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.

Equity Bottom-Up

<ul><li>2Q23 result was resilient, and both SSSG and margins are strong.</li><li>YUMC is still one of our sector top picks, as we think its margin and store expansion will remain strong and perhaps surprise the market.</li><li>Hence, we maintain BUY and fine-tuned TP to US$ 74.47, based on 27x FY24E P/E (unchanged).</li></ul>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.

2Q23 result was resilient, and both SSSG and margins are strong.YUMC is still one of our sector top picks, as we think its margin and store expansion will remain strong and perhaps surprise the market.Hence, we maintain BUY and fine-tuned TP to US$ 74.47, based on 27x FY24E P/E (unchanged).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.

Yum China (YUMC US) – Likely to Be Resilient and Outperform in 2H23E

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/guzman-y-gomez" target="_blank" data-smartkarma-citation="entities:43656:1" rel="noopener">Guzman Y Gomez</a> plans to raise around US$160m in its Australian IPO.</li>
<li>GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>



Guzman Y Gomez plans to raise around US$160m in its Australian IPO.
GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
In this note, we talk about the not-so-positive aspects of the deal.


Guzman Y Gomez IPO - The Negatives - Lawsuits and Management Churn

<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 (2367 HK)</a> aims to raise up to US$205m via a top-up placement.</li>
<li>We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>



Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement.
We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Giant Biogene Placement - Has Been Doing Well but Doesn’t Need the Cash

Analyst

Steve Zhou, CFA

<ul>
<li>China's catering industry has changed compared to pre-COVID19, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options due to weaker consumer sentiment. </li>
<li>Yum China's same-store-sales growth could be under pressure if the company cannot raise ASP easily like in previous years.  </li>
<li>Yum China's historical valuation should not be used as a benchmark, given that the growth profile has changed (new store openings reaching a plateau; sustained increased competition; lower ASP pressure). </li>
</ul>


China's catering industry has changed compared to pre-COVID19, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options due to weaker consumer sentiment. 
Yum China's same-store-sales growth could be under pressure if the company cannot raise ASP easily like in previous years.  
Yum China's historical valuation should not be used as a benchmark, given that the growth profile has changed (new store openings reaching a plateau; sustained increased competition; lower ASP pressure). 


Yum China (9987 HK/YUMC US):  Earnings And Derating Risks Not Priced In

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Haidilao International Holding / Equity Bottom-Up

In this insight, we discuss why we believe <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> at current prices has a higher downside risk versus upside potential given limited visibility of near term operational recovery and its premium valuation.<a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> had issued a profit warning that it is expected to record a decrease of approximately 90% in net profit for the year ended Dec 2020 versus the previous year; this implies a likely recovery in earnings in 2H2020 vs 1H2020 but not significant enough to match pre-COVID levels nor street estimates. Detailed results are expected this week on March 23rd.We believe <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>'s pace of sales recovery to be slower versus QSR peers (1) in the near term from ongoing restrictions in the social and dining scene, following cluster outbreaks, and (2) in the medium term from a shift in customer preference towards off-premise dining. Unlike QSR peer, <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> that managed to recover most of the COVID-led fall in dining demand by growing off-premise dining, we believe  <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> may find it difficult to pivot given experiential fine dining was core to its appeal and value positioning. Despite a difficult operating environment, the stock is up 83% YoY; a steep upswing in February this year was led by reports of it being included in HongKong's benchmark HangSeng Index from mid-March.

In this insight, we discuss why we believe Haidilao (6862 HK) at current prices has a higher downside risk versus upside potential given limited visibility of near term operational recovery and its premium valuation.Haidilao (6862 HK) had issued a profit warning that it is expected to record a decrease of approximately 90% in net profit for the year ended Dec 2020 versus the previous year; this implies a likely recovery in earnings in 2H2020 vs 1H2020 but not significant enough to match pre-COVID levels nor street estimates. Detailed results are expected this week on March 23rd.We believe Haidilao (6862 HK)'s pace of sales recovery to be slower versus QSR peers (1) in the near term from ongoing restrictions in the social and dining scene, following cluster outbreaks, and (2) in the medium term from a shift in customer preference towards off-premise dining. Unlike QSR peer, Yum China Holdings Inc (9987 HK) that managed to recover most of the COVID-led fall in dining demand by growing off-premise dining, we believe  Haidilao (6862 HK) may find it difficult to pivot given experiential fine dining was core to its appeal and value positioning. Despite a difficult operating environment, the stock is up 83% YoY; a steep upswing in February this year was led by reports of it being included in HongKong's benchmark HangSeng Index from mid-March.

Haidilao (6862 HK): Hot Pots Don't Pivot Easily.

China

Yum China Holdings, Inc. operates chain restaurants. The Company offers pizza, entrees, pasta, rice dishes, appetizers, soups, vegetables, beverages, and desserts. Yum China Holding conducts its business worldwide.

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Yum China Holdings (YUMC US)

Yum China (YUMC US) – Likely to Be Resilient and Outperform in 2H23E

YUMC is still one of our sector top picks, as we think its margin and store expansion will remain strong and perhaps surprise the market.

CMB International

Guzman Y Gomez IPO - The Negatives - Lawsuits and Management Churn

Guzman Y Gomez plans to raise around US$160m in its Australian IPO. In this note, we talk about the not-so-positive aspects of the deal.

Sumeet Singh

Giant Biogene Placement - Has Been Doing Well but Doesn’t Need the Cash

Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement. In this note, we talk about the deal dynamics and run the deal through...

Sumeet Singh

Yum China (9987 HK/YUMC US): Earnings And Derating Risks Not Priced In

According to public news, several sell-side have come out with reports adjusting down estimates for the name in the last few days, citing negative...

Steve Zhou, CFA

Haidilao (6862 HK): Hot Pots Don't Pivot Easily.

Downside risks outweigh upside potential given the expected slower pace of sales recovery versus peers and premium valuations. Difficult to pivot...

Devi Subhakesan

Price Gauge

52-week Range

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