China

• Conglomerate Guoco Group (53 HK) has fielded three privatisation Offers from Guoline (the Quek family) over the past twenty years. 
• Elliott Advisors, then holding 9.72% of shares out, backed the most recent Offer of HK$135/share in November 2018; but it was voted down at a Scheme Meeting. 
• Elliott has now, surprisingly, exited. This may open the door for a fourth Offer. Shares popped 14% on the news.  

• Alibaba Changed its Tmall Taobao business unit from three centers to six departments.
• We believe the change means Alibaba is moving its focus from cost cut to revenue growth.
• We set the stock upside at 26% and the price target at HK$91. Buy.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Lippo Malls Indonesia Retail Trust
• Road King Infrastructure

• Pientzehuang’s 2023 results were well below expectations. The performance in 23Q4 was terrible. 2024 performance would continue to be under pressure, without any reversal signals to be seen.
• In the process of China’s de-financialization, growth potential of assets with strong financial attributes would weaken.Pientzehuang’s ability to raise prices won’t be as strong as rigid-demands such as telecommunications tariffs.
• Pientzehuang’s stock price performance doesn’t follow traditional TCM companies.It’s not surprising if Pientzehuang’s valuation drops to PE of 15x or even lower. We recommend investors not to rush to bottom-fish.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Sunny Optical Technology Group

• Back on the 20th January 2023, shares in Bank Of Jinzhou (416 HK) (BoJ) were suspended due to a delay in publishing its FY22 results. 
• BoJ was previously bailed out in March 2020 by the PBOC and Liaoning Financial Holdings, owned by the finance authority of Liaoning province, via the placement of new domestic shares. 
• Now Liaoning Financial is taking BoJ private at HK$1.38/share, or ~0.28x P/B.

• Temporary implications of Evergrande’s court ruling on property sector sentiment and other troubled property developers’ restructuring plans
• Evergrande’s situation is more complicated than that of other troubled developers, as its founder is still under arrest and the company is unable to issue new debts.
• Cross-Border bankruptcy cases for Chinese companies are still relatively rare, making the recognition and enforcement of Hong Kong bankruptcy judgments by the PRC court uncertain

• We believe Mixue’s low prices are fit for the current weak economy.
• Any “freshly made” price lower than Mixue’s will compete with bottled drinks.
• We also believe low rental is the key for Mixue’s low prices.

• Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by Huatai and UBS.
• Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants. 
• According to the firm, a Xiaocaiyuan restaurant offers approximately 45 to 50 menu items in each season, including cold dishes, stews and braised dishes, amongst others. 

• December: strong volume growth, but worsening price declines for STO, Yunda
• Recent trends in X-border parcel volume growth & pricing moderated in December
• In 2024, look for SF to continue its outpeformance; STO, Yunda should still lag

• Mindray has encountered bottleneck in performance growth. So, it urgently hopes to bring “new growth stories”. APT Medical’s current growth momentum is commendable, and could also complement Mindray’s product line.
• We saw poor stock price performance of both after the announcement. High acquisition premium and the possibility that APT Medical’s future performance fall short of expectations are among the reasons. 
• In fact, both sides got what they wanted. We advise investors to be patient.Perhaps, Mindray would indeed make a breakthrough from this acquisition, which is also a blow to Microport.  

• China Beststudy Education Group (3978 HK) is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area. 
• The company is trading at 5x forward PE (2024), and I expect earnings to grow >100% in 2024 off of a low base, and >30% in 2025. 
• I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU’s current 20x.

• A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.
• Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land – net buying of SOEs, selling of tech.
• Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). 

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc. 
• SOUTHBOUND flows were small positive and NORTHBOUND flows a decent buy. AH premia stopped rising. Chinese shares bounced. SOEs being bought. Tech being sold. Tencent seeing SB outflows, still. 
• New article in China Securities Journal hints at new measures on SOEs. Watch this space. Wouldn’t be short SOEs vs Privates on H/A basis. 

• If a sustainable bottom was made in January, which sectors are best to invest?
• China State Owned Enterprises fit the current uncertain investment climate
• The Hang Seng China Affiliated Index (red chips) provides some good ideas

• Great Wall Motor’s revenue increased by 26%, but its profit increased by less than 5% in 2023.
• Huawei’s shipments increased 36% YoY in 4Q23 and was the only company to witness an increase among the top five sellers.
• Jack Ma, the founder, and Mr. Joe Tsai, the chairman, purchased Alibaba’s shares.

• The approval rate of Draft Bill is very low. So, it’s more of a “strangulation” of investment sentiment. But considering the 2024 US presidential election, similar negative proposals may resurface. 
• WuXi AppTec has little control over the entire situation.There’s “valuation discount” for China CXOs due to geopolitical conflicts. It’s difficult to completely rule out the possibility of “deliberate short selling”. 
• If look deeper, considering “sensitive situations” at present, to some extent, we may have already been in a financial war.The goal of short selling is to pick up cheap chips. 

• Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC, and Huatai International.
• Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
• According to F&S, Shouhui was the third largest online insurance intermediary in China in terms of GWPs of long-term life and health insurance in 2022, with a 7.1% market share. 

• China Communications Construction (1800 HK) saw its 4Q23 new contracts increased 14%, faster than the 13.5% growth in 9M23. Full-year new contracts are 3.5% ahead of its target.
• Our estimated backlog of Rmb4.26trn at end-FY23 is 25.6% higher than end-FY22. Such backlog covers 4.9x FY24F revenue, which is a 0.6pp improvement YoY.
• The inclusion of market cap management as a KPI for senior SOE officials will drive return, while CSRC’s encouragement to raise payout ratio may easily push yield to over 10%.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net BUY RMB 12.1bn of A-shares on very strong average activity. National Team continued to buy this week. Foreigners bought banks
• Renewables were again a net sell by NORTHBOUND. It is not clear what stops persistent net selling. Capacity huge/growing and Pricing is a disaster in solar modules, batteries, etc. 

• Even good enterprises could be neglected by the market, leading to low valuation. Many people wonder when is the best buying point for pharmaceutical companies. We shared our views.
• If PD-1 sold in China can still achieve a certain scale, the situation of PD-L1 is not the same. In fact, we’re pessimistic about all companies selling PD-L1 in China.
• Beijing Tiantan Biological Products (600161 CH) is a good defensive target in unfriendly external environment. The reasonable market value is RMB45-50 billion. We think Tiantan will maintain stable growth ahead.

• European luxury goods maker enjoyed its best week in the past 52 weeks, spurred by better-than-expected results by LVMH, the industry leader and widely viewed as the bellwether  
• China’s market was cited as resilient and very strong in certain categories, defying the general market perception that Chinese demand is soft
• The key European luxury goods share price has risen by an average of 8.2% YTD, China Tourism Group share price performance has lagged. Good buying opportunity    

• China announced game approval for the Jan batch. The number of games approved has increased compared to recent months.
• The pace of China game approval appears to be accelerating, to the same level as pre-tightening.
• Tencent gets one game approved but we don’t see that the acceleration of game approval benefits big names proportionally.

• The Hang Seng Index this week reversed up and close the week up, after 3 weeks down. This may not be the usual opportunity to go SHORT.
• The index may rise for another 1 week and then pullback, but our seasonal matrix model says there is a good probability the HSI rallies in February.
• Based on this market reading we advise HSI Short Sellers to be particularly careful when setting up SHORT trades between here and the end of February.

• We believe RemeGen has bottom fishing value because its Systemic Lupus Erythematosus (SLE) drug Telitacicept (RC18) has already been approved for sale in China.
• Earliest data read in US clinical trial for IgA Nephropathy is already available, with SLE data read available in C3Q24 and MS in C4Q24;
• We don’t think a leading biotech from the wealthy city of Yantai will run out of cash. We assume RemeGen will be able to mitigate its liquidity problem.

• Investor confidence toward the Chinese tech sector remains fragile after the government crackdown, and Alibaba Group was particularly hard hit due to Jack Ma’s previous conflicts with Chinese regulators.
• Growth of its main eCommerce business is in question given the softening Chinese economy and intense competitions. Additionally, the growth of its cloud computing unit is also slowing down. 
• China’s stock market stabilization fund is not likely to benefit Alibaba directly as it will be used to buy onshore stocks only. 

• New Oriental Education & Techn (9901 HK) reported better than expected FY2Q24 results last night, with sales up 36% yoy and net profit up 183% yoy.
• The company further guided a 42-45% sales growth in FY3Q24, well above market consensus. 
• The visibility for the next 2-3 years is actually quite high post-“double reduction” policy.

• Huawei Technologies Co. Ltd. on Thursday launched the latest version of its own operating system — HarmonyOS NEXT, which will no longer support Android apps and can only accommodate apps specifically developed for it.
• The Chinese telecom equipment giant said the Beta version for developers will be released in the second quarter, and the general version for consumers in the fourth quarter.
• Insiders from Huawei expect the new Mate smartphones to be released in the second half with the HarmonyOS NEXT installed.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• ENN Natural Gas

• Haier Smart Home (6690 HK)‘s management is confident about the FY24 outlook, with net profit growth of 12-13% can be sustained.  
• Casarte will continue to lead with 10-15% revenue increase. There is room for further margin expansion led by overseas markets and process optimisation in the domestic market.
• The plunge in real estate market does not have a material impact on sales and HSH is positive on replacement/upgrade demand. Its FY24F PER of 10.1x is undemanding.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK), Wuxi Biologics (2269 HK), Sichuan Kelun-Biotech Biopharm (6990 HK), and Wisdom Sports (1661 HK).

• With the Hang Seng Index dipping below the 15,000 mark earlier this week, it’s time to dust off some old school perspective.
• This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
• Graham would conclude these stocks are priced for liquidation.  Stocks discussed include Brilliance China (1114 HK), Ming Yuan (909 HK), Yidu Tech (2158 HK), and A-Living Smart City (3319 HK).

• Short notional in Hong Kong is HK$335bn and has been falling over the last 12 months due to a drop in the market.
• In terms of short notional to marketcap, the Materials, Consumer Staples, Health Care, Utilities, Real Estate sectors are most shorted while the least shorted are Information Technology, Communication Services, Energy.
• The largest shorts have been built on BYD (1211), XPeng (9868), ICBC (1398), Xiaomi (1810), Link REIT (823), JD.com (9618), Wharf Holdings (4) and New World Development (17). 

• Nearly halfway through the review period, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
• Some of the potential changes will also have passive flows from the CSI 500 Index trackers at the same time as the ChiNext Index rebalance.
• The potential inclusions and deletions have slipped over the last couple of months along with the ChiNext Index, but the potential inclusions have outperformed as the deletions have dropped more.

• US-Led tech chain may push for AI phone features, which itself is a great strategy to pull the tech industry out of doldrums. It will pressure Huawei, in our opinion;
• We believe there are other stories unfolding in the AI era, including availability of AI killer apps, the rivalry between super apps and OS vendors, and the growing China/Ex-China chasm.
• Our Top Pick is Tencent and Kuaishou. We maintain Xiaomi at SELL.

• We attended Miniso’s Investor Day on January 18-19 and came away positively. Management outlined growth strategy of fostering strong connection with Chinese supply chain to achieve fast turnaround of…
• We expect MNSO to report C4Q23 revenue and non-GAAP NI at 2.9% and 4.0% higher than consensus mainly due to new store openings;
• We maintain the stock as BUY and raise TP by US$2 to US$33/ADS to reflect our endorsement of the growth strategy.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Anton Oilfield
• Greentown China
• Reliance Industries

• Geopolitical risks have led to foreign companies planning to withdraw from China.It’s also difficult to allow foreign companies to control China’s core strategic assets.So, Grifols and RAAS’ “breakup” is inevitable.
• This acquisition is an important milestone in the development of Haier’s big health industry. RAAS’s valuation also has room to rise further after being acquire by Haier due to synergies.
• In the case of slowing growth in the home appliance market, this is a wise move for Haier.However, potential goodwill impairment in GDS is a risk for Haier/RAAS and investors.

• HEVI announced the addition of Amerit Fleet Solutions as an Authorized Service Provider to support the company’s electric powered heavy industrial equipment.
• Amerit Fleet Solutions, which has more than 800 locations nationwide, joins Mid-Atlantic-focused Quality Truck Center as the second multi- location service company that has partnered with HEVI to support customers with its equipment.
• The addition of another service provider should help boost the growth of HEVI’s products. In addition to expanding awareness of the brand, this should help alleviate any concerns that potential customers might have about supporting and servicing their equipment.

• Weiqiao Textile Co (2698 HK)’s IFA opines that Weiqiao Chuangye’s privatisation offer of HK$3.50 per H Share, a 104.7% premium to the undisturbed price, is fair and reasonable. 
• Despite amassing a blocking stake, Prudence’s ongoing buying supports the view that it intends to play the spread rather than block the deal.
• Despite the offer being below net cash, this is a done deal. At the last close and for the 28 March payment, the gross/annualised spread is 1.7%/10.2%. 

• Completing three-quarters of the review period, 6 stocks are in inclusion zone and 9 in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 6.8% at the June rebalance leading to a one-way trade of CNY 7.35bn (US$1.02bn). Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) over the last few months and could continue to do so as positioning builds up.

• New Horizon Health announced a positive profit alert yesterday after market close and held a conference call.
• We participated in the call and spoke with the management to understand the recent developments.
• The company upgraded ’23 revenue guidance and provided revenue guidance for ’24.

• We expect Kuaishou to report C4Q23 revenue, IFRS op. profit and IFRS net income in-line, 34% and 29% vs. consensus, thanks to margin improvements;
• Playlet continued to generate significant organic traffic, leading to decreasing sales marketing cost and growth in advertising inventories. We further expect AI to drive playlet market expansions;
• E-Commerce GMV growth was robust. Kuaishou will likely increase take rate in the future. We maintain BUY and raise TP to HK$79, implying an 17x PE.

• Following the recent Offer for Weiqiao Textile Co (2698 HK), I flagged Pacific Textiles (1382 HK) in Pacific Textiles (1382 HK): Material Benefits as a potential M&A play.
• Also in this space is Texwinca Holdings (321 HK) which is trading down towards its Covid-affected lows.
• Both Pacific Textiles and Texwinca are pursuing a Vietnamese expansion. Texwinca is trading cheaper to Pacific Textiles, is net cash, and has a superior yield.. 

• The essence of Shouhui’s business model is to “sell insurance” rather than provide services with technological attributes. So, Shouhui has relatively single business composition and lacks diversified sources of revenue.
• The trend of “disintermediation” is becoming increasingly evident, which may lead to customers deciding to purchase insurance directly from insurance companies not from Shouhui, resulting declining demand for Shouhui’s services/products.
• The business nature of insurance is incompatible with the Internet’s pursuit of rapid expansion. Cooling “Internet +insurance” investment in recent years proves the decline of market’s enthusiasm for this business.

• Guming Holdings (GUM HK) (Guming) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Guming Holdings (Guming) is a maker of freshly-made beverages in China.
• In this note, we will talk about the not so positive aspects of the deal.

• With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
• The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.

• We believe Hang Seng Index’s tumble was due to a comment in a governmental newspaper.
• BYD announced that it will sell three models of new energy vehicles in Indonesia.
• Trip.com began to sell tickets of scenic locations via the Kuaishou app.

• Travelsky Technology Ltd H (696 HK) has been the predictable play for a rebound in domestic tourism in China.
• 1H23 result did not show anything that should alert investors to the changes in business practices.
• The recent profit warning disclosure has alerted investors that there is something else beyond the usual.

• A capitulation-type event for the Hong Kong market is ongoing.
• High-Dividend stocks will provide a safer return regardless of broader market moves.
• A false breakdown below Oct 2022 support will provide a signal for higher-beta exposure.

• The China equity markets have continued to slide and the lower market caps and free float market caps will see a lot of stocks deleted from passive portfolios in February.
• We currently estimate selling of around US$1.66bn across 74 stocks listed on the mainland, in HK and the U.S., and that number could increase as markets continue to underperform.
• The potential deletes have dropped a lot over the last 4 months and there has been a marked underperformance versus the headline indices over the last month.

• On the 17th January, Weiqiao Textile Co (2698 HK) announced the pre-conditions – regulatory approvals from NDRC, MoC and SAFE – had been fulfilled. 
• The Composite Document was dispatched this morning (23 January), with an 8th March EGM, and expected payment on or before the 28 March, bang in line with my estimate.  
• Prudence has upped its stake to 10.47%.  IF they were intending to block, they’d stop at just over 10%. Buying any more shares >10% is simply a waste of money.

• Plummeting ASPs likely pushed STO and Yunda OpInc margins below 0% in Q423
• The companies’ operating cash flow may be insufficient to fund needed capex
• Reduced investment could lead to slower growth, consolidation pressure in ’24

• Guming Holdings (GUM HK) (Guming) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Guming Holdings (Guming) is a maker of freshly-made beverages in China.
• In this note, we will talk about the positive aspects of the deal.

• 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). 

• One direct reason for the sharp drop in stock prices is that RemeGen’s performance in 23Q4 would miss expectation, thus leading to disappointing performance for the entire year of 2023.
• Due to low competitiveness of pipelines, product sales are hard to bring sufficient cashflow.Prospects for future license-out deals are still uncertain. RemeGen may find it difficult to turn the tide.
• Reasonable market value of Remegen should be above RMB12 billion. Investors can participate in the rebounds after stock price plunge, but we do not recommend holding for the long term.

• Ping An Insurance (601318 CH) trades at a 40% premium to Ping An Insurance (2318 HK). The premium has blown out the last week and there could be a reversal.
• The difference in Ping An’s AH premium versus the HSAHP Index has shrunk to its narrowest level in the last 10 years.
• Shareholding in Ping An Insurance Group of (601318 CH) via Northbound Connect has dropped and shareholding in Ping An Insurance (H) (2318 HK) via Southbound Connect has increased steadily.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc. But that didn’t help. 
• SOUTHBOUND flows were bigly positive and NORTHBOUND flows a large net sell. Nevertheless AH Premia had their best week in ages as HK large caps, mid-caps, small-caps got shellacked.
• Now at new 52wk wides on A premia. Now within 3% of 5+ year highs.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 23.5bn of A-shares on strong average activity. Big net selling on Weds. National Team stepped in Thurs. NORTHBOUND stepped in to sell Friday.
• Renewables were a bit more mixed this week but still a net sell by NORTHBOUND. It is not clear what stops persistent net selling. 

• With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
• We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
• There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.

• An ugly week for HK stocks but SOUTHBOUND flows showed decent net buying at HK$14.7bn on the week. High-Div SOEs continue to be in favour.
• What appears to have been strong net selling on the mainland combined with CBBC unwinds in Hong Kong related to mainland-linked stocks caused HK to have a baaaaad week.
• The separately published AH Monitor highlights a Really Tough Week. Hs got KILLED vs their A-share counterparts as CBBCs sold the HK names and National Team bought A-shares.

• Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY. 
• Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share. 
• The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).

• While the 2H23 result of Lonking Holdings (3339 HK) may disappoint due to a plunge in sales volume, it is a yield play given the high historical payout ratio.
• Assuming a DPS of HK$0.10 for FY23-25 as in FY22, yielding 8.3%, the total dividend will amount to Rmb1.2bn. This only equals 22% of its net cash (including short-term investments).
• Its controlling shareholders bought 7.3m shares since 27 Dec, raising the stake by 0.13pp to 56.2%, demonstrating their positive view on the share’s value and long-term outlook. 

• 23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.
• In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&A.
• Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.