In today’s briefing:
- China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma
- TCL Electronics (1070.HK) – a Rising Star in the TV Business
- China Consumption Weekly (18 Mar 2024): Great Wall, KE, Tuniu, Tuhu Car, Boss Zhipin, Weibo
- AviChina Industry (2357 HK): Better Look Forward
China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma
- A document titled “Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain” would completely change the outlook/investment logic of China’s innovative drugs.
- We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
- After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.
TCL Electronics (1070.HK) – a Rising Star in the TV Business
- TCL Electronics Limited (1070.HK ) (“TCL”), with a market cap of HKD 7.57 billion (USD 968 million), is not your ordinary Chinese TV manufacturer.
- TCL focuses on mid-to-high end audio/video products like miniLED, QLED, Android, and smart TVs, ranking second in the global TV market behind Samsung.
- The Company also produces air conditioners, refrigerators, smartphones, tablets, and smart home devices. A recent catch-up with the IR team at TCL’s Shenzhen Industrial Park Headquarters intrigued us and we decided to dig a bit deeper.
China Consumption Weekly (18 Mar 2024): Great Wall, KE, Tuniu, Tuhu Car, Boss Zhipin, Weibo
- Great Wall Motor denied that many employees have resigned recently, but there many complaints from employees on social media.
- Many small companies grew strongly, such as Tuniu up by 140% and Kanzhun up by 46%.
- Weibo’s advertising revenue decreased, while most companies’ ad revenues have recovered.
AviChina Industry (2357 HK): Better Look Forward
- AviChina Industry & Technology H (2357 HK)‘s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth.
- Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
- The stock’s 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.
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