In today’s briefing:
- 2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
- Alibaba (BABA US): 2Q25, Weak Quarter, But Waiting for Two Events to Benefit Top Line
- Anxian Yuan (922 HK)
- [Atour (ATAT US, BUY, TP US$37) TP Change]: Strong 11.11 Sales Recalibrate E-Commerce Potential
- Lucror Analytics – Morning Views Asia
2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
- Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
- Part of that change includes the payment of a punchy HK$9.70/share special dividend.
- The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.
Alibaba (BABA US): 2Q25, Weak Quarter, But Waiting for Two Events to Benefit Top Line
- Total revenue grew slightly as we expected in our preview note.
- The operating margin improved significantly, but this was due to the shrinks of non-cash items.
- However, we believe Alibaba will benefit from the boycott against JD.com and the disposal of Sun Art.
Anxian Yuan (922 HK)
- Chinese cemetery operator with three main assets: the Anxian Yuan cemetery in Hangzhou, the Fushouyuan cemetery in Yinchuan and the Dachenshan cemetery in Niuxin Village, Guizhou Province
- The stock is inexpensive at 6.1x trailing P/E with a 13.3% dividend yield that’s covered by cash flows. Further, net cash represents 82% of market cap with limited contract liabilities.
- Recent tomb sales has been weak for reasons that seem macro related. Other risks are historical share dilution: the 2020 rights issue was under-priced, 85% taken up by the founder.
[Atour (ATAT US, BUY, TP US$37) TP Change]: Strong 11.11 Sales Recalibrate E-Commerce Potential
- Based on Atour (ATAT)’s strong pillow sales in 11.11, we raised C4Q24/2025 revenue estimate by 6.9%/7.1%. Our number is now 7.9%/15% higher than consensus;
- The outstanding performance of the retail business may draw more consumer attention to the brand, thus bring contribute to Atour’s hotel expansion.
- We raise the TP by US$1 to US$37/ADS and maintain the BUY rating.
Lucror Analytics – Morning Views Asia
- Fed Chairman Jerome Powell yesterday said that there is no need for the US central bank to rush rate cuts.
- He said: “The economy is not sending any signals that we need to be in a hurry to lower rates,” adding that “the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully”.
- Following Mr Powell’s comments, traders reduced their expectations for an interest-rate cut in December to 60% from 80% earlier.
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