In today’s briefing:
- Meituan (3690 HK): 4Q24, High Growth and Higher Margin, 60% Upside
- China Merchants Port (144 HK): Will It Have a Role in CKH’s Port Sale?
- Taiwan Dual-Listings Monitor: TSMC Headroom Increases Again; ASE at Discount a Long Opportunity
- Micron. HBM Gets Even Better, NAND Gets Even Worse
- China Healthcare Weekly (Mar.23)-Fosun Pharma Sells United Family Healthcare, MNC’s Inflection Point
- ENN Energy (2688 HK): Privatisation or What? A Look at the Valuations
- Foxconn’s Huge EV Bet Pays Off: Key Mitsubishi Win Could Spark Additional Automaker Deals to Come
- Fu Shou Yuan (1448.HK) – 2025 Outlook May Remain Sluggish Despite the Ugly 2024 Results
- Workman Fixes the Big Problem: Colors Replaces Workman Joshi
- Miniso: Undeterred by Tariffs. IP-Strategy, Global Expansion on Track. Value Buy
Meituan (3690 HK): 4Q24, High Growth and Higher Margin, 60% Upside
- In 4Q24, Meituan’s revenue growth rate was 20% YoY with all businesses rising.
- The operating margin improved to 8.8% in 4Q24 versus about zero in 4Q23.
- We set an upside of 61% and a price target of HK$270. Buy.
China Merchants Port (144 HK): Will It Have a Role in CKH’s Port Sale?
- China Merchants Port (144 HK) may potentially play a role in CK Hutchison Holdings (1 HK)‘s port portfolio disposal should the mainland government want to step in.
- While CMPH’s size is small relative to the port portfolio, its parent China Merchants Group and sister China Merchants Bank H (3968 HK) can easily facilitate such a transaction.
- Having the portfolio in the hands of mainland company is desirable to the Chinese government. Even if CMPH has no role, its 7.6x PER and 6% yield are attractive.
Taiwan Dual-Listings Monitor: TSMC Headroom Increases Again; ASE at Discount a Long Opportunity
- TSMC: +20% Premium; Wait for Higher Premium Before Shorting, ADR Headroom Has Increased Further
- UMC: -1.6% Discount; Wait for Lower Discount Before Going Long
- ASE: -0.1% Discount; Discounts Are Good Level to Long the Spread Given Maxed Headroom
Micron. HBM Gets Even Better, NAND Gets Even Worse
- Micron this week reported revenues of $8.1 billion, down 8% QoQ but up 38% YoY, and at the top end of the guided range
- Micron is expecting to reach an annual run rate of $7.8 billion by Q425. Wow!
- NAND is headed for yet another downturn after six quarters of sequential growth.
China Healthcare Weekly (Mar.23)-Fosun Pharma Sells United Family Healthcare, MNC’s Inflection Point
- Given new policy recommendations, it is only a matter of time before HPV vaccination is included in the national immunization program, which is detrimental to HPV vaccine companies.
- MNCs have seen a inflection point in performance growth in 2024 in China. Although VBP/NRDL negotiation are negative factors, is it also due to any consideration to withdraw from China?
- Fosun Pharma has agreed to sell its entire stake in United Family Healthcare to Calcite Gem Investments Group for US$124.1 million. We shared our views about the deal.
ENN Energy (2688 HK): Privatisation or What? A Look at the Valuations
- ENN Energy (2688 HK) has suspended trading. The possibilities include privatisation, third-party offer, increase in stake by ENN Natural Gas (600803 CH), and a change in control.
- It trades on 1.16x 12-month forward P/B, vs. 5-year average of 2.42x and 1.31x since 2024. Given the lower forward ROE, it is difficult to return to the 5-year average.
- For PER, it should be higher than China Gas Holdings (384 HK) but lower than CR Gas (1193 HK). At 10.8x (average of the two), it equates to HK$74.26.
Foxconn’s Huge EV Bet Pays Off: Key Mitsubishi Win Could Spark Additional Automaker Deals to Come
- Mitsubishi Motors plans to outsource EV production to Foxconn, signaling the most significant commercial validation of Foxconn’s MIH EV platform to date.
- While Foxconn’s AI server manufacturing is currently the company’s strongest growth driver, its EV strategy is increasingly gaining credibility as a second long-term pillar.
- Foxconn — Structural Long. We see depressed share price as buying opportunity. Mitsubishi contract win increases the probability for additional major OEM production partnership wins this year for Foxconn.
Fu Shou Yuan (1448.HK) – 2025 Outlook May Remain Sluggish Despite the Ugly 2024 Results
- Fu Shou Yuan had a sharp decline in performance in 2024. The performance in recent years has often missed management guidance, which makes us question the integrity of management.
- The “crisis” of Fu Shou Yuan has evolved from a short-term headwind to the failure of its long-term business model. Good dividends cannot conceal the problem of gloomy outlook.
- Valuation logic is undergoing a transformation – from a leading company with “high growth/stable cash flow” to a struggling company with “weak growth/questionable profit model”. 2025 performance may remain lower-than-expected.
Workman Fixes the Big Problem: Colors Replaces Workman Joshi
- Workman’s slower same-store growth can be blamed on its shift to mass market fashion and the choice of Workman Joshi as a banner, putting off male customers.
- The outdoor and workwear retailer has now acknowledged the misstep and will rebrand the chain as Workman Colors while adjusting merchandise back to more apparel basics.
- This will take time to implement but could mean a return to form for the apparel retailer.
Miniso: Undeterred by Tariffs. IP-Strategy, Global Expansion on Track. Value Buy
- MINISO Group Holding (9896 HK) committed to expanding in the U.S. with plans in place to mitigate the impact of U.S. tariffs on Chinese goods via its diversified supply chain strategy.
- Key investor concern: Slower store expansion in Mainland China in 2025 may temper near-term sales and profit growth. Capital intensive overseas expansion could dilute potential returns.
- Miniso (MNSO US)’s accelerating shift toward higher-margin IP co-branded lifestyle products—a strategy poised to sustain double-digit revenue growth, makes it an attractive investment play in the lifestyle retail space.
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