In today’s briefing:
- Shh! SAIC’s Unconditional Offer For Dongzheng (2718 HK)
- XPENG Slide to 18 Major Pivot Point
- Kuaishou – Continued Drop in Operating Losses with Upside Potential
- Kuaishou (1024 HK): 1Q22, Strong Revenue and Shrinking Loss, 19% Upside
- COSCO Shipping Energy (1138 HK): Ahead of the Curve…but Too Much
Shh! SAIC’s Unconditional Offer For Dongzheng (2718 HK)
- On the 19 May, SAIC Motor (600104 CH) acquired China Zhengtong Auto Services Hldg (1728 HK)‘s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction.
- Reportedly SAIC was the only bidder. The price paid appears to be at the minimum bid price of HK$1.294/share.
- The acquisition will trigger an unconditional Offer for the H shares. SAIC and ZhengTong have announced the outcome of the auction. But still no word from Dongzheng.
XPENG Slide to 18 Major Pivot Point
- XPEV (US ADR) is forming a compelling positive wedge but faces a test of the critical 18 macro dual low support where a trading bounce is expected.
- Sell volumes rose on the 25 rejection, calling for a test on the key 18/19 support zone.
- RSI sub 30 target does suggest XPEV breaks 18 support after a tradable bounce with 24/25 the key hurdle. 31 represents MT resistance. 9868 HK linked levels.
Kuaishou – Continued Drop in Operating Losses with Upside Potential
- Kuaishou reported 1Q2022 results on Tuesday. Revenue grew 23.8% YoY to RMB21.1bn while reported operating losses declined to RMB5.6bn (27% of revenue) from RMB7.3bn (43% of revenues) in 1Q2021.
- Adjusted operating losses for the quarter further dropped to 24% of revenues from 48% of revenues in 1Q2021 despite drop in livestreaming ARPPU in 1Q2022.
- Kuaishou’s shares have lost almost 80% since its IPO in February last year due to the regulatory crackdown.
Kuaishou (1024 HK): 1Q22, Strong Revenue and Shrinking Loss, 19% Upside
- Revenue increased by 24% YoY with online marketing, the main business, up 33% YoY.
- KS operating loss decreased to RMB5.1 bn in 1Q22 from RMB8.2 bn.
- We set an upside of 19% and a price target of HK$75.00. Buy.
COSCO Shipping Energy (1138 HK): Ahead of the Curve…but Too Much
- Share price of Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) has rallied 55.7% over the last four months, and we believe it is now prudent to trim position.
- P/B valuation is almost at 5-year high and over 2SD above historical average, but ROE for FY22F is still shy of the peak level achieved in such period.
- There is downgrade risk for FY22F consensus profit of Rmb1.6bn given 1Q22 profit of just Rmb25m, and near-term retreat in spot rate does not bode well for CSET.
Before it’s here, it’s on Smartkarma
