Daily Brief Equity Bottom-Up: Luckin(LKNCY.US) Initiation: Rising Challenger and more

• We initiated Luckin with a BUY with TP $40 because we believe Luckin is a rising challenger in a rising market, half way through a rising business model; 
• We see room for Luckin to expand transaction frequency and transacting customers before expanding ASP in order to drive same store sales;
• In the long run, we see coffee + western bakery to gain market share over tea house + Chinese dim sum in the snack + breakfast market. 

• M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
• In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
• Though m3 has made a large no. of M&A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.

• Lotus Pharmaceutical (1795 TT) ended 2022 on a strong note. Full-year 2022 revenue grew 15.7% YoY to NT$14.6B. 2022 was the third consecutive year that Lotus achieved double-digit annual growth.
• The export markets outside of Asia grew 28% YoY, largely contributed by the launch of multiple myeloma drug lenalidomide in a number of markets around the world, including the U.S.
• In December, Lotus took over the Eli Lily’s Alimta business in Taiwan for $62M. Alimta is a first-line treatment for NSCLC with high brand loyalty.

• Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to stimulate hotel demands in 2023. 
• We expect Atour to report its 4Q22 revenue at RMB580mn and OPM at 8.2%, both in-line with consensus. We expect a strong revenue growth at 60% YoY in 2023.
• We rate the stock as BUY and maintain the TP at US$35.

• Minor International (MINT TB) is trading at 2.4x PBR, slightly higher than during the pre-COVID level at 2x.
• Most of its hotels are in Europe (77%) and only half of the food business is in Thailand. 
• Other Thai stocks have higher exposure to Thai tourism-related activities.

In the upcoming webinar, AIMS APAC REIT’s (“AA REIT”) CEO, Mr Russell Ng, will share a short company presentation. After which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

AIMS APAC REIT (“AA REIT”) is a real estate investment trust listed on the Mainboard of the SGX-ST since 2007. The principal investment objective of AA REIT is to invest in a diversified portfolio of high quality income-producing logistics, business parks and industrial real estate throughout Asia Pacific. As at 30 September 2022, AA REIT’s portfolio consists of 29 properties, of which 26 properties are located throughout Singapore and 3 properties located in Australia (including a 49.0% interest in Optus Centre held through a joint venture), with assets under management of S$2.2 billion. AA REIT is also a constituent of the FTSE EPRA Nareit Global Developed Index and the MSCI Singapore Small Cap Index. 

AA REIT is managed by AIMS APAC REIT Management Limited, which is wholly-owned by AIMS Financial Group (“AIMS”). Headquartered in Sydney, AIMS is a diversified financial services and investment group, active in the areas of fund management, mortgage lending, investment banking and property investment. AIMS is also the owner of the Sydney Stock Exchange.