In today’s briefing:
- Growatt Technology Pre-IPO – Revised Peer Comparison and Thoughts on Valuation
- China Comm Const (1800 HK): Bullish Outlook Reaffirmed
- [Hua Hong (1347 HK) Target Price Change]: High IGBT Inventory Signals Pause in Top-Line Growth
- China Fortune Land Restructures Debt and Posts Profit
- [Luckin Coffee (LKNCY US, BUY, TP US$41) Earnings Review]: Price War Will Work to Luckin’s Advantage
Growatt Technology Pre-IPO – Revised Peer Comparison and Thoughts on Valuation
- Growatt Technology (1833969D CH) is looking to raise about US$400m in its upcoming Hong Kong IPO, after downsizing from an earlier US$1bn float in Nov 2022.
- Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption, as well as energy digitalization.
- In this note, we will provide a quick peer comparison update and our latest thoughts on valuation.
China Comm Const (1800 HK): Bullish Outlook Reaffirmed
- China Communications Construction (1800 HK) should see more valuation upside as it narrows the discount to book through more asset disposal, spin-off, restructuring and securitisation.
- Healthy 1Q23 earnings demonstrated underlying business strength. We expect new contract growth to accelerate in the rest of this year. Backlog estimated to cover 4.7x FY23F revenue.
- Gross margin has stabilised in 1Q23 when compared with 1Q in previous years. Contribution from concessions will improve as traffic recovers and projects get mature.
[Hua Hong (1347 HK) Target Price Change]: High IGBT Inventory Signals Pause in Top-Line Growth
- We expect Hua Hong to report C1Q23 top-line, IFRS operating income, and IFRS net income in-line, 14.1% and 19.1% vs. consensus, respectively.
- Our sample of 1Q23 A-share fabless balance sheets showed that inventory days rose, which we expect will lead to a slowdown in wafer orders beginning in 2Q23.
- Despite near-term weakness, we are positive the longer-term benefits of (1) localization, and (2) EV demand. We maintain BUY and raise TP to HKD35.
China Fortune Land Restructures Debt and Posts Profit
- China Fortune Land Development Co. Ltd said it successfully restructured more than 80% of its 219 billion yuan ($31.7 billion) debt overhang.
- The cash-strapped private developer returned to profitability after two years of liquidity crisis
- Hebei province-based China Fortune Land signed agreements with creditors to restructure 180.6 billion yuan of debts through various means by the end of 2022, accounting for 82.4% of total outstanding debt
[Luckin Coffee (LKNCY US, BUY, TP US$41) Earnings Review]: Price War Will Work to Luckin’s Advantage
- Luckin Coffee 1Q23 revenue beat is due to higher-than-expected store expansion, while SSSG is in-line with our estimate.
- The normalized of RMB9.9 per cup campaign is expected to generate minor impact on Luckin Coffee’s profitability.
- We maintain the stock as BUY and maintain TP at US$41.
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