inline with CMBI est. and beat market...

CMB International

Xtep (1368 HK) – Guidance softens with mounting inventory risks

But we maintain BUY and revise down its TP to HK$10.52, implying a 19x FY23E P/E (from SOTP valuation method), just because its valuation is not...

CMB International

Xtep (1368 HK) – Inventory Not a Worry and Guidance Maintained

Xtep roughly maintained its FY22E guidance, which consists of faster sales growth but a slightly higher opex for Xtep kids’ brand building.

CMB International

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