In today’s briefing:
- SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules
- [Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
- China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point
- Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth
- Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts
- COSCO Shipping Energy (1138 HK): Don’t Get Carried Away
- [Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape
- The Battle of CMCDI: What Is the Endgame?
- NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
- [Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?
SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules
- Several US customs brokers have been suspended under new, tighter rules
- The new rules could make ‘de minimis’ imports slightly more difficult
- Whether it lists in London or NYC, additional rule changes could threaten SHEIN
[Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
- Xiaomi reported CY1Q24 revenue, non-IFRS operating income and non-IFRS net income 2.7%, in-line, and 21.7% vs. consensus;
- SU7 interest drove more and higher quality traffic to Xiaomi channels, driving higher revenue and margin for IoT and handset sales, in our view.
- We expect this augmentation to sustain higher non-EV margin and growth in the long-run, and for ADAS and battery upgrades to drive demand for its next EVs.
China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point
- Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
- The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
- There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.
Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth
- Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
- Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
- In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.
Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts
- In the fourth quarter fiscal of 2024, Deckers Brands achieved record revenue growth of 18% compared to the previous year, almost reaching $4.3 billion of annual revenue.
- Gross margin increased by a considerable 530 basis points from last year to 55.6%, and earnings per share rose by 51% to $29.16.
- These results reflect Deckers’ successful long-term strategies and the hard work of its employees.
COSCO Shipping Energy (1138 HK): Don’t Get Carried Away
- Cosco Shipping Energy Transp. Co. Ltd. (H) (1138 HK)‘s 1.25x 12-month forward P/B is more than 2SD above historical average. Though earnings have improved, this still appears rich.
- The market expects this upcycle will sustain for at least 5 years, but as a cyclical stock, CSET has never had such a long cycle in the last 10 years.
- While VLCC rate has gained 36% YTD, the average for FY24 is just in line with 2H22 and 1H23. However, earnings projections are 57% higher than that time.
[Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape
- Ivonescimab’s (AK112) head-to-head clinical win against Keytruda (Pembrolizumab) reaffirmed Akeso’s standing as the flag-bearer of Chinese innovative drugs. It also affirmed its business model of specialized R&D+flexible distribution.
- This success might be followed by a similar win globally in 2025-27,as well as AK112 and 104’s head-to-head win against Tislelizumab.
- We reiterate our BUY rating on Akeso and adjust TP to HK$58 to reflect revenue share from AK112 to come in from 2025 but in bulk after 2027
The Battle of CMCDI: What Is the Endgame?
- ASM is a hedge fund with a strong track record of investor activism in taking over distressed assets and closed-end funds.
- Lazard, the second largest CMCDI shareholder, bought shares last week at a multi-year high sending a strong message to the market.
- CMCDI can also explore announcing a discount management program besides agreeing to ASM’s claim to sell assets to pay dividends and offer a share buyback to reduce the NAV discount.
NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
- NetEase’s first quarter earnings highlighted the company’s ongoing growth, driven in large part by its game portfolio.
- Net revenue for Q1 rose to RMB 26.9 billion, marking an accelerated YoY increase led by the company’s diversified game offerings.
- There was significant growth from established game franchises which have managed to maintain high popularity among their user bases, showcasing the sustainability of the company’s games.
[Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?
- Atour reported C1Q23 revenue 4.6%/6.8% higher than our est./cons., and non-GAAP NI 6.9%/8.8% higher than our est./ cons, driven by hotel expansion and new retail products.
- The company raised total revenue guidance from 30% to 40% YoY for 2024 due to a strong retail sales trend.
- We believe retail sales is a form of increase in Atour’s same store sales. We thus raise TP to US$39 to reflect this retail-driven increase of same store sales.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
