In today’s briefing:
- Tencent Second Rejection – 305 Buy Zone
- Meituan (3690 HK): Delivery Workers on Strike
- AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- Kujiale: 3D Design Platform for Home Décor
- APAC Insurers Series (#2): AIA or Prudential?
- PICO: Leader in Chinese XR Market
- Hangzhou Tigermed Consulting (3347HK)-Turning Point Emerge, Followed by Sharp Decline in Performance
- JD.com Inc: Proposed Acquisition of Deppon Logistics Co & Other Drivers
- [Xiaomi (1810 HK, SELL, TP HK$8.2) Company Update]: EV Expense Acceleration at the Starting Line
Tencent Second Rejection – 305 Buy Zone
- Tencent’s rally back to the 285 resistance saw a second rejection confirming a b-wave top and our base case call for a C wave slide to the 305 buy support.
- Corrective structure to align with RSI low just under 30 as the buy zone. Sell volumes are on the backfoot.
- Macro long zone remains at 305/280 to challenge the 385 bull/bear divide. Near resistance at 370.
Meituan (3690 HK): Delivery Workers on Strike
- Meituan’s delivery workers started a strike in Shanwei City of Guangdong Province.
- Meituan called many of its delivery workers from other cities nearby as substitutes.
- We believe the hard job market pushes Meituan to the very font line of industrial relation.
AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- Ahead of Aag Energy Holdings (2686 HK)’s vote on 27 April, the gross spread to Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer sits uncomfortably high at 13.5%.
- The key risk remains that minorities vote down the scheme. Retail forums are active with mixed views on the offer. Peers have also modestly re-rated, which helps the NO camp.
- At the last close, the risk-reward profile is unfavourable as the downside to a scheme fail (-16.0%) is greater than the upside to a scheme pass (+13.5%).
CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- With 4 trading days to go the review period, we see 13 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 1.94% at the June rebalance leading to a one-way trade of CNY 5.05bn.
- With the review period nearly complete, the gap between the potential adds and deletes could narrow ahead of the announcement of the changes as pre-positions are built.
Kujiale: 3D Design Platform for Home Décor
- Founded in 2011, Kujiale (1716974D CH) is a Chinese technology company that provides a 3D design and visualization platform for home decoration and furniture.
- The company’s AR/VR tech platform allows users to generate design sketches to decorate and furnish their homes, as well as providing information and networking services on home design.
- The company’s parent Manycore is the largest residential interior DDC cloud-based software provider (Kujiale is the flagship product offered by Manycore) with a market share of 56.5% in 2020.
APAC Insurers Series (#2): AIA or Prudential?
- Given Pru’s demerger in 2021, it now offers investors a good alternative to AIA to tap into the development and the growth potential of the life insurance sector in Pan-Asia.
- AIA has a more balanced business across so many markets in APAC, while Pru skews toward Southeast Asia.
- Pru’s P/BV is currently at a 30% discount to AIA’s and is trading at the same level as the year-end when China just announced the re-opening of its borders.
PICO: Leader in Chinese XR Market
- Pico Technology (1870309D CH) is a Virtual Reality (VR) / Extended reality (XR) technology company that develops and sells VR glasses and comprehensive XR solutions.
- The company is the market leader in the XR market in China and has a global presence. It was acquired by ByteDance in 2021.
- PICO is a company to watch for in the VR/XR segment given it operates in a growing market and has already established itself as a prominent player in this space.
Hangzhou Tigermed Consulting (3347HK)-Turning Point Emerge, Followed by Sharp Decline in Performance
- Tigermed’s revenue growth in 2021/2022 would have been pessimistic if it were not for the large COVID-19 orders, which makes us worried about the Company’s future growth in post-COVID era.
- Profit margin could further decline due to increasing labor cost. Highly volatile financial profit would lead to more ugly profit performance. Higher domestic revenue proportion would limit future growth space.
- The year 2022 marked a turning point in Tigermed’s performance. Its subsequent growth shows a downward trend.We think its valuation should be lower than WuXi AppTec, with more downside ahead.
JD.com Inc: Proposed Acquisition of Deppon Logistics Co & Other Drivers
- JD.com had a successful year in 2022, achieving high-quality growth and surpassing 1 trillion RMB in full-year revenues for the first time.
- Despite external challenges, the company was able to maintain high-quality operations and record the highest-ever profitability for the year.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
[Xiaomi (1810 HK, SELL, TP HK$8.2) Company Update]: EV Expense Acceleration at the Starting Line
- Per Tmall tracking data, in 1Q23 we expect Xiaomi’s (1) phone unit sales fell 18% YoY to 31.7mn (2) phone ASP rose 2% YoY, (3) IoT revenue fell 10% YoY
- We estimate 1Q23/FY23 operating profit is (16%)/(13%) vs. the street. We expect Xiaomi to spend more on OPEX to support its EV investment;
- We maintain SELL and HK$8.2 TP given rising costs despite lack of growth.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
