In today’s briefing:
- Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names
- Cathay Pacific – Rising Inflationary Pressure Expedites Earnings Normalisation
- Auntea Jenny (Shanghai) Industrial Pre-IPO – The Positives – Has Benefited from a Growing Network
- [Luckin Coffee (LKNCY US, BUY, TP US$37) TP Change]:Weak Sales in 1Q24 but Likely to Improve in 2Q24
- Cathay Pacific (293 HK, BUY, TP HK$9.90): FY23 Better than Expected, and Surprise Dividends
- Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Multiple Changes to Expectations; US$481mn One-Way
- JD.com Inc.: Market Share Expansion via Platform Ecosystem Improvements! – Key Drivers
- Pre-IPO Qyuns Therapeutics (PHIP Updates) – Some Points Worth the Attention
- Belle Fashion Pre-IPO – Refiling Updates
- Auntea Jenny (Shanghai) Industrial Pre-IPO – The Negatives – Improving Margins Playing Catch Up
Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the June 2024 index rebal event.
- I currently expect three changes for the STAR 50 index in June 2024 but there are some questions marks over the names leading the race to become ADDs.
Cathay Pacific – Rising Inflationary Pressure Expedites Earnings Normalisation
- 2023 results came in broadly in line with expectations but included a concerning step up in ex-fuel unit cost inflation.
- We cut our 2024 EBITDAR by 10% to HK$22.2bn, which drives net income down 21% to HK$6.6bn, leaving us well below consensus.
- We revisit Cathay’s margin generation problems from the last cycle, illustrating structural problems which require structural solutions.
Auntea Jenny (Shanghai) Industrial Pre-IPO – The Positives – Has Benefited from a Growing Network
- Auntea Jenny (Shanghai) Industrial (AJI HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
- Auntea Jenny (Shanghai) Industrial (Auntea) is a freshly-made beverage producer.
- In this note, we will talk about the positive aspects of the deal.
[Luckin Coffee (LKNCY US, BUY, TP US$37) TP Change]:Weak Sales in 1Q24 but Likely to Improve in 2Q24
- We cut Luckin Coffee’s 1Q24 revenue estimate by 3% to RMB7.9bn with 79% yoy and cut non-GAAP net income estimate by 42% to RMB318mn due to (1) weak sales；
- We expect 2Q24 to be the turning point for earnings due to (1) sales improving with weather warm-up (2) ASP rebound from easing competition
- We maintain the stock as BUY rating but lower TP by US$4 to US$37 to factor in the temporary near-term weak sale.
Cathay Pacific (293 HK, BUY, TP HK$9.90): FY23 Better than Expected, and Surprise Dividends
- FY23 net profit of HKD9.1b, easily beating the consensus forecast of HKD8.5b, and announced a surprise dividend, the first since 2019, signally pandemic effects are over
- Perfect execution from the team, leveraging on a strong market
- Cathay Pacific is a value BUY, our target price of HK$9.90 (+10% UPSIDE) implies 10x FY2024 PE. We will update more after tuning in the 2 pm analyst briefing
Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Multiple Changes to Expectations; US$481mn One-Way
- The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
- The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
- In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.
JD.com Inc.: Market Share Expansion via Platform Ecosystem Improvements! – Key Drivers
- JD.com’s latest earnings showed a strong commitment to growth, navigating a mix of macro recoveries, seasonality factors and strategic refocus.
- They delivered a growth in net revenues by 4% and recorded a non-GAAP net income attributable to ordinary shareholders of RMB 8.4 billion.
- Cash and cash equivalents, restricted cash, and short term investments totaled RMB 198 billion.
Pre-IPO Qyuns Therapeutics (PHIP Updates) – Some Points Worth the Attention
- The biggest concern here is the uncertain commercialization outlook of Qyuns’s pipeline, mainly due to both industry factors in the field of autoimmune and allergic diseases and Qyuns’s own problems.
- Qyuns is overvalued. There’re rumors that Qyuns was “not popular” in primary market when fundraising, perhaps due to Dr. Yu Guoliang’s past unsuccessful experience which made investors suffered losses before.
- By reducing the size of IPO to maintain high share price, this IPO may “look successful”.Investors can seize this opportunity to take profits in time, but long-term hold isn’t recommended.
Belle Fashion Pre-IPO – Refiling Updates
- Belle Fashion (BF) aims to raise up to US$1bn in its Hong Kong listing. The company recently refiled its application proof after a gap of two years.
- As per F&S, it was the largest player in China’s fashion footwear market with a 12.3% market share, based on 2022 retail sales.
- We have looked at the company’s past performance based on its earlier filings in 2022. In this note, we talk about the updates from its recent filings.
Auntea Jenny (Shanghai) Industrial Pre-IPO – The Negatives – Improving Margins Playing Catch Up
- Auntea Jenny (Shanghai) Industrial (AJI HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
- Auntea Jenny (Shanghai) Industrial (Auntea) is a freshly-made beverage producer.
- In this note, we will talk about the not so positive aspects of the deal.
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