In today’s briefing:
- Hong Kong CEO & Director Dealings (2 August): Flat Glass, Arts Optical, Sky Light Holdings
- Country Garden Services (6098 HK): 1H23 Profit Warning A Good Read-Across For The Sector
- [Luckin Coffee (LKNCY US, BUY, TP US$43) TP Change]: Economies of Scale Brings Margin Improvement
- [Hua Hong (1347 HK, BUY, TP HK$34) TP Change]: Valuation Is Attractive Post-Shanghai Listing
- WuXi AppTec (2359.HK/603259.CH) 23H1 – Is It Time to Start Being Optimistic?
- Taste Gourmet: Q1 FY24 Preview, Another Strong Quarter in the Making
- Immuno Cure Bags US$12M Series A Funding, Gears up for Hong Kong IPO
Hong Kong CEO & Director Dealings (2 August): Flat Glass, Arts Optical, Sky Light Holdings
- 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.
- Stocks mentioned in this regular insight include Flat Glass (6865 HK), Arts Optical Intl Hldgs (1120 HK), and Sky Light Holdings Ltd (3882 HK).
Country Garden Services (6098 HK): 1H23 Profit Warning A Good Read-Across For The Sector
- Country Garden Services (6098 HK) announced a profit warning for 1H23 last night, expecting sales to increase by 3-4% yoy and net profit to see a 0-10% drop yoy.
- The company also announced the intention to repurchase up to 10% of total shares outstanding.
- Share price up +18% following the profit warning and share buyback announcement – a good read-across for the rest of the sector that will report interim results later this month.
[Luckin Coffee (LKNCY US, BUY, TP US$43) TP Change]: Economies of Scale Brings Margin Improvement
- Luckin Coffee reported 2Q23 revenue beat our est. by 7.5%, and non-GAAP NI beat our estimate by 84.1%.
- The top-line beat is driven by stronger product sold on average store sales, the bottom-line beat is driven by economies of scale and less than estimated sales promotion.
- We maintain the stock as BUY rating and raise TP by US$5.5 to US$43/ADS (27x PE in 2023) to factor in the outlook of sustainable margin improvement.
[Hua Hong (1347 HK, BUY, TP HK$34) TP Change]: Valuation Is Attractive Post-Shanghai Listing
- We expect Hua Hong to report C1Q23 top-line and non-IFRS net income in-line and (24%) vs. cons., respectively, missing mainly due to one-time costs.
- Hua Hong’s post-A share IPO valuation is cheap at 0.7x P/B, but we expect that weakening industrials demand and a slow recovery to hamper shipments.
- We maintain BUY but cut Hua Hong’s TP to HK$ 34 reflecting lowered wafer shipments estimates for FY24/25. Our TP implies 15x FY24 PE.
WuXi AppTec (2359.HK/603259.CH) 23H1 – Is It Time to Start Being Optimistic?
- The market’s reaction to WuXi AppTec’s 23H1 report was positive due to some improvements in performance, but we don’t think WuXi AppTec has reversed its predicament completely if look closely.
- We deep dive the challenges/risks in macro environment faced by US/Europe. The orders WuXi AppTec received from MNCs can’t guarantee future growth momentum if the US cannot achieve “soft landing”.
- We advise investors not to be blinded by the high growth of CXO in the past since the prosperity of CXO industry may face continuous downward pressure in the future.
Taste Gourmet: Q1 FY24 Preview, Another Strong Quarter in the Making
- We estimate Taste Gourmet (8371 HK) to deliver 39% YoY revenue growth and about 13% YoY profit growth (adj 350% YoY) for Q1 FY24e, to be declared on August 10th.
- The company is expected to go ex-dividend on the 4th of August and pay out a 5.2-HK cent final dividend by the 24th of August for FY23.
- Trading at 6x FY24e PE /20% of the market capitalization in cash and a 9-10% dividend yield ( based on a 50-60% payout ratio) represents a great investment opportunity.
Immuno Cure Bags US$12M Series A Funding, Gears up for Hong Kong IPO
- Hong Kong-based Immuno Cure BioTech has closed the US$12 million tranche of its US$27 million Series A fundraising round, led by Gobi Partners-managed AEF Greater Bay Area Fund.
- The biotech company will use the capital to accelerate the development of DNA vaccines and antibodies besides preparing for an IPO in Hong Kong.
- Immuno Cure focuses on R&D of immunotherapies for cancers, inflammatory and infectious diseases based on its patented “PD-1-enhanced DNA Vaccine Platform” and “Anti-Δ42PD1 Antibody Platform” with two DNA vaccine candidates, ICVAX and ICCOV, currently in clinical trials.
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