Daily Brief China: China Resources Beer Holdings, Sichuan Baicha Baidao Industrial, Health And Happiness (H&H) and more

• A liquid proxy for China’s recovering consumption (with no technology regulation risk)
• A quality red chip company at a very reasonable valuation
• Growing sales and margins as its premiumisation strategy is executed

• Baicha Baidao’s business model is similar to MIXUE, but MIXUE has more heavy-asset model with own supply chain, while Baicha Baidao is more of a “transfer station” for raw materials.
• Single store data of Baicha Baidao showed varying degrees of decline. It’s uncertain whether Baicha Baidao would maintain current market share/revenue growth/high gross margin in front of fierce homogeneous competition.
• When Baicha Baidao submitted prospectus last year, its valuation was already about RMB18 billion.We think its valuation would be lower than MIXUE, close to Guming and higher than Auntea Jenny.

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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