Daily Brief China: Alibaba Group Holding , Alibaba (ADR), Hongkong Land, Huitongda, Taste Gourmet, Wynn Macau Ltd and more

• The revenue growth rate rose to 14% in 1Q24, compared to the past four stagnant quarters.
• All businesses continued to improve their margins, so that the general operating margin rose to 19% in 1Q24 versus 12% in 1Q23.
• We believe the re-organization is successful and the stock price is overly impacted. Buy.

• Alibaba (ADR) (BABA US)‘s 1QFY24 revenue and OP beat consensus by RMB 9.2bn and RMB 14.4bn respectively, possibly on the back of a successful 6.18 shopping festival.
• It looks like Alibaba Group Holding (9988 HK) has decided to abandon its New Retail Strategy and instead, put more effort into e-commerce, especially on popular platforms like Taobao and Tmall.
• Although this is a good-sign and could rally the stock short-term, we would still steer clear of Alibaba as we remain skeptical about the overall health of the Chinese economy.

• According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)‘s 33-storey Three Exchange Square.
• This “news” is straight out of left field. For its part, HKL said the market rumour is pure speculation.
• HKL’s P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid. 

• We expect Huitongda (HTD) 1H23 revenue in-line with consensus, and non-IFRS NI 15.6% lower than consensus. 
• The lower bottom-line is due to 1) product mix change result in lower gross margin; 2) higher impairment loss from account receivables due to its SME focused model.
• We maintain the stock as SELL. We raise TP by HK$2.5 to HK$20.5 to factor in the upward revision of NI from downsizing of minority interest.

• Taste Gourmet (8371 HK) reported its Q1 FY24 with revenues up 47% YoY and core profits up 349% YoY.  We believe that the company will report stronger revenues in Q2.
• The restaurant count increased from 39 to 42 by the end of Q1 FY24 for HK. As of the latest date, the company has 46 restaurants in HK. 
• The company also had 126.5 mn HKD of net cash at the end of Q1 FY24 (vs 118 mn HKD in FY23), almost 20% of the current market capitalization. 

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.

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