In today’s briefing:
- HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
- China Tourism Group (601888 CH | BUY | CNY): New Duty-Free Contracts with Airports, Slight Negative
- Dada Nexus (DADA.OQ) – Leading Chinese On-Demand Retail Platform Accelerates on Significant Runway
- WuXi XDC Cayman (2268.HK) – Would It Be An “Oasis in the Desert”?
- J&T Global Express FY23 Earnings Preview | Revenue Growth & Margin | China, SE Asia, ‘Other’
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
- We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
- We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
China Tourism Group (601888 CH | BUY | CNY): New Duty-Free Contracts with Airports, Slight Negative
- China Tourism Group Duty Free Corp Ltd (601888 CH) (CTG) announced last week a new supplementary contract for its duty-free airport businesses in Beijing and Shanghai airports
- The new deal aims to promote collaborations between the airports and CTG, acting like true partners. However, we think it is more positive for airports and slight detriment to CTG
- Maintain our Bullish call with an unchanged target price of CNY106 (+27% UPSIDE), based on the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24
Dada Nexus (DADA.OQ) – Leading Chinese On-Demand Retail Platform Accelerates on Significant Runway
- Dada Nexus Limited (DADA.OQ) (“Dada”), with a market cap of USD 869.9 million, is one of China’s leading on-demand retail platforms holding around 20% market share behind Meituan (42%, 3690.HK) and Ele.me (24%, Alibaba-owned).
- Dada, a 54% subsidiary of JD.com (JD.OQ; 9618.HK) and 9% owned by Walmart Inc. (WMT.N) operates two core businesses, namely:
JD Daojia (JDDJ), which is a local non-restaurant online to offline (“O2O”) retail marketplace
WuXi XDC Cayman (2268.HK) – Would It Be An “Oasis in the Desert”?
- WuXi XDC looks like “an outlier” among domestic CXOs – Its share price has performed well so far. As a niche player, WuXi XDC’s short-term performance growth is relatively guaranteed.
- We analyzed the valuation of WuXi XDC Cayman (2268 HK) under different scenarios. How much upside WuXi XDC’s valuation would have depends on the future real market size of ADCs.
- We’re conservative about whether we could have a US$50 billion ADC market. The “lucky” part for WuXi XDC is the current ADC market brings “a safe window period” for investors.
J&T Global Express FY23 Earnings Preview | Revenue Growth & Margin | China, SE Asia, ‘Other’
- In this insight we preview J&T’s maiden earnings report as a listed company
- We focus on revenue growth & margin trends in the China & SE Asia businesses
- We fear slowing organic growth & margin deterioration could spook investors
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