In today’s briefing:
- Kunlun Energy (135 HK): The Story Is Still Going On
- [KE (BEKE US, BUY, TP US$24) TP Change]: Silver Lining Appear in Industry Cycle, Maintain BUY
- LianBio (LIAN.US) – Some Points Worth the Attention
- Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality
- Directors of agri-food and F&B companies raise their stakes
- REIT Watch – Data centre S-Reits under spotlight as investors look for ways to ride AI wave
Kunlun Energy (135 HK): The Story Is Still Going On
- We think Kunlun Energy (135 HK) will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.
- It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex.
- Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.
[KE (BEKE US, BUY, TP US$24) TP Change]: Silver Lining Appear in Industry Cycle, Maintain BUY
- KE Holdings (Beike) reported 2Q23 GTV 5.6% lower than our estimate, revenue (2.6%)/0.4% vs. our estimate/consensus, and non-GAAP NI 21.8%/42.9% higher than our estimate/consensus.
- We think 3Q23 is the trough and expect a rebound in 4Q23 as more substantial supportive policies laying out in China.
- We maintain the stock as BUY rating and raised TP by US$2 to US$24/ADS
LianBio (LIAN.US) – Some Points Worth the Attention
- Mavacamten is expected to be LianBio’s first commercialized product. Due to low diagnostic rate/doctors’ insufficient cognition of HCM, whether it can become a blockbuster drug in China is still uncertain.
- There’s an “insurmountable obstacle” to license-in model, and its “fault-tolerant space” is small. LianBio has to go all the way to the end.Otherwise, the license-in projects will eventually become worthless.
- Due to high cost rate, it’s difficult for LianBio to make profit even with large drug sales. Although pipeline is good, LianBio could still fail to bring investors good returns.
Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality
- Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
- The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
- When Aier’s external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.
Directors of agri-food and F&B companies raise their stakes
- Share buybacks by primary listed companies 25 – 31 Aug 2023 UOB again led the share buyback consideration tally, buying back 360,000 shares at an average price of S$28.41 per share, followed by Olam Group which bought back 3.25 million shares at an average price of S$1.25 per share.
- Between Aug 28 and 31, SunMoon Food Company non-independent and non-executive director Song XiaoJun acquired 2,055,500 shares at an average price of S$0.02 per share.
REIT Watch – Data centre S-Reits under spotlight as investors look for ways to ride AI wave
- INVESTMENT in artificial intelligence (AI) is booming worldwide – the frenzy fuelled by the release of ChatGPT last November has led to a surge in demand for data centres as well as the real estate investment trusts (Reits) that invest in them.
- NVIDIA shares marked an intra-day record high on Aug 24 of US$502.66 per share two days after the company’s earnings exceeded expectations.
- Singapore Reits with substantial data centre assets include Keppel DC Reit (KDCReit) and Digital Core Reit (DC Reit).
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