Daily Brief China: Minth Group Ltd, Focus Media Information Technology Co, Ltd., Meituan, Neusoft Xikang Healthcare Technology Co Ltd, Adaro Energy and more

• Minth’s stock price has been weak in the past year but its improving fundamentals started to reflect in the results in 2H22. 
• 2023 revenue growth will be supported by the overseas auto market recovery and fast-growing battery housing business. 
• Minth’s valuation is near historical low and is at a discount to its peers

• Urbanization and brand premiumization are Focus Media’s two long term structural drivers which will keep broadening its audience and advertiser base.
• 1Q23 results end a 5-quarter streak of profit decline and  mark the start of new profit cycle. This will usher in a meaningful stock re-rating if history is a guide.  
• We expect at least 30% upside by the end of 2023 by applying 25x P/E (still at large discount to last profit cycle) on RMB4.9 billion net profit for 2023. 

• Meituan has recently implemented three strategies to compete with Douyin: a low-price strategy, the addition of more video/live streaming content, and a management reorganization.
• The low-price strategy has already shown some promising results, as seen in the slowdown of Douyin’s local service GTV and the number of new merchants joining its platform.
• However, the effectiveness of the other two strategies, particularly Meituan’s push to add more video content, remains unclear.

• The cloud hospital platform services serve as “the entry point” of Neusoft Xikang’s overall solutions, but the restrictions imposed by cities would affect the scalability of business.
• The variety of 2B objects and the diversity of medical scenarios covered would be conducive to the transformation to 2C business, resulting in stronger user stickiness and more monetization opportunities.
• Xikang’s 2B business is weaker than ClouDr. Financial performance would finally reflect the effectiveness and rationality of business model. Xikang’s valuation should be lower than ClouDr and Ping An Good Doctor.

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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