In today’s briefing:
- BYD (1211 HK): Sales Volume Up by 62% in 2023
- HKEX – Worsening Property Transactions, Underscores Ailments for Hong Kong
- Kweichow Moutai (600519 CH): Stability Amidst Overall Industry Weakness
- Quick Ideas #6
- Pre-IPO QuantumPharm – Good Stories May Not Be Backed up by Performance
- PetroChina (857 HK): An Interesting Contrarian View
- HEC Pharma (1558 HK): Strong Performance to Continue as Flu Activity Is On Rise In China
BYD (1211 HK): Sales Volume Up by 62% in 2023
- BYD’s sales volume grew by 45% YoY in December, higher than 31% YoY in November.
- For the whole year 2023, BYD’s total sales volume rose by 62%.
- We conclude the stock has an upside of 74% for 2024.
HKEX – Worsening Property Transactions, Underscores Ailments for Hong Kong
- HKEX (388 HK) outlook has been withering for some time, and new data on property transactions, shows that this remains weak.
- SGX (SGX SP) in a less volatile geopolitical financial center, has a much lower market capitalization while its earnings outlook is far stronger.
- Two major differences between these two entities is their ROE and ROA, although the former may be more relevant. SGX (SGX SP) has an ROE that is nearly 50% higher.
Kweichow Moutai (600519 CH): Stability Amidst Overall Industry Weakness
- Kweichow Moutai (600519 CH) announced the preliminary result for FY23, with sales and net profit both up 17% yoy.
- The overall weak consumer sentiment in China has not spared the Chinese liquor sector, as overall Chinese liquor demand has been lukewarm.
- The current valuation for Moutai has become very attractive, and even if no rerating, the return is likely to be around 15% through earnings growth plus 2% from dividend yield.
Quick Ideas #6
- First of all, happy new year to all my readers! May 2024 bring market beating returns for everyone.
- Again I managed to underperform my blog stock picks by concentrating in the wrong stocks.
- Although I still ended up over 20% for the year, it was disappointing considering I was getting close to 30% in July.
Pre-IPO QuantumPharm – Good Stories May Not Be Backed up by Performance
- The essential difference between QuantumPharm and InSilico in terms of business models is that InSilico is an end-to-end generative AI-driven biotech but QuantumPharm is more of a platform-based service provider.
- It’s difficult for QuantumPharm to achieve significant increase in revenue scale in short time,because the service fee amount is usually not large, and it takes time to accumulate order volume.
- If there is no substantial performance contribution, these good stories would not bring about a sustained leap in valuation. QuantumPharm’s valuation in last funding round before IPO is too expensive.
PetroChina (857 HK): An Interesting Contrarian View
- We doubt if PetroChina (857 HK) can sustain good performance in 2024. On historical patterns, it has never sustained as one of HSI’s best-performing stocks for two consecutive years.
- Consensus growth forecasts of 4.4% and 4.3% for FY24-25 are likely wrong as this means FY25 will be the 5th straight year of growth. PetroChina does not behave like that.
- Crude oil price has got back to the end-2022 level, but PetroChina’s share price is still 50% higher. A return to their high correlation before 2023 will lead to underperformance.
HEC Pharma (1558 HK): Strong Performance to Continue as Flu Activity Is On Rise In China
- Yichang HEC Changjiang Pharma (1558 HK) is set to benefit from the recent upsurge in respiratory illness in China. The company commands ~90% share of anti-flu drug market in China.
- In 1H23, HEC Pharma’s revenue jumped 148% YoY to RMB3.2B, mainly due to spiking flu cases in China. A strong flu season in 4Q23, should boost H2 performance.
- Despite a 43% rally in HEC Pharma share price over the last six months, the shares are trading at forward P/E of just 4.8x.
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