Daily Brief China: Koolearn, Sa Sa International Hldgs, Jacobio Pharmaceuticals and more

In today’s briefing:

Koolearn (1797 HK): Don’t Overpay for Growth
Sa Sa Intl (178 HK): On-Ground Observations and Outlook
Jacobio Pharmaceuticals Placement (1167.HK) – We Keep Hope for Jacobio Because of Dr. Wang Yinxiang

Koolearn (1797 HK): Don’t Overpay for Growth

Koolearn’s successful transformation into a live-streaming e-commerce business showcased outstanding entrepreneurship and leadership of its founder Michael Yu, whom we highly respect.
That said, we expect its growth to decelerate materially after hitting RMB18 billion GMV by 2024. We value Koolearn at RMB36 billion (20% downside), drawing reference to VIPShop growth trajectory.
While high-frequency data on live-streaming business will drive near-term stock price (and potentially to the upside), its current valuation doesn’t pay off for long -term investors in our view.

We observed that businesses at Sa Sa International Hldgs (178 HK) have picked up during the Chinese New Year, but a significant overall significant recovery is still lacked.
The full relaxation of mainland-HK border control has brought about a 110% surge in mainland arrival between 6 Feb and 11 Feb. This suggests that momentum is clearly building up.
Sa Sa has embarked on strategies like re-opening important stores, selectively increase store counts and re-adjusting staff arrangement and opening hours to capture the opportunities.

There is limited breakthrough points in the field of small molecule drugs. Except those big varieties, the market space of small-molecular drugs is not optimistic due to small applicable population.
For KRAS, it just crossed the threshold of druggablility, but the whole pathway hasn’t shown the feeling of being a blockbuster variety, which would dampen the optimism of Jacobio’s valuation.
Jacobio is among the few biotech under Chapter 18A who really develop drugs seriously. Therefore, despite the challenging outlook, we hoped that Dr. Yinxiang Wang would finally break through.

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