In today’s briefing:
- Travelsky (696): Sleepy Giant
- Tech News This Week: Smartphone, Mediatek, Nvidia, Qualcomm, TSMC, Super Micro, SK Hynix, Samsung
- Takasago Thermal Engineering (1969): Start of Multi-Year Bull
- [Kuaishou (1024 HK, BUY, TP HK$72) TP Change]: C3Q24 Review: Value Stocks Face Picky Investors
- China Consumption Weekly (25 Nov 2024): Xiaomi, Haier, Autohome, Xpeng, Full Truck, Tongcheng
- MT/Meituan (3690 HK) 3Q24 Earnings Preview: Upside Narrowed to 50%
- Nameson Holdings (1982 HK) H1 FY25: 16-17% Dividend Yield Intact
- China State Construction Intl (3311 HK): Steady as It Goes
- Jiangxi Rimag Group Lock-Up Expiry: Cornerstone Investor May Sell Shares After 200%+ Post-IPO Gains
- UMP Healthcare (722 HK): Postcard From Hong Kong and Webinar Updates
Travelsky (696): Sleepy Giant
- Despite being a key beneficiary in travel and tourism in China, the rather muted growth in the first half does not bode well for Travelsky Technology Ltd H (696 HK) .
- YTD share price performance has reflected the above, but the deep discount valuation to Trip.com (TCOM US) might be temporary.
- In the near term, the company’s share price will not rebound as the company has less upside participation compared to Airlines and OTA.
Tech News This Week: Smartphone, Mediatek, Nvidia, Qualcomm, TSMC, Super Micro, SK Hynix, Samsung
- Smartphone demand remains slow, that contributes to weak outlook for commodity DRAM. Nvidia / Mediatek and Qualcomm AI PC chips should be launched mid-2025.
- Nvidia allocation of TSMC CoWoS remains at 60% in 2025, capacity doubles, Data Center GPU revenue will double? TSMC 2nm-16A roadmap on track.
- SK Hynix is now ahead of Samsung in HBM, DDR5, 3D NAND and SSD. Meanwhile, Samsung is buying back shares.
Takasago Thermal Engineering (1969): Start of Multi-Year Bull
- Takasago Thermal Engineering (1969 JP) is one of the top 10 players in Japan for energy efficiency players for industrial clients, especially semiconductors.
- Japan Metropolitan Govt bought stake in Rapidus, signifying a potential long-term business potential for Takasago Thermal Engineering.
- Valuation is no longer dirt cheap but still at a favorable level given its potential enlarged revenue growth.
[Kuaishou (1024 HK, BUY, TP HK$72) TP Change]: C3Q24 Review: Value Stocks Face Picky Investors
- Kuaishou reported C3Q24 revenue, IFRS operating profit,and IFRS net income in-line with our estimates and consensus.The only negative was that C4Q24 guidance for operating margin missed consensus and our estimate;
- Within mid-sized Internet platforms, Kuaishou lacks fresh secular driver, putting its stock under pressure. Advertising and GMV growth still outpace the industry and some peers. The stock is undervalued;
- We maintain our BUY rating and slightly revised down TP to HK$72 to make up for the higher-than-expected OPEX guidance.
China Consumption Weekly (25 Nov 2024): Xiaomi, Haier, Autohome, Xpeng, Full Truck, Tongcheng
- Haier plans to acquire all shares of Autohome and dismiss 30% of Autohome’s employees.
- In 3Q24, Xiaomi’s revenue grew by 30% YoY or 17% YoY without electric vehicle.
- In 3Q24, Tongcheng Travel’s revenue increased by 51% YoY with gross profit up by 29% YoY.
MT/Meituan (3690 HK) 3Q24 Earnings Preview: Upside Narrowed to 50%
- The stock has risen 84% in one year, but we still believe there is an upside of 49%.
- We believe the operating margin will continue to improve significantly in 3Q24.
- We also believe the growth rates of all main businesses should be healthy in 3Q24.
Nameson Holdings (1982 HK) H1 FY25: 16-17% Dividend Yield Intact
- Nameson Holdings (1982 HK) results for H1 FY25 revenue/net profit showed a slight growth of 2.2%/3.1% YoY, with margin expansion being offset by lower other income.
- The company declared a 9.8 cent interim dividend (current share price = 82 cents), maintaining a 75% payout ratio, which gives us confidence that a 16-17% yield can be maintained.
- At 4.9x FY25 PE (see: Nameson Holdings (1982 HK): 17% Dividend Yield Can Be Sustained and Improved Long-Term ), this is a very steady yield play.
China State Construction Intl (3311 HK): Steady as It Goes
- China State Construction Int’l (3311 HK)‘s backlog of HK$418.26bn is enough to cover 3x consensus forecast revenue of FY25, providing comfort for secured earnings outlook.
- The focus on public housing and municipal projects limits its exposure to the real estate market. Its consecutive earnings growth in last five years demonstrated its resilience.
- With ROE of 15-16%, its P/B of 0.8x is cheap. The reduction in operating cash outflow supports higher payout ratio, and its dividend yield of 5.6-6.3% is healthy.
Jiangxi Rimag Group Lock-Up Expiry: Cornerstone Investor May Sell Shares After 200%+ Post-IPO Gains
- Shares of Jiangxi Rimag Group, a medical group with focus on medical imaging in China, rose 200%+ since IPO and massively outperformed Hang Seng Index.
- A Nanchang-based medical imaging center operator priced its IPO at HK$14.98/share and raised ~HK$183M in June. Cornerstone investors have agreed to acquire ~8M H shares.
- I expect key cornerstone investor may sell shares after 200%+ post-IPO gains as early lock-up period will end on December 6th, 2024.
UMP Healthcare (722 HK): Postcard From Hong Kong and Webinar Updates
- We met with UMP Healthcare (722 HK) in Hong Kong. We believe management’s cost control initiatives are bearing fruit and will see an inflection in earnings in FY25.
- The weak consumption sentiment is setting a landscape for asset disposals, such as EC Healthcare (2138 HK) ‘s 436 mn HKD disposal of medical imaging to AIA.
- We believe the company is a multi-bagger trading at 6.8x PE FY25e. It has ~80% of its market cap in cash (260+ mn HKD) and a ~10% dividend yield.
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