Daily Brief China: Shenzhou Intl Group Holdings, Noah Holdings, China Resources Beer Holdings, China Everbright Environment, Yuexiu Property , LANTIAN Group Holdings, Beijing Wantai Biological Phar, Health And Happiness (H&H), Sichuan Baicha Baidao Industrial, Yihai Int’L Holding and more

• Shenzhou Intl Group Holdings (2313 HK) reported 2023 results yesterday.  2H23 continued to be weak, with sales down 6% yoy.  Net profit grew 10% yoy in 2H23.
• Most importantly, the company sounded quite bullish on 2024 during the results briefing, which greatly improves the visibility in the order recovery thesis of the company.
• I continue to believe that Shenzhou is the best proxy for gaining exposure to the global sportswear sector, especially given the improved visibility now. 

• I mentioned Noah holdings as a trade to buy before earnings since I anticipated an announcement of significant capital returns.
• This has worked out well with over $2 in dividends announced. Half of that dividend will be recurring.
• So I sold out all of my shares at just under $12. This was never a high conviction investment, but merely a trade. Marking it as a 18% return.

• Full -year 2023 results  and 2024 forecasts indicate business going to plan
• The Baijiu division, key to a rerating, grew sales 50% y/y in the first two months of the year
• The beer division continues to reap the benefits of its premiumisation strategy

• Despite a 3.8% decline in FY23 net profit, China Everbright Environment (257 HK)‘s profitability has still outperformed its peers by significant magnitudes. 
• Positive notes in the result are an increase in operation service revenue proportion, expansion in EBITDA margin, improvement in financial position, and addition of new projects.
• It is easy for CEE to achieve the market expectation of a 9.8% growth in FY24. Yet, it just trade on 3.6x PER, 8.5% yield, and 0.34x P/B. 

Yuexiu Property’s (YXP) FY 2023 results were largely stable and in line with our expectations. The company reported strong contracted sales and top-line growth, albeit the margins weakened in tandem with industry trends. Leverage was mixed, as net debt crept up slightly. Importantly, liquidity appears sound, supported by YXP’s healthy access to financing. The company remains active in land acquisitions and has a good quality land bank, with 95% of its projects in Tier 1 and 2 cities.

• The industry in which LANTIAN operates has basically bid farewell to the era of high-speed growth. The baby diaper products market is nearing saturation, with limited future growth potential.
• The economy baby diaper products market is the last segment to bring alpha. However, it’s not easy for LANTIAN to break through considering strong international big names and local brands.
• Profit margin of LANTIAN is low. If this is the characteristic of this industry, then baby diaper products isn’t a profitable business.Investors could have other options to achieve higher returns.

• Beijing Wantai Biological Phar (603392 CH) announced that its net profit for 2023 declined 71–75% YoY to RMB1.20–1.35B mainly due to the market competition.
• China’s HPV vaccine market is highly competitive. Beijing Wantai has no presence in higher valent HPV vaccine segment, which dominates the domestic market.
• Although the company will be one of the early movers in domestically developed nonavalent HPV vaccines, at least three more players will follow soon, thereby making the space more competitive.

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.

• China Oil And Gas
• Meituan

• Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO.
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
• We have looked at the company’s past performance in our earlier notes.  In this note, we provide our initial thoughts on valuations.

• Since my previous insight on March 5, the share price is up 32% in less than a month.
• The company reported 2023 results on March 26, as net profit was up 15% yoy while sales growth was flat for the year. 
• The company also announced a strong dividend payout ratio of 90% compared to below 30% previously, making the dividend yield of the stock at 6%.