In today’s briefing:
- Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up
- [JD.com (JD US, SELL, TP US$30) Target Price Change]: Painful Transition Continues Amid Margin Beat
- [JD Health (6618 HK) Rating Change]: Strong Profitability Likely Achieved Margin Reversal
- [Luckin Coffee Inc. (LKNCY US) Company Update]: Is Cotti Coffee Charles Lu’ NeXT Computer?
- Broad-Based Improvement in India, Add Exposure/Overweight. Buys: Cyclicals in Japan, India, & Taiwan
- HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade
- Hilton Worldwide Holdings Inc.: A Strong Emergence From The Lull – Key Drivers
Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up
- AmoreG has been closely moving relative to Amorepacific Corp (090430 KS) over the past few months, but starting from mid-April, it rapidly entered a downward diversion phase.
- It appears to have experienced greater sensitivity towards the recent tensions in Sino-Korean relations, possibly due to its higher price correlation with the Chinese market.
- The issue lies in the timing of entry aimed at reversion, and there may be one upcoming passive inflow event that we should pay attention to in this regard.
[JD.com (JD US, SELL, TP US$30) Target Price Change]: Painful Transition Continues Amid Margin Beat
- JD reported 1Q23 revenue in-line vs. cons., while non-GAAP net income beat cons and our est. 99% and 74%, respectively.
- It’s early to say whether JD is getting out of the puddle, as (1) revenue grew just 1.4% YoY in 1Q23, (2) the effect of its management change remains uncertain.
- We maintain SELL, but raise JD’s 2023 non-GAAP net margin from prior 3.2% to 3.34%, and raise TP to US$ 30.
[JD Health (6618 HK) Rating Change]: Strong Profitability Likely Achieved Margin Reversal
- JDHealth (JDH) reported C1Q23 top line and non-IFRS operating profit 56% and 78% of our C1H23 estimates.
- We now take a more positive view on JDH’s ability to at manage the issue at certain periods and certain areas;
- We raise TP from HK$44 to HK$57 and rating to BUY. Possible risks include renewed margin pressure from prescription drugs
[Luckin Coffee Inc. (LKNCY US) Company Update]: Is Cotti Coffee Charles Lu’ NeXT Computer?
- Cotti Coffee has become a head-to-head competitor of Mixue’s Lucky Cup, and to a lesser degree, Luckin.
- But what is behind Cotti’s agenda, in our view, is its founder Charles Lu’s aspiration to return to Luckin;
- The biggest obstacle for Charles to repeat the playbook of Steve Jobs is Chinese security regulator’s refusal, so far, to allow franchised chain to list
Broad-Based Improvement in India, Add Exposure/Overweight. Buys: Cyclicals in Japan, India, & Taiwan
- Our 2023 outlook remains unchanged as we continue to expect broad-based consolidation with $93 capping upside on MSCI ACWI (ACWI-US), while important downside targets are $86, $84, and $75-77.
- We still recommend tactical overweight to defensives including gold miners and MSCI ACWI Staples, Health Care, and Utilities, given ACWI-US remains near the top of our expected 2023 trading range.
- We are now starting to see broad-based improvement, particularly in Japan and India, but also in Taiwan and South Korea. Most of today’s buy recommendations are cyclicals in these countries.
HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade
- There are no constituent changes for the Hang Seng Tech Index (HSTECH INDEX) in June but there are some free float changes and a bunch of capping changes.
- Estimated one-way turnover is 3.2% leading to a one-way trade of HK$3bn (US$384m). There are 3 stocks with over 1 day of ADV to trade.
- Trip.com (9961 HK) has over 1x ADV to buy from Hang Seng Tech Index (HSTECH) trackers. The stock is also an add to the Hong Kong Hang Seng Index (HSI).
Hilton Worldwide Holdings Inc.: A Strong Emergence From The Lull – Key Drivers
- Hilton Worldwide Holdings delivered an all-around beat in its latest result as travel demand has remained robust, continuing the pattern seen in the back half of last year.
- This resulted in both the company’s top and bottom line results closing the quarter above the high end of the management guidance.
- The quarter’s leisure trends continued to be strong, with RevPAR outperforming the previous quarter’s performance.
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