In today’s briefing:
- 2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees
- [Meituan (3690 HK, BUY, TP HK$118) TP Change]: Deeply Cultivate Domestic While Wait for Overseas
- Last Week in Event SPACE: Denso, Sapporo, Hollysys, PCCW, Origin Energy
- Weekly Deals Digest (03 Dec) – Denso, T&K Toka, CIMC Vehicles, Origin, OreCorp, Hollysys, BPLANT
- ECM Weekly (3rd Dec 2023) – Denso, Toyota, Zensho, Asahi, Kotak, Zomato, Zeekr, Tatatech, IREDA
2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees
- China stock market despair has brought down China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years
- Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins
- Using the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)
[Meituan (3690 HK, BUY, TP HK$118) TP Change]: Deeply Cultivate Domestic While Wait for Overseas
- Meituan reported C3Q23 top line (1.0%)/0.6% vs. our estimate/consensus, non-GAAP net income (9.7%)/8.3% vs our estimate/consensus. Subsidies and investment in in-store business is the main reason for bottom-line miss.
- Meituan in-store GTV increased 90% YoY in 3Q23, effectively counteracted Douyin’s attack and maintained size ratio at 3:1 vs. Douyin in-store, which scarified profit.
- Meituan OPM lowered 2.5ppt QoQ to 4.4% in 3Q23, and we expect it decline to 2.4% in 4Q23.
Last Week in Event SPACE: Denso, Sapporo, Hollysys, PCCW, Origin Energy
- A holistic view of the three different documents here suggests the Denso Corp (6902 JP) buyback, indeed, “It was a trap”.
- 3D Investment Partners raised its stake in Sapporo Holdings (2501 JP), suggesting the activist investor is optimistic about successfully advancing their proposals.
- A firm merger proposal is expected for Hollysys Automation Technologies (HOLI US) in the next couple of weeks. Time to buy.
Weekly Deals Digest (03 Dec) – Denso, T&K Toka, CIMC Vehicles, Origin, OreCorp, Hollysys, BPLANT
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Denso Corp (6902 JP)‘s US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback.
- Event-Driven developments – CIMC Vehicle Group Co Ltd (1839 HK), Origin Energy (ORG AU), Orecorp Ltd (ORR AU), Hollysys Automation Technologies (HOLI US), Boustead Plantations (BPLANT MK).
ECM Weekly (3rd Dec 2023) – Denso, Toyota, Zensho, Asahi, Kotak, Zomato, Zeekr, Tatatech, IREDA
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- In the IPO space, Tata Technologies and IREDA continued the India IPO juggernaut.
- On the placements front, there seems to be no stopping Japan flows.
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