In today’s briefing:
- Great Eagle Seeks To Delist Langham Hospitality (1270 HK)
- Baba’s Babies: Co-Parenting Works! Zhong An Online P&C Insurance
- Anta Sports (2020 HK): Sustains Strengths into FY24
- DPC Dash (1405 HK): Margin Potential Underappreciated
- Zongmu Technology Pre-IPO Tearsheet
Great Eagle Seeks To Delist Langham Hospitality (1270 HK)
- Hong Kong hotel-play Langham Hospitality (1270 HK) was spun-off from Great Eagle (41 HK) on the 30 May 2013. Now GE intends to take the company back into the fold.
- Covid was devastating to the hospitality sector. As were the 2019 demonstrations. Langham’s share price never recovered, and is currently trading at a lifetime low and a P/B of 0.21x.
- No price was mentioned in the announcement. Expect a healthy premium to undisturbed, should a firm Offer unfold. But I wouldn’t expect a knockout price.
Baba’s Babies: Co-Parenting Works! Zhong An Online P&C Insurance
- ZhongAn Online P&C Insurance C (6060 HK) is benefiting from the cross-selling opportunities generated through the eco-systems of Alibaba Group Holding (9988 HK) and Tencent (700 HK), its parent companies
- Largest solely online insurance company in China with Rmb 30B gross premiums written in 2023.
- Expertise and cross-selling from Ping An Insurance (H) (2318 HK) , another parent company with a jointly run auto insurance business.
Anta Sports (2020 HK): Sustains Strengths into FY24
- After a solid FY23, Anta Sports Products (2020 HK)‘s outlook for FY24 looks equally encouraging. Its various brands are expected to grow by 10-30% YoY still.
- Listing of Amer Sports (AS US) will provide Rmb1.6bn non-recurring gain in 1H24. For the full year, there will be a positive swing in its profit contribution.
- Anta Sports can be considered as a sportswear brand incubator, and its premium PERs of 18.3x and 15.9x for FY24 and FY25 reflect the ability to brew new brands.
DPC Dash (1405 HK): Margin Potential Underappreciated
- We believe consensus has not fully captured the company’s margin upside for FY24/25, likely due to management’s excessively conservative guidances.
- Our confidence is underpinned by positive SSSG trend, accelerating store expansion and clear trajectory for store margin improvement.
- We expect the company to generate RMB150/320 million adjusted net profit for FY24/25 respectively, compared to RMB30/150 million baked in consensus. Reiterate buy with HK$80 target price (30x FY25 earnings).
Zongmu Technology Pre-IPO Tearsheet
- Zongmu Technology (1491595D CH) is looking to raise up to US$150m in its upcoming HK IPO. The deal will be run by Huatai and BNP Paribas.
- Zongmu Technology is a Chinese advanced driver assistance system (ADAS) solutions provider, offering solutions with comprehensive autonomous driving functions.
- As a Tier 1 supplier, it undertakes software design, hardware design, system design and the integration of these components to develop solutions for mass deployment.
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