In today’s briefing:
- Pre-IPO Ximalaya – The Potential Risks and the Outlook
- China Resources Beverage Pre-IPO – The Negatives – Remains a Minnow in Other Markets
- Yum China (9987 HK/YUMC US): Earnings Risk Materialized As 1Q24 Earnings Were Weak
Pre-IPO Ximalaya – The Potential Risks and the Outlook
- The key to Ximalaya turning losses into profits is not the outstanding performance in revenue side, but rather the effective cost control. The Company seems to have encountered growth bottleneck.
- To achieve long-term stable profits, it’s necessary to continuously optimize content quality, improve user experience, and expand paying user scale, but Ximalaya has shown “signs of fatigue” in this regard.
- AI technology brings big room for imagination, but the question here is how much would truly translate into a leap in financial performance? Ximalaya’s valuation could be lower than peers.
China Resources Beverage Pre-IPO – The Negatives – Remains a Minnow in Other Markets
- China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In this note, we talk about the not-so-positive aspects of the deal.
Yum China (9987 HK/YUMC US): Earnings Risk Materialized As 1Q24 Earnings Were Weak
- Yum China Holdings (9987 HK)‘s 1Q24 earnings were weaker than the already lowered consensus expectations, as both sales and core operating profit only grew 1% yoy.
- Same-Store-Sales declined by 3% yoy, and restaurant margin declined by 2.7ppt yoy, mainly due to more discounts offered.
- China’s catering industry has changed compared to pre-COVID, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options.
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