In today’s briefing:
- SF Holdings A/H Trading – Strong Demand but Is Probably Close to Fair Value
- Xiaomi (1810 HK): Three Months Surge Overvalued Vehicle Business
- Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 25)
- Demand Uncertainty To Influence Rubber Markets In Q1 2025
- China Education Group (839 HK): What’s up After the Big Bath?
- Taste Gourmet (8371 HK): Resilient H1 FY25: Cash Now 35% of Market Cap
- Lucror Analytics – Morning Views Asia – November 26, 2024
- Hansoh Pharmaceutical Group (3692.HK) – Successful Business Transformation Opens up Valuation Upside
SF Holdings A/H Trading – Strong Demand but Is Probably Close to Fair Value
- S.F. Holding (002352 CH), China’s largest express delivery company, raised around US$860m in its H-share listing in Hong Kong.
- SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
- We have covered the company and deal background in our previous notes. In this note, we talk about the trading dynamics.
Xiaomi (1810 HK): Three Months Surge Overvalued Vehicle Business
- Xiaomi’s stock price has risen 62% since our buy rating after 2Q24 results.
- We believe vehicle production will bring Xiaomi a revenue of RMB90 billion maximum.
- The sum-of-the-parts valuation suggests significant downside for the next twelve months.
Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 25)
- Hong Kong continued a correction in its Bull market which has lifted the HSCEI to be the best performing Asian index this year. Southboune buying is strong.
- AAC Technologies Holdings (2018 HK) share price had a breakout relative to the MSCI AC Asia Index. The company reported solid results benifitting from the smartphone and auto sectors.
- CGN Power (1816 HK) share price relative to MSCI China broke down. The company reported a disappointing 3Q24 results even as power generation increased by 15% YoY for the period.
Demand Uncertainty To Influence Rubber Markets In Q1 2025
- Short term supply shortage
- US and EU demand uncertain
- Shipping cost spike in short term ahead of Trump’s tariff drive
China Education Group (839 HK): What’s up After the Big Bath?
- Although the reported FY24 net profit plunged 69.7% due to intangible impairments, China Education Group (839 HK)‘s adjusted net profit grew by 3.3% and adjusted EBITDA by 12.3%.
- Based on adjusted net profit, its payout ratio is flat at 40%, implying an 8% dividend yield. This suggests underlying operations are decent and demonstrate confidence in the outlook.
- Both tuition and enrollment are expected to sustain growth in FY25, meaning that a consensus forecast of 9% net profit is achievable. Its 4.5x PER does not appear stretched.
Taste Gourmet (8371 HK): Resilient H1 FY25: Cash Now 35% of Market Cap
- Taste Gourmet (8371 HK) reported H1 FY25 results of Revenues/Pat 19% YoY/-6%YoY. Profits disappointed slightly as the company was unable to achieve the desired restaurant table turns.
- Cash continues to pile on the balance sheet, with 185 mn HKD of net cash representing 35% of market capitalization. The company paid a 6-cent semi-annual dividend.
- The stock trades at a 5.2x PE for FY25, has a 10% dividend yield, and plans to grow at least 15% CAGR.
Lucror Analytics – Morning Views Asia – November 26, 2024
- Treasuries surged yesterday, with yields falling 10-13 bps across the curve after a strong auction of 2Y notes and in the wake of US President-elect Donald Trump’s nomination of Scott Bessent as the next Treasury Secretary.
- Mr Bessent is expected to implement Mr Trump’s tax cuts, while reducing the budget deficit and boosting GDP growth through deregulation and other pro-growth policies.
- The yield on the 2Y UST fell 10 bps to 4.27%, while that on the 10Y UST declined 13 bps to 4.28%.
Hansoh Pharmaceutical Group (3692.HK) – Successful Business Transformation Opens up Valuation Upside
- Hansoh’s 24H1 results beat the expectations. Product revenue (excluding BD cooperation revenue) would achieve double-digit growth in 2024 full year, among which revenue of Ameile would maintain 20%+ YoY growth.
- Total product revenue would be about RMB14-14.5 billion in the future. Based on P/S of 5, market value is RMB70-72.5 billion, which is the lower end of market value range.
- There is still certain gap in terms of R&D capability/globalization outlook between Hansoh and those leading biotech in China. So, we think valuation of Hansoh would be lower than them.
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